CEOs of Rhode Island credit unions expressed shock and dismay Thursday at the state’s first municipal bankruptcy in Central Falls, a community of 20,000, as efforts were under way to assure members of local support via media ads.
“There’s no doubt this is a wakeup call for communities elsewhere but we are in good shape, as we’ve worked hard with borrowers in advance, but we still want to assure members that we’ll get through this difficult time,” declared Stephen J. Angell, CEO of Dexter CU, the lone CU domiciled in Central Falls.
The $125 million Dexter CU, which has managed to be profitable and post a delinquency rate of only 1% despite the dismal local economy, expects to take out ads probably next week in the Providence Journal “simply telling citizens that we are aware of their anxiety and we expect to stand by them as their financial partner,” Angell said.
The struggling northern Rhode Island city, located in an area of 1.2 square miles and long at the epicenter of economic distress in the state, filed its bankruptcy petition on Monday. A Boston bankruptcy judge held the first hearing Wednesday, stressing the court is in “uncharted waters” as it sorts through $80 million in unfunded pension and benefits liabilities and a $5 million budget deficit.
“A major concern remains for the municipal retirees in the community and we’ve offered our help,” said Gary Furtado, president/CEO of the $1.2 billion Navigant CU of Smithfield, R.I., which has a branch in Central Falls and once was headquartered there.
The worry now, said Furtado, is the impact the bankruptcy will have on future business or individuals moving to the community amid dim economic prospects.
Angell, an attorney, said from his experience with at least two other Rhode Island communities which have faced similar municipal crises, the key is learning “how to manage the risk and have in place firmly written underwriting standards.”
Dexter CU, he said, has long lived with the city’s economic plight, so the bankruptcy filing while still a stunner comes as Central Falls has endured an unemployment rate “2.4 to 2.8% higher than the rest of the state,” currently at 10.8%.