The Case for Supplemental Capital: A Credit Union Shares its Story

Better auto loans, community involvement, frustration with high bank fees and the activists’ movements—all reasons for credit union membership growth and reasons for celebration in the credit union movement.


Not so fast.

“The most pressing concern for us,” said Kevin Cole, chief financial officer for Maps Credit Union, “is we continue to add new members and deposits to the credit union, and it continues to strain our net worth ratio.”

The Salem, Ore.-based Maps serves 42,000 members and is currently able to offer highly desired services, including consumer loans, mortgage loans, deposit accounts, insurance, financial planning and business loans.

Consumers have found the $417 million state chartered financial institution so attractive that its average growth between 2001 and 2011 was 8.76 percent. Yet while new members were joining, the corporate credit union losses and share insurance assessments also took a toll.

Current law restricts the ability of credit unions, including Maps, to build capital, thereby limiting their ability to serve their members. As a result, Maps and other healthy credit unions may be forced to turn away deposits and to restrict lending to satisfy rigid regulatory capital requirements.

Maps is a leader in support of a bill that would provide relief to credit unions being hamstrung by the current law. H.R. 3993, entitled “Capital Access for Small Business and Jobs Act,” was was introduced Feb. 9, 2011, by Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.). Current co-sponsors include Oregon’s Earl Blumenauer. The Northwest Credit Union Association (NWCUA) supports the initiative and is part of the Coalition for Credit Union Access, an organization instrumental in building support and awareness of the need for supplemental capital.

“In 2010 and 2011, management has had to work aggressively to constrain asset growth,” Maps stated in a position statement it shared with Congressional leaders. “We have reduced deposit rates significantly and have shifted marketing resources to loan products. This has resulted in less value delivered to Maps members, and has perhaps discouraged potential members from joining, at a time when many people clearly see value in a Maps relationship.”

In February 2012, Maps added more new members and opened more new checking accounts than during any previous month in its 76 year history.

“Absent the ability to raise supplemental capital, we feel we may be faced with the prospect of turning new members away,” Cole said.

Supplemental capital will be one of the priorities next month when a delegation of Northwest credit union supporters travels to Washington, D.C.

“Garnering support from the Northwest delegation for H.R. 3993 will be one of the primary focuses of the June ‘Hike the Hill’ trip,” said Jennifer Wager, vice president of legislative advocacy for the NWCUA. “Credit unions need this common-sense regulatory relief to allow them to continue to provide a full array of services to their membership and stimulate their local economies.”


Questions? Contact a member of the Association’s Legislative Affairs team:

Jennifer Wagner, Vice President of Legislative Advocacy
Mark Minickiello, Vice President of Legislative Affairs
Stacy Augustine, Senior Vice President & General Counsel

Posted in Around the NW.