Sounding a lament typical
of many small credit unions, the $51 million Perfect Circle CU of Hagerstown, Ind. announced this week it is taking consolidation steps in preparation for more tough times in the industry.
Though its 10% capital remains steady, the east central Indiana CU has closed one of its four branches and now is girding for financial hits from Regulation E on overdrafts, the sharp income cuts from Federal Reserve interchange rules and tighter spreads.
"There is nothing urgent about our situation and there's really no story here but I read your paper and the others and I can see what's coming," declared Perfect Circle's CEO Lisa Dykhoff.
Dykhoff's comments follow an interview with a local reporter explaining the CU's decision to close its east Richmond branch in a cost-cutting move reflecting lower business volume at a facility which once served employees of Dana Corp., the auto parts supplier which two years ago exited from bankruptcy.
"Some time ago Dana closed plants and so we determined it is simply more strategic to move operations to another branch located in a busy shopping area," explained Dykhoff noting also no employees lost jobs.
Meanwhile, the cost pressures on CUs like hers remain intense and even though it is privately insured through American Share Insurance Inc, "and we don't have those assessments," the Indiana CU remains subject to income reduction.
"I've seen those reports about the huge blow from Fed interchange--amounting to 60-80% of revenue," said Dykhoff forecasting the income pressures would continue for some time. "We may have escaped the worst but in this rate environment it is still tough going," concluded Dykhoff.