Mass. CU Turns To CMG Program For New Capital
Winthrop FCU, a low- income credit union bumping up against NCUA's net capital standards, has become the first credit union to test pilot CUNA Mutual Group's new secondary capital product, called Capital Notes. The $33-million credit union, which has been searching for additional capital to expand into the nearby low income communities of Chelsea, Revere and East Boston, will use the $300,000 in secondary capital and another $300,000 from the National Federation of CDCUs to build its net worth ratio to 8.1% from the current 6.3%, close to NCUA's minimum 6% level. Because Winthrop FCU is a low-income designated credit union it may count the secondary capital as net worth under NCUA's minimum capital, or prompt corrective action, rules.
"Our goal is to expand in Revere and East Boston," Joseph Clark, president of the credit union, told The Credit Union Journal. More immediately, the credit union is looking at building a new branch in nearby Chelsea.
Under the terms of the deal, WFCU will begin repaying the 7% notes midway through their 10-year terms.