Hartford Business Journal

24 HARTFORDBUSINESS.COM | NOVEMBER 7, 2022 Focus: Credit Unions Hartford Federal Credit Union President and CEO Ed Danek Jr. outside of his Hartford location. HBJ PHOTO | MICHAEL PUFFER Credit union CEOs say they're prepared for economic headwinds By Michael Puffer mpuffer@hartfordbusiness.com A nticipating difficult economic times, Hartford Federal Credit Union has tightened its lending standards for home equity lines of credit, lowering its loan-to-value ratio to 70% from 80% for moderate- to higher-risk borrowers. Just implemented about a month ago, the new approach has lowered the amount of credit available to about 30% to 40% of Hartford Federal Credit Union's borrowers, according to President and CEO Ed Danek Jr. "It doesn't feel like a recession, but sooner or later the energy prices, the food prices and core inflation, … it's all going to ripple through the economy," said Danek, whose credit union has $159.9 million in assets. "I'm afraid you couple that with the recent aggressive (U.S) Fed actions and it could be really difficult. Either way, we are prepared for it." However, this relatively small lending-standard adjustment is the only out-of-the-ordinary measure Hartford Federal has taken in response to the threat. Danek said his 17,000-member credit union's conservative lending practices have already prepared it for any economic turbulence that can be reasonably anticipated. In recent interviews, heads of three of the state's largest credit unions all predicted worsening economic conditions. Only Danek, however said his institution has taken preventative action. The CEOs of Connex Credit Union and Charter Oak Federal Credit Union said their institutions' robust safe- guards are up to the challenge, at least for now. "We have to be careful," said Brian A. Orenstein, president and CEO of the 85,000-member Charter Oak Federal Credit Union with $1.6 billion in assets. "As credit unions, we try to work with our members, so I really can't see us taking drastic measures that might hurt the membership based on what we might be forecasting. Now, if things do turn worse, we might have to take those measures, but we wouldn't do it based on economists' forecasts, we would really have to see some of our own data and some more … local, New England data where delinquencies are significantly higher before we would hurt the membership with some kind of credit reduction." The bottom lines of the state's 85 federally-insured credit unions have not yet shown signs of significant impacts from any potential downturn. Some CT credit unions shed branches, invest more in technology By Michael Puffer mpuffer@hartfordbusiness.com A big selling point for credit unions is their personal touch, the con- nection of a local not-for-profit institution whose mission is serving members rather than shareholders. Some credit unions are deciding this mission can be better served with modern technology and fewer brick-and-mortar locations. Charter Oak Federal Credit Union, an 85,000-member institution with $1.6 billion in assets serving New London and Windham counties, is allowing the lease of its Long Hill Road branch in Groton to expire at the close of the year. That will leave Charter Oak with 15 branches, including two others in Groton. Brian Orenstein, president and CEO of Charter Oak, said closure of the 6,000-square-foot branch will save the credit union around $250,000 in rent and taxes. Staff will be moved to other locations. Orenstein said walk-in branch use has decreased as members increas- ingly moved to online banking services during the pandemic. "So many of our transactions switched to electronic because of the pandemic and haven't come back, haven't switched back at all," Orenstein said. "So, having that knowledge, it really just made a lot of sense to let that lease expire." Charter Oak added a branch every year between 2012 and 2016. Oren- stein said his credit union decided to strategically focus on digital services in 2016. Today, Charter Oak's customers can make deposits, complete loan applications and handle just about any transaction online, Orenstein said. "I guess the only thing you can't do electronically is put something in your safe deposit box," he said. Other Connecticut credit unions are following in Charter Oak's path. The state's 85 federally-insured credit unions have collectively closed 10% of their branches since June 2018, according to National Credit Union Administration data, as they turn more of their attention and investment capital to digital capabilities. At the end of June 2022, they had 241 brick-and-mortar outposts, down from 267 in June 2018. In 2011, Connecticut credit unions had 292 branches, NCUA data shows. Headwinds continued on page 25 Technology continued on page 25

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