NEWARK, N.J. -
What he's not sure of is whether his numbers show sufficient evidence that his is a strong credit union.
"We may be in the top percentile in terms of return on assets and net worth, but we're in the bottom percentile in terms of delinquent loans and net charge-offs," said Kaufman, who has run the $31.7 million credit union for the past seven years. "You'll have to decide whether or not we're a strong credit union."
The dichotomy among the financial indicators is deliberate and based on an aggressive loan strategy that takes into account the seasonal cash flow nature of its employees, many of whom teach in the Newark Public School System. Despite showing both assets and loans in decline over the past few years, net income is strong and getting stronger. The credit union's aggressive risk-based lending program is at least partly responsible for the institution's interesting financial profile, one Kaufman described as a deliberate board strategy to better serve members who tend not to see paychecks during the summer months.
"Don't think we're not concerned about delinquencies and charge-offs, but we want to take a more aggressive approach to lending," said Kaufman, who spent two year as a strategic management consultant with the New York State Credit Union League before joining the credit union. Before that he worked at Fairleigh Dickinson University FCU in Madison, N.J., which serves students and faculty of Kaufman's alma mater.
Indeed, this past June the credit union's delinquent loans totaled 3.26% of the total portfolio, compared a peer average of 1.17%. Net charge-offs equaled 2.48%, compared a peer average of .44% for the same period. The New Jersey Department of Banking and Insurance, which regulates the state-chartered credit union, is watchful of the trends at Newark Board of Education ECU, but apparently not yet concerned enough to step in, Kaufman said.
"We can get written up for it, but we're still serving our members," Kaufman said. "We're working on a lower delinquency rate, but we accept what we have."
Nevertheless, while Newark Board of Education Employees CU has actually shrunk in terms of assets over the past two years, net income has improved.
The credit union, which operates out of one 4,000-square-foot office and satellite service center open two days a week, supports seven full-time and three part-time employees. It does limited marketing to its members, relying largely on word of mouth and occasional statement stuffers. Although electronic services are limited to an ATM, audio response, payroll deduction and a Web site, Kaufman would like to see more electronic service delivery in the credit union's future.
"I'd like us move to online banking and own an ATM machine, but right now there's not a lot of demand for it," said Kaufman.
