MONTICELLO, Miss. - Economic uncertainty has left Ferguson Federal Credit Union with an interesting dilemma. FFCU has plenty of money to lend, but no one interested in taking out a loan.
The $52-million credit union has a 30% loan-to-share ratio which is not only anemic compared to other institutions across the country, but also to its historical rate.
"We're not hurting, we're still making profits," noted CEO Elaine Hollingsworth. FFCU, which has more than 12% capital, reported net income of $135,000 during the first half of the year. "But I feel like we would like to lend that money out, and be a service to our members."
For months Hollingsworth has been socking away the credit union's excess cash into CDs that are easy to liquidate if the situation arises, but so far she has not had reason to. The few members that are interested in borrowing are not exactly credit worthy at this time, she added. Ferguson Federal does offer some risk-based pricing in its loans.
"Our primary service is to lend, we'd like to pass it on to our members, but we are refusing to get them overloaded so that they can't meet their debts," said Hollingsworth. "Everything is here in place and we're available to help them, but we will not overextend a member."
Ferguson FCU serves 3,700 members across two fields of membership, with many members tied to a single mill. Uncertainty about their future is keeping them from pulling the trigger on attractive 5.75% auto loans to purchase vehicles from dealerships desperate to move inventory. FFCUs does not currently have any joint promotions with local dealers; it does not do indirect lending.
"Our sponsors help us with advertisements and getting the word out to our members about what we will do and what we won't do," Hollingsworth said, adding that the credit union's members "are well-paid employees but they are sitting and waiting. Their contract is coming up for renewal (so) they aren't buying anything."
That leaves Ferguson essentially stuck as members hang onto their cash and sock it away. Hollingsworth said FFCU has not altered its fee structure as a means of generating more income. She expressed frustration that the credit union cannot do more to perk up the economy until moods change.
Despite the current climate, Hollingsworth is confident that her members have little to fear when it comes to potential layoffs at the wood mills and related industries that the credit union serves. When the greater economic landscape begins to take shape, she believes that lending will pick up again as consumer confidence improves.
"We're hoping that contract gets renewed, and we feel that it will; once the contract is completed, we get a new president in, things will start to change around," Hollingsworth said.
