The Missouri Credit Union Association (MCUA) President/CEO Don Cohenour responded to an article published by the Kansas City Business Journal on June 6. Cohenour wrote a Letter to the Editor that provided needed context for the story, "Credit unions continue membership, loan growth; Missouri and Kansas lag." MCUA also reached out to the reporter and spoke first-hand about the unique structure of credit unions. Cohenour's letter is posted below.
As the president and chief executive officer of the Missouri Credit Union Association, it’s refreshing to see a local newspaper like the Kansas City Business Journal include credit union news in its publication. However, after reviewing the article “Credit unions continue membership, loan growth; Missouri and Kansas lag,” I felt it was necessary to clarify several points.
To say that Missouri’s credit unions “lag” in return on average assets is a bit of an oversimplification. Context is required to fully understand the National Credit Union Administration’s report.
Credit unions are financial cooperatives, and their primary focus is to return income to their member/owners. To “grade” a credit union on ROA alone is to forget that credit unions have a not-for-profit structure, unlike banks. This unique structure enables credit unions to provide the highest return on savings in the form of dividends and offer the best rates on loans possible. Both of these operating principles work to reduce ROA. Your article makes it sound like a weakness when in reality, it proves credit unions are exemplifying the very principle of a true cooperative – again, we’re not in the business of making money off of our members.
A great example of how this works in Kansas City was reported by your Journal when CommunityAmerica Credit Union (Kansas City), paid out a bonus dividend at year-end of $5 million, which invests money right back into the community. That bonus reduced CommunityAmerica’s ROA but enriched every one of its members’ accounts.
You also mention in your article that fixed-rate, first mortgage loans are down significantly in the first quarter compared to the same time last year. In a rising-rate environment, that is exactly what you would expect and what our regulator would require. Your article makes it sound negative, but it is another example of a financial institution following the precepts of safety and soundness.
Consumers are learning the benefits of credit union membership everyday, and our membership rates are better than in past years. The points above clearly indicate that our motives are pro-consumer and this fact is enjoyed by almost 100 million members nationwide. We will continue to uphold our philosophy of “not for profit, not for charity, but for service.”
On behalf of The Credit Unions of Missouri, I appreciate this opportunity to provide further elaboration on these figures and trust I have shed more light on the subject.
Missouri Credit Union Association President/CEO