TOMAH, Wis. - Central Wisconsin is about as far away from the boom-gone-bust real estate regions as can be. Yet Tomah Area Credit Union is nevertheless feeling the burden of foreclosures. Job loss, not real estate speculation, has led to a pair of foreclosures for the $44-million credit union, something CEO John Laufenberg has never dealt with before.
"I've been with the credit union for 30 years and we've never had a foreclosure before," he said. "The economics are no better here than anywhere else."
Home values have only declined by about 5% to 10% in its rural Wisconsin market, but the job market has contracted far more. The Three Bears Resort, located alongside a Jellystone Park Camp in nearby Warrens, closed in September, leaving more than 230 people out of a job, many of whom are TACU members. With little money coming in, some members leveraged their credit cards just to put food on the table. But for two members, their bills they couldn't pay forced them into the foreclosure process.
Laufenberg is upset by these developments, but said there is little the credit union can do to alleviate the pain. "At this point there is nothing we can do for the members because there are no new jobs opening up," he noted. "But we always offer to rewrite loans, consolidate them if the member is creditworthy."
While credit unions of every size in larger cities have found ways to leverage big bank failures to grow market share, the small town nature of Tomah poses a problem for Laufenberg - one that many other smaller credit unions may be facing. He is finding it exceedingly difficult to get the credit union difference message out to potential members.
"I don't see any advantage to being a credit union (right now) because we have three well-respected community banks in the area that think like we do," Laufenberg notes. "Of course they are concerned about profits, but they are concerned about their friends and neighbors."
