Catalyst News

First Financial CU Turns to Secondary Capital to Provide Rural Communities with More Options

by Catalyst Corporate | Jul 02, 2021

Eight million dollars of secondary capital was the catalyst Ronald Moorehead needed to fund micro-branches – a tool his credit union will use to help an underserved region in rural New Mexico.

Moorehead, president of the $800 million-in-assets First Financial Credit Union, turned to Catalyst Strategic Solutions’ new Secondary Capital program to assist with the NCUA application process. His goal was to put the wheels in motion and obtain approval before new accounting rules would make the credit union’s plans more challenging.

“We hoped to avoid a lot of back and forth in refining the application with NCUA. We wanted the application to be right the first time, so we could get the program in place before CECL took effect,” Moorehead said. Current Expected Credit Loss (CECL) is FASB’s new accounting rule that is scheduled to take effect in January 2023.

Moorehead said the credit union, which has served New Mexico residents since 1937, needed additional capital to cushion upfront costs incurred as it launches the micro-branches. “It may take time for some to become profitable. Without the extra capital, we could potentially draw down our reserves,” he said.

The town of Grants, NM, with a population of about 12,000 and another 8,000 or so in the surrounding area, suffers from limited financial services. And some banks seem eager to “fee these people to death,” Moorehead said.

Beyond bringing additional financial service options to the area with micro-branches, Moorehead said the credit union plans to provide financial counseling to the community. “The credit union traditionally provides value-added services to our members, so financial counseling aligns well with our mission,” he said.

Moorehead was pleased with the assistance Catalyst’s Advisory Services brought to the application process. “Catalyst provided the right level of detail. They added components to the application that we didn’t consider, such as folding in studies of the underserved to fairly represent the situation and validate this as a solid solution.

“I just knew if I partnered with Catalyst, it would be successful,” Moorehead said.

For more information about Secondary Capital, visit www.catalyststrategic.org.