'Do-Or-Die' Situation In Wichita As CDCU Races To Raise New Capital
Kansas stands to lose its only community development credit union if Communities United CU here doesn't raise $50,000 in the next 30 days.
"We've got a do-or-die situation here," CUCU Vice Chair Milford Adams told The Credit Union Journal. "This area has really been hurt by the hit the aircraft and call center industries have taken, and that, in turn, has had a major effect on us, as well."
NCUA and state regulators have given the credit union until June 30 to come up with $50,000-and it can't be in the form of non-member deposits. The credit union reported a 5% capital ratio at the end of the first quarter, down from 6.55% one year earlier.
"Non-member deposits are not going to fix this. In fact, new member deposits aren't going to fix this. We need to have donations so we can be well capitalized," Adams explained. "When we were chartered nine years ago, we were undercapitalized even from Day 1. As a community development credit union, at least 50% of our members must be low-income. We need this money so we can continue our mission."
Although the regulators are calling for an influx of $50,000, the credit union hopes to raise as much as $150,000. "We don't want to just have a quick fix, we want to be in a strong position to continue our work," Adams offered. "We want to ensure our continued growth. We do important work here. We were the first credit union in Kansas and the only one in Wichita to offer [individual development accounts]. IDAs have been extremely popular, and they are an important tool for helping to transform our members from using payday lenders to using mainstream financial services to build wealth. If we're not here, who's going to do it?"
Communities United has had meetings with local church, business and community leaders to get the entire community involved in helping the CU with its "Yes We Can Pledge Campaign" to raise the necessary funds.
As a result, word has gotten out to the local press, which has taken up the $1.9-million CU's cause.
Wichita Eagle Columnist Mark McCormick called on support for the credit union, writing, 'This isn't an institution that the community can afford to lose. It can't be replaced."
A "Credit Union Sunday" was also planned at the area churches to help raise money, as well, Adams noted.
"We are looking for corporate sponsors, faith-based sponsors and individual donations," he said. "You know, in addition to pioneering IDAs here in Kansas, we are also serving as the pilot program for a disability program, and we've won awards for our work. It seems we get a lot of honors, but not a lot of dollars."
But Adams also wanted to stress that while hard times have forced the credit union to dip into its reserves, it's not as if the membership has abandoned the credit union. "A good 94% of our members are doing excellent," he said. "It's the 6% who had troubles that have depleted our reserves."
If Communities United cannot raise the money in the time allotted, it will either be merged with another credit union or liquidated, and Adams said the CU does not want to have to merge. "We want to keep on going," he said. "No, we need to keep on going. We have a job to do."