Dennis Fisher, president/CEO of the $7 million First Security Credit Union in Lincolnwood, Ill., told CU Times that CUNA, the state leagues and regulators are ignoring the loss of small credit unions.
"If small credit unions go the way of the dinosaur, if this trend continues they will, without any help from the national organizations or the state leagues or a collaborative effort with the NCUA and the regulators and guess what? The credit union movement loses its effectiveness," Fisher said.
"I was shocked to learn that Illinois lost 200 credit unions in the last 10 years. We're in the top 5% and most of those are small credit unions. What's being done to stop the attrition of small credit unions? The credit union movement is foolish for giving risk-based capital this big attention and small credit unions are dying and they continue to let them die without making it a big deal and helping them out," he added.
Fisher said he understands why the NCUA's risk-based capital proposal needs to be addressed, but he views the loss of small credit unions as a larger problem.
Fisher argued that small credit unions are essential in the fight against taxation since there are more similarities between large credit unions and banks.
"They [the trades] give a lot of lip service for small credit unions being the backbone of the credit union movement, yet when you lose 25% of your backbone, what do you do about it? But when something like risk-based capital comes about that affects all the larger credit unions, my gosh, the world comes tumbling down, we need to devote every single thing we can to fighting this thing," he said.
According to Fisher, the NCUA has started encouraging small credit unions to merge with similar size credit unions, rather than larger ones.
"To their credit, they are finally beginning to see the logic of merging small credit unions with small credit unions so that's a plus for them," he said.
"If they are at the point where a credit union is about to merge, if they feel a credit union has to merge or a credit union has already decided to merge, they encourage it to go to a small credit union," Fisher added.
He said he would like to see the NCUA simplify the exam process and devote its resources to credit unions below the required 7% capital standard.
NCUA Public Affairs Specialist John Fairbanks told CU Times it is not NCUA policy to encourage mergers.
"Merger is a business decision made by the credit union. Our Office of Small Credit Union Initiatives encourages credit unions to develop successful business plans, and a credit union may decide that a merger with another credit union of a similar size is a good idea. If so, OSCUI may offer information, but it is not NCUA policy to encourage mergers per se," he said.
CUNA President/CEO Jim Nussle said CUNA is aware of the compliance and operational issues facing small credit unions.
"CUNA believes in the importance of smaller credit unions, and is keenly aware of the extra headwinds they face from compliance and operational challenges," Nussle told CU Times.
"That's why CUNA has a Small Credit Union Committee that reports to the CUNA Board, hosts a Small Credit Union list serve, holds Small Credit Union Roundtables twice a year at national meetings, and works with leagues to tailor services to smaller credit unions. In addition, our work on RBC ensured smaller credit unions wouldn't be affected by this additional regulation."
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