MOSS POINT, Miss. -
"It depends. If we continue as normal, I think the future is perhaps dismal," Smith bluntly told the Credit Union Journal.
Smith said the entire credit union industry needs to loosen up a bit on its lending practices. With only a .19% delinquency rate, Smith said his own credit union could use the advice as well. When he examined his loan portfolio, Smith said 95% of the outstanding loans were either "A" or "B" paper. While some might ask "what's wrong with that," he pointed out that the members with lesser credit ratings are the ones who need their credit union most. Especially with the lingering effects of Hurricane Katrina: high building material costs and still no set flood plain from the Army Corps of Engineers.
"We've lost what our focus is. We've gotten away from helping people of modest means," Smith said.
Smith fears members of modest means will be drawn from the entire CU industry, not just in the Mississippi Gulf States. His concern is that many CUs are just "order takers" rather than being engaged as trusted financial advisers. To that end, Smith said Singing River is in the process of hiring an outside vendor to implement a sales culture at the CU.
Smith also cited the competition from payday lenders as an example of credit unions not fully reaching out to needy members. Members need small amounts of cash, today, with little or no frills.
"We can offer the same service for a heck of a lot less," he said. "We need to be just as fast."
Meanwhile, in the Windy City, Northside Community Federal Credit Union CEO Ed Jacob said his main concern about the future is regarding CU conversions.
"That's member equity. It's their equity. Not mine or any other CEOs. That's not my equity to give away or cash in. I worry about small credit unions," he said.
Jacob said he's also concerned about shrinking memberships and mentioned one long-time member who left Northside for Chase. When Jacob asked her why she was leaving, she cited Chase's network of 1,400 ATMs. While the big boys of finance can offer many products and services he can't at his 2,300 member CU, Jacob said credit unions can still offer things banks can't or won't, namely actually caring for the member.
"Personal service is the niche we offer," he said. "There are large and small credit unions who are not serving their members well."
Citing the advancing age of credit unions, and especially boards of directors, Jacob also said he wants to know where the next generation of credit union leaders is going to come from.
