Six Months Later And CUs In The Big Easy See Hope In The Big Mess

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It is almost six months after Hurricane Katrina bulldozed through the Gulf Coast, and recovery efforts have left a patchwork quilt of rays of hope dimmed by the death and destruction still looming in parts of this beleaguered city.

For most of New Orleans' credit unions, things are looking up. Only a handful of credit unions are still working out of borrowed space and all are operational one way or another.

A number of credit union officials have found they are in high demand as speakers or consultants on disaster planning, having paid an extremely high price to come by their expertise.

And while NCUA is looking for merger partners for several credit unions, there are still no outright failures to report.

But with only a small number of schools reopened and the uncertainty of when and how some neighborhoods can be rebuilt, credit unions are left to wonder if their members will ever return. "'Normal' has been redefined forever for us," said Anne Cochran, CEO of the Louisiana league. "There is only one CEO who is still operating from outside of the state. All credit unions are operational in one form or another, with just a few who are still sharing space with others."

But field of membership concerns still loom.

"People are not returning to New Orleans," she related. "There are certain areas, like Jefferson Parish, that are booming. But others have yet to begin returning, much less rebuilding. In some cases, you've got single-sponsor credit unions where the sponsor still hasn't returned. Then you have community charters where the community is still devastated."

Finding employees is just as hard. The league has already hosted one job fair, and CUs have expressed interest in having another.

One thing that isn't hard to come by: deposits. "Credit unions have taken in a lot of insurance deposits," Cochran reported. "Their assets have grown tremendously, and that's distorting their capital-to-assets ratios. One credit union has seen its assets grow by 48%. It's challenging for them."

That's why Cochran has made a concerted effort to meet with all three of the NCUA board members as well as David Marquis, NCUA's director of the Office of Examinations and Bob Fenner, the agency's general counsel. "They are very much aware that this deposit growth is all going to flow right out over time, so they are considering allowing credit unions to pay operational fees based on what the credit union believes (assets) will be when the insurance money flows back out."

Cochran has also met with a number of lawmakers to explain how some of these things, including Prompt Corrective Action, are affecting CUs that were hit by the storms. "We're talking with them about reg relief and how there is a difference between PCA for banks and PCA for credit unions."

The league has contracted with Dollar & Associates-the consulting firm of former NCUA Chairman (and former Mississippi credit union CEO) Dennis Dollar-to put together a net worth restoration plan template to help credit unions work through a variety of "what if" scenarios as they continue to deal with the post-Katrina reality.

Part of that reality is the fact that it has been nearly six months, and there are still areas that remain in the same condition as the day the levees were breached. "There are people who want to do something, they want to rebuild their homes, but they're waiting to see where the rest of the neighborhood is going, because what is the point of rebuilding your home if it's going to stand in the midst of these bull-dozed hulks," Cochran explained. "There's still this sense of 'what next?' in New Orleans."

It's a sense with which Cochran is intimately familiar. Just as she was more than five months ago, she is living with her son. Her husband is living in a trailer in the driveway of their home.

"This was the first time in 34 years that we weren't all together for the holidays," she related. "It's been hard. I had thought we'd be back in the house in March, now we're thinking April...maybe."

But Cochran, who will be one of several league CEOs to receive the Anchor Award at the GAC this week in recognition of their post-Katrina work, makes it clear where her energies will be going. "I told my husband the house is up to him," she said.

WHAT'S IN THE WORKS

Among the projects the Louisiana League has in the works:

Working with CUNA's Economics Department to do risk analyses on CU member loans located in affected zip code areas; working with the Illinois League Service Corp Collection Department to assist small CUs; working with a California CU to distribute 200 pairs of shoes to elementary school age children in St. Bernard's Parish, one of the hardest hit areas; working with a Baton Rouge CU to distribute new clothing to CU employees affected by the storms; working with National Credit Union Foundation to offer on-site grief counseling for CU staff; contacting affected CUs to evaluate and assess specific needs, after which it will offer custom tailored programs/services to assist with their survival.

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