It’s been a year since Hurricane Maria battered Puerto Rico, and the credit unions based on the territory remain determined to rebuild and thrive.
For months, thousands of Puerto Ricans were left in the dark after the storm destroyed the territory’s electrical grid. Studies estimate that thousands died from the September 2017 storm, which caused $139 billion in damage.
Now the island’s cooperativas de Ahorro y Crédito will have to contend with a declining population and helping members who may be ineligible for federal assistance.
But there is still much hope. Some Puerto Rican credit unions have seen an uptick in lending and membership since the storm. And four cooperativas were awarded funds from the Community Development Financial Institution to help with the recovery. This was the first time that a cooperativa has been awarded money from the fund.
“With the extent of the destruction, there’s no way [for the cooperativas] to do it on their own,” said Pablo DeFilippi, senior vice president of membership and network engagement at the National Federation of Community Development Credit Unions. “We have to inject capital there [on the island], and credit unions are the perfect mechanism to do this.”
Experts believe there may be long-term effects from Maria that could damage the local economy. For one, the storm seems to have exacerbated the territory’s population decline. Puerto Rico's population totaled 3.3 million in July 2014, down 10.4% from April 2010, according to the most recent statistics from the Census Bureau.
Up to 213,000 Puerto Ricans may leave the island annually from 2017 to 2019, causing the territory to lose up to 14 percent of its population, according to an October 2017 study from the Center for Puerto Rican Studies.
The federal government has provided $18.5 billion in relief to Puerto Rico to help rebuild the territory’s battered housing and infrastructure, but most of the families affected by the hurricane are ineligible to access the aid due to issues with permits and missing documentation on ownership.
More than 330,000 Puerto Ricans had applications requesting assistance for repairs denied, according to the Miami Herald. One resident was denied aid twice by the Federal Emergency Management Agency to fix his home because he didn’t have papers showing he owned the property, according to the Miami Herald.
Puerto Rico is also struggling with a debt crisis that traces back to 1973. The territory’s bonds were downgraded in 2014 after the government was unable to pay its debt. Most recently, creditors approved a plan to restructure bonds issued by Puerto Rico's insolvent Government Development Bank.
The cooperativas are heavily invested in bonds issued by the Puerto Rican government. Puerto Rican bonds compose approximately 56 percent of the cooperativas’ total investment portfolio, according to a report from the Public Corporation for the Supervision and Insurance of Cooperativas in Puerto Rico Act.
Despite these challenges, cooperativas are remaining hopeful and are looking for ways to expand their membership base. Gura Coop in San Jose is planning to renew an agreement with the municipal government to increase access to potential investors and new customers.
BoniCoop in Aibonito is looking to improve its core market on consumer loans while Jesús Obrero Cooperativa in Caguas is looking to focus on younger generations by looking into innovative products.
Some cooperativas saw an uptick in membership and a greater demand for credit after the storm. Since November 2017, BoniCoop has added 700 new members.
Jesús Obrero experienced an increase in its loan portfolio compared to the prior year as members needed credit to buy generators, photovoltaics systems, used cars and make home repairs, said CEO Aurelio Arroyo.
“All those needs are directly related with the impact of the hurricane one year ago,” Arroyo said.
Lending is up 6 percent at Gura Coop since Maria struck, said President and CEO Diogenes Gonzalez. But delinquent accounts have also surged from 3.8 percent to more than 5.8 percent.
“Despite all the financial challenges faced because of the devastation caused by the hurricanes, the loss associated to repossession of houses and cars financed through our credit union is lower than expected,” Gonzalez said.
Four cooperativas – BoniCoop, Gura Coop, Jesús Obrero and Jayuya Cooperativa in Jayuya – overcame challenges to win a total of roughly $500,000 in grants from the CDFI.
In total, 302 organizations were awarded $202.2 million. Credit unions accounted for 16 percent of the recipients.
The grant process is already seen as rigorous. The institutions had less than two months to complete the application process, which can’t be rushed, DeFilippi said. Each step of the process must be completed before applicants can move onto the next one.
“This is huge for them because you have to remember that Puerto Rico is part of this country, yet [...] there’s this sense that Puerto Ricans feel isolated, ignored and almost forgotten,” DeFilippi said.
Fifty-two cooperativas traveled from the island to an event in February to learn more about opportunities with the CFDI then 10 initiated the application process by registering with the awards management system, DeFilippi said.
Jesús Obrero will use its $124,000 to implement a program that assists residents in reaching their financial goals and will help with recovery efforts by expanding its services.
Luis Rodriguez, who leads Jayuya, also noticed a spike in membership following Maria. The $62 million-asset cooperativa, which was awarded roughly $108,000, serves 7,100 members and is looking to “obtain a more robust financial platform focused on modernization, Rodriguez said.
Gura Coop’s will use its $125,000 grant to improve the fiscal health of its clients and overall institution.
The $103 million-asset BoniCoop will use its $125,000 to upgrade its core system, said Carlos Ortiz Díaz, executive president. The money should cover more than half of the cost of the new platform.
“This is the best news that we ever had, that bring us the opportunity [to] make the necessary changes in our core system to give to our members more electronic services and a modern technological platform that is going to put our service [to] a new level,” Díaz said. “That’s our objective and our commitment with our members."
