By Joe Brancucci, CU Results EVP, CU Strategic Planning
I’ve been somehow, someway responsible for billions of dollars in lending in the credit union market over more than five decades. While most of my time was spent in larger credit unions, the smaller community and SEG credit unions are near to my heart.
As we say at CU Strategic Planning, just about every credit union could qualify as a Community Development Financial Institution (CDFI). The truth is all we have to do is the work we were created to do: have an impact on the financial health of those who are underserved or not served at all. And that work? That’s what will help credit unions maintain their tax exemption.
For example, the $42.7 million Fort Randall Federal Credit Union is headquartered in Wagner, SD. Fort Randall is the size credit union many believe will be up for merger in the next few years.
But that’s not Ft. Randall.
The town of Wagner has fewer than 500 households, and 31.5% of the residents are American Indian & Alaska Native (non-Hispanic). The credit union has expanded its field of membership (FOM) a few times over the years and now serves six counties across South Dakota.
Who would serve these people if the credit union went away?
Community Development Financial Institution Efforts
The credit union earned its Community Development Financial Institutions Fund (CDFI Fund) certification in early 2022. After that, they continued working with CU Strategic Planning to help guide them to a successful $3.7 million Equitable Recovery Program (ERP) grant in the aftermath of COVID-19. ERP grants had very strict requirements to ensure the money went to the most economically disadvantaged areas that were hardest hit by the pandemic. That’s certainly not something a $42.7 million credit union can easily implement on their own, but by partnering, any credit union can truly make a difference!
In 2024, the Fort Randall earned the maximum technical assistance award from the CDFI Fund, $300,000. This award funded the hiring and training of a Native American financial specialist who is well-versed in the Native American financial structure. The credit union’s six-county service area has a far higher concentration of Native Americans than the US average.
Fort Randall has continued over the last couple of years to work toward its three overarching strategic objectives:
- Impactful and health growth in our community
- Be the premier CDFI
- Strengthen equitable lending to empower our underserved communities.
I’ve been working with the team to help them achieve their objectives through multiple tactical moves. We collaborated on a comprehensive 5-year roadmap with Ft. Randall. Is it perfect? No. Is it intended to be thought-provoking? Yes. And they’re taking it very seriously.
Some of the items included in the roadmap are as simple as revising job descriptions, or they can be as complex as hiring and training a Native American financial specialist.
Fort Randall FCU’s Results
Leveraging the CDFI Fund ERP grant to increase capital, lending at the credit union has soared, pushing other financial performance measurements up, too.
As a result, Fort Randall lent $2.5 million in its target market area alone. The credit union made $13.5 million in loans in the first three quarters of 2024 compared to $10 million the entire year prior. Ft. Randall’s delinquencies and charge-offs ticked up a bit, 42 bp to 66 bp, however, their net income in December 2023 versus December 2024, increased from 68 basis points to 243 basis points.
| Fort Randall FCU | Size Peers | CDFI Peers | |
| Net Worth Ratio | 10.58% | 13.51% | 14.36% |
| ROA | 2.43% | 0.72% | 0.89% |
| Yield on Avg. Loans | 7.16% | 6.06% | 6.81% |
| Loan to Share | 68.14% | 60.24% | 76.87% |
| Share Growth | 8.38% | -0.21% | 0.09% |
| Loan Growth | 14.68% | 0.86% | 1.55% |
| Asset Growth | 7.63% | 0.36% | 0.37% |
| Member Growth | 3.30% | -1.56% | 0.52% |
Source: Callahan & Associates as of Q4 2024
The CDFI credit union also recorded more than 9% membership growth in the last two years since winning the ERP funds, compared to a previous 5-year high of 3.5% in 2020.
Net income as of Q4 2024 was $1.0 million compared to $258,558 at year-end 2023. Small as it is, Fort Randall also offers business loans and mortgages.
Smaller credit unions are not something to just sweep up into ever-growing larger ones. Fort Randall is all in and so are plenty of others. Who else could serve the community the way Fort Randall can?
Credit unions of any size that understand and serve their communities will always remain relevant and impactful to their members and community. Supporting smaller credit unions and sharing stories like Ft. Randall’s and many other solid yet smaller credit unions is the only way for credit unions to maintain their tax exemption.
To learn more about what CDFI certification can do for your credit union and its members, contact CU Strategic Planning!