Secondary Capital Helps Drive CU's Growth

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ALBANY, N.Y.-Among the CDCUs that have performed well through the recession is Alternatives FCU here.

According to CEO Tristram Coffin new mortgage and business loans were three times higher in 2009 than 2007, and the $65-million CDCU's overall loan portfolio jumped 12.7% year over year. Even though the CU made no changes to its charge-off strategy, delinquencies declined significantly in 2009, to just less than 1% from 5%, while assets grew by 14.5%.

Its strong performance was rewarded by a capital investment from an outside source. "The investment from the CDFI Fund bolstered our capital ratio and allowed us to grow at the rate in which we are instead of worrying about capital," Coffin explained.

While Alternatives has managed to curtail credit risk through matching fund savings products, financial education and partnerships with non-profits, the CU is still facing tough challenges from regulators, legislators and the corporate fallout. "We're not immune from any of those trends; in fact, as a CDFI we work on a more narrow margin to begin with so we have to work harder and be more innovative to prosper in this environment," said Coffin.

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