PHOENIX-The economic downturn hit the Grand Canyon State hard, but credit unions here are crediting a simplified message to members and the media as the reason membership numbers continue to climb.
Scott Earl, president and CEO of the Arizona CU League, told Credit Union Journal the issues his state is facing are similar to the plight of adjoining "Sand States" Nevada and California.
"We have a construction-based economy — Phoenix was adding 120,000 new residents a year for several years in a row. Property values were skyrocketing," he recalled. "But today we have seen a substantial drop, even 50% in some areas from the peak. That affects consumer activity."
A Similar Message: CUs Not Part Of The Problem
Credit unions in Arizona are telling the media "we didn't cause the problem, we didn't participate in subprime lending, but we are feeling the effects of what has happened to the economy," Earl continued
Nevertheless, nearly 95% of Arizona-based CUs reported negative earnings during Q1 2009 (compared to 75% of Arizona-based banks reporting losses for that period).
Even in the midst of these problems, however, membership in Arizona credit unions is on the rise: up to nearly 1.6 million members in the state. The league attributed this growth to consumers seeking low-risk places to put their money.
Still, being in one of the so-called "sand states," means credit unions here have taken an economic beating. More than one-third of Arizona's CUs lost as least $1 million during Q1. Arizona FCU, headquartered here, reported $48 million in losses during the period, after a $116 million loss in 2008.
The $3.2-billion Desert Schools FCU reported a $12.8 million loss for the quarter. The state's largest credit union said it still grew in spite of the recession — with a 4% increase in membership, an 8% increase in deposits and 10% growth in loans.
Giving Them Something To Talk About
Joy Audet, political communications coordinator for the ACUL, said she is in regular communication with credit unions to talk with them about the economy — and how to talk about the economy with lawmakers. "I give them talking points to discuss with their members so they have communications tools. Each credit union is in a different situation," she added.
Earl said the league is trying its best to make sure its member credit unions are given the tools to explain the situation to in the best way possible to make sure their members understand. This is especially important in an environment where most of the general public has no concept of what a corporate credit union is, much less what it does.
"One of the things we help credit unions with is avoiding the minutiae of what happened with corporate credit unions," he explained. "We tell them the message is: 'Even though we had to put money into a stabilization fund, we are still well-capitalized and are ready to serve you.'
"Our members are solid, other than one exception. Arizona Federal was hit much harder in their capital, but I have confidence they will see their way through it," Earl asserted. "That is what capital is there for — to assist members during tough times. The other thing is the steps our credit unions have been taking to help their members since this recession hit, such as workout loans."
Pat Bodnar, ACUL senior vice president, said the state's CUs "are working with their members, doing workout loans, as I'm sure credit unions all over the country are doing. As long as members still have a job, the credit unions are doing everything they can to help their members."
