How Are Assessments Affecting Your CU?

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LAS VEGAS-Credit Union Journal asked attendees at the recent 1 Credt Union Conference: How are the assessments affecting your credit union's operations?

Kathy Scholes, chief financial officer, USAgencies CU, Postland, Ore.
We are pretty much trying to operate our credit union as normal. It is hard because just about all of our earnings are going to these assessments. We were going to upgrade our website, but we postponed that project. We have had several deferrals of projects. On the other hand, we are keeping up benefits to our members and we have had no layoffs of our staff, so we are ready to move forward once things improve. We are a $70 million credit union with 7,500 members and we had increased loan demand in 2009.

The biggest problem is the assessments make it difficult to plan. We were told 15 to 40 basis points, which is a big spread. We are anticipating the high end.

Steve Dahlstrom, president and CEO, Spokane Teachers CU, Spokane, Wash.
We budgeted for the assessments, so we are ready. It is money out of our system, and we don't know how much more we will have to pay, but overall it is an annoyance but it is not going to kill us.

The bad part is: eventually, it is the members who will have to pay.

Jim Updike, president and CEO, Honda FCU, Torrance, Calif.
We accrued 40 basis points for the assessments by the end of our fiscal year, which was June 30. Even with the assessments, at the end of June our ROA was 70 basis points. We are not the typical California credit union-for most credit unions in California the assessment is a real problem.

We are lucky that our sponsor credit union is Honda. We have not faced unemployment, the majority of our loan portfolio is in Ohio, with some in Alabama and South Carolina. The housing markets in those three states have not declined, and our California members have not lost their jobs.

Charles Papenfus, president and CEO, Inland Valley FCU, Fontana, Calif.
At the beginning of the year we planned for the worst. Because the first assessment came in at 13.4 instead of 15, that helped us a little. The money came out of our new project budget, so perhaps we will be able to dedicate more back to that, depending on how big the second assessment is. We budgeted 40 basis points overall: 15 and 25. So if the next one comes in at less than 25 that will mean more money for new projects or improving our infrastructure.

Our vendors have been great: many of them made concessions or gave us a break in exchange for renewing our contract. You have to be creative and save money where you can.

We look at everything from a long-term perspective. There has been a lot of "woe is me" over these assessments, but as a credit union this is just a cost of doing business and we have not had an assessment for years. This is this year's challenge. Next year it might be interchange, but we'll deal with that then.

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