BIRMINGHAM, Ala.-The "new reality," according to Dollar Associates Principal Dennis Dollar, is that CUs cannot afford to write off any source of income that is "not inconsistent with the credit union philosophy or is not member-centric."
That includes bankruptcies. "Rather than assuming that any bankruptcy is practically a total loss with high legal costs attached, they should look for ways to strengthen their bankruptcy-management processes, manage their legal costs, and increase their percentage of reaffirmations through a systematic approach of working with the bankruptcy trustees and attorneys."
Another opportunity exists by ensuring proper and efficient compliance with new Fed rules on overdraft programs, he said. "A lot of credit unions are panicking about the losses they anticipate from requiring members to opt in to their overdraft program for debit transactions and ATMs. Most members see the value of overdraft programs, and particularly the members who utilize them most often."
Dollar urged credit unions to engage in a well-structured program to provide quality financial education on how to properly use overdraft, including benefits and costs, and then ID members who most value the service to give them an opportunity to opt in.
"Credit unions cannot afford to give up overdraft programs," Dollar said. "But this new rule does give them a chance to strengthen both their compliance and their structure of their programs-with a special emphasis on making sure member education and member focus are integral. If so, these programs will be strong credit union offerings for years to come."
