LAS VEGAS — The CUs of Puerto Rico count half of the island's population as members, yet have only a tiny share of wallet, which is why the current economy may just be the biggest opportunity to come their way in a long time.
"We have 130 state-charted credit unions and 14 or 15 federal credit unions, and together we have 1.4 million members," explained Thomas Johnson, president and CEO of Business Consortium Alliance, a wholly owned subsidiary of Caribe FCU in Puerto Rico. "We have less than a 3% share of the financial market. The current economic situation is a huge opportunity for credit unions to do more for their members."
Caribe FCU founded Business Consortium Alliance just two years ago. Johnson said the economy has not affected the contributions the CU makes to its CUSO. As shared branching is introduced to the country, he expects credit unions to make inroads.
Emilio Colon, chairman of the board for both Caribe FCU and Business Consortium Alliance, said BCA is Puerto Rico's first CUSO solely on the island - several CUSOs based elsewhere do business there. BCA actually is two CUSOs, he said, having originally been set up to offer business lending, and it recently spun off an insurance business that still is developing.
"We are starting to discuss a mixed venture within the next year, so we hope the CUSO will pay its way," Colon said. "President Obama was supposed to talk today [May 4] about the business portion of the recovery plan, and we hope to be part of small business lending."
Johnson and Colon were in Las Vegas for NACUSO's annual meeting here.
Puerto Rico was not hit as bad by the recession as many parts of the U.S., Colon said, but it does have "local problems." He said the CU's top priority is to decrease delinquencies among its members, but it is in good financial condition overall.
"We want to position ourselves to capture increased growth. Credit unions have much more credibility than banks in Puerto Rico," Colon asserted. "The credit union is not cutting back contributions to the CUSO because we want to be able to run when economic conditions improve - when everyone else will be wondering what to do."
Johnson said Caribe FCU has been self-funded for 60 years, and he therefore finds it very unfair the credit union is being asked to pay into a corporate stabilization plan.
"The credit union is well-capitalized, but it is facing bailout of an industry on equal footing with other credit unions that used the corporate system for income growth. [Caribe FCU] did not get income growth from corporates, but we have to pay," Johnson said.
