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ALEXANDRIA, Va.-Since coming to the NCUA Board early this year, Deborah Matz has been outspoken on many topics that are not always popular with the credit union community. One such issue has been her staunch support to try to preserve the small credit unions, which at one time raised the hairs on the back of large credit union CEOs’ necks when she referred to small credit unions as the `backbone’ of the movement. Matz clarified with the Credit Union Times that it is not necessarily the size of the credit union that is important, but that smaller credit unions seem to more closely portray the historic mission of credit unions. “Small credit unions seem uniquely to serve people who don’t have access to other financial institutions,” Matz explained. Oftentimes, she said, “It’s the only game in town.” She gave the example of $8 million Union Settlement Federal Credit Union in New York, admitting that they are not open all the convenient, typical banking hours, but there is no alternative in the area so long lines form outside the credit union. However, she added, “I think that [large credit unions], serving their entire fields of membership, are starting to go in that direction.” During the interview, she noted the two most recent field of membership expansions addressed by the NCUA Board, the $238 million SSA Baltimore Federal Credit Union and the $237 million Lafayette Federal Credit Union, which took in large underserved areas of Baltimore and Washington, D.C., respectively. Matz said that the landscape is changing and larger credit unions are realizing that it is another market and “it’s good business.” She explained how $395 million Charter Oak Federal Credit Union in Connecticut taught financial literacy in a high school, the students of which wanted to teach the elementary school students and then another school wanted to pick up the program. The demonstration of the credit union philosophy and outreach-based marketing made Matz optimistic that the credit union philosophy can carry on even with the declining number of smaller institutions. “That’s what credit unions are all about,” she said. Still the rapid decline in the number of small credit unions has been disconcerting for Matz, who receives an update whenever a small credit union is merged or liquidated. “That caught me be surprise. It’s important to let others know,” she said. The board member has said that she receives a handful of reports of small credit unions that have closed their doors every week. While Matz can go out on the speaking circuit raising awareness of the issue and talk until she is blue in the face, she said small credit unions need to help themselves. She advocated small credit unions joining Credit Union Service Organizations, working with corporate credit unions and larger credit unions, as well as partnering with community-based organizations and the state credit union leagues. She provided the example of small New York credit unions that have formed a group called NYCNAC, the New York City Financial Network Action Consortium. Since 1999, this group of community development credit unions, has worked to close the economic gap for low-income consumers and have opened the city’s capital access program to credit unions for microenterprise loans. “It is incumbent upon small credit unions to maintain service [and] improve service to their members,” she said. Matz also suggested large and small credit unions work on marketing together. “There are a lot of instances of really trusting relationships,” she said, even though the large credit unions sometimes overpower the smaller ones. However, she said, this sends a message to the smaller credit union that they are not doing enough to serve their members. In other instances, the large credit unions appreciate the uniqueness of the smaller ones. But oversaturation of the markets Matz is focusing on is not the problem. “It would be a nice problem to have those people have to choose between credit unions,” she said, repeating that the typical scenario is that there are no alternatives in many underserved areas. Matz is resigned to the fact that the definition of a small credit union will change over time, but still feels the credit union community should work to stem the tide. She pointed out that there are some credit unions so small, they are operated out of the manager’s home. In 10 years, she predicted, that type of credit unions will suffer extinction and a small credit union will refer to any under $50 million in assets. “We can’t turn the tide. They’re going to continue to disappear, but maybe we can ebb the flow,” Matz commented. She reiterated that small credit unions have to do a lot of the creative thinking for themselves and that it really is not NCUA’s place to help out, except from a safety and soundness standpoint. NCUA does provide help through its Small Credit Union Program, of which Matz said, “The workshops are fabulous,” and through Economic Development Specialists. Technology is a major hurdle for most small credit unions; though the start-up costs are prohibitive, it is a vital avenue for small credit unions to serve their members and potentially gain new ones. She gave an example of a large New York credit union that provided its smaller brethren with a computer loan and training. “There are always challenges, but I think credit unions are run by very sophisticated, savvy people dedicated to serving their members,” Matz concluded. [email protected]

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