PCA could put the brakes on CU growth

Feb 23, 2001 - CU Magazine

Some credit unions might have to take steps to prevent normal, healthy growth so they can meet the new capital requirements mandated by Prompt Corrective Action (PCA).

" We'll have to curtail growth, which means either putting limits on new money or pricing our share certificates below market so people stop putting money in," says Bruce Cramer, president and CEO of O Bee CU, Tumwater, Wash. Cramer was interviewed for an article on alternative forms of capital that will be published in the March issue of CU Magazine.

" We have a fair amount of money flowing in and it's diluting our capital," Cramer says. "Unless you have double-digit capital, which we don't, you can run up against PCA limits without realizing it. Is it fair to penalize members with lower dividends when they're rewarding you with deposits that don't increase your risk?"

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