Castlecomer Credit Union relaunches with new current account, debit card, and a suite of insurance products.
Despite its modest population of 9,000, the hard working and hard saving people of Castlecomer have built a hugely successful financial co-op.
Starting from scratch in 1967, Castlecomer Credit Union has grown into an asset with a value of just under €60 million – €58.2m to be exact.
“That’s a credit to the community involvement over the last 55 years,” said Gerry Reynolds, CEO for Castlecomer Credit Union. “Back in the 1960s and 1970s, people with a low income had virtually no opportunity to apply for a bank loan. When it came to buying the simple extras in life, like a new pair of shoes for their child to start the school year, there was nowhere to turn to for help. If you didn’t own a property or work in a higher income bracket, the banks wouldn’t lend you money. You had to already have money to be lent money. The people who really needed it couldn’t access it.”
And so a group of local people came together in 1967 to form the Castlecomer Credit Union which became a savings and loans business for the local community. “This is something that many people don’t realise,” said Gerry, “that the Credit Union belongs to those living in the Castlecomer common bond – they actually own a multi-million-euro asset business!”
This thriving Credit Union is in a strong financial position, with 19% in reserves. “We have just over €12m in lending and just under €46 million in deposits and we can lend an awful lot more,” said Gerry.
Despite this solid position, Castlecomer Credit Union understands it also needs to adapt in order to build for a sustainable future. “I joined Castlecomer Credit Union in 2014,” said Gerry, “and was tasked with putting a plan in place that would safeguard its future sustainability. During the 2014-2015 period a lot of Credit Unions were merging because they weren’t sustainable operations on their own. Castlecomer Credit Union decided it wanted to stay independent, if at all possible, and so we did everything we could to build it up to its current position.
“Back in 2014, the attrition rate would have been one year. The attrition rate now is between two and a half and three years, which means that makes us much more sustainable.
“The second thing we need to do to stay sustainable, is to generate enough income to pay the staff and overheads, because if we don’t the facility will collapse. That’s what our relaunch is all about; we’ve got permission from the Central Bank to offer our members a full MYCU Current Account via a debit card underwritten by MasterCard.
“So, for example, if you’re an Ulster Bank customer and you’re living in Castlecomer wondering what you’re going to do now that your old bank is closing, you can walk in to Castlecomer Credit Union and open a current account. The cards can be used all over the world and have been tested without any issues. They’re operated and managed by a company called CUSOP, which is an arm of the Irish League of Credit Unions. This means we can now offer a payment system that is better than some of the banks.
“We need to generate 1,000 accounts within the community to be self-sufficient on our current accounts. We’re just three months in and we’re already a tenth of the way there, so we will get there probably in 2024, all going well, making us even more sustainable within the community.
“We’ve also been aware for some time of the need for a local house and car insurance provider. A lot of people have contacted us down the years asking if we could do this as there is nobody in Castlecomer offering it. So to answer these requests, we’ve teamed up with the League and a company called Marsh that offers a suite of insurance products, Coveru, with exclusive rates available to union members.”
Insurance products are already available from banks, but Gerry argues that the Credit Union will provide a more personal approach. “You can apply for these products from our website, or, if you’re not comfortable using the internet, or you don’t have access to it, visit us in the office and we can get the process started. All you need is a phone number for the insurance agent to contact you on to go through the details.
“We’re not the seller, we’re just the conduit for the services to the members. Yes, it will generate an income for us, but it’s not as much about money as it is providing a service.”
So why does a not for profit organization need to make money? “We need to generate enough income to keep those reserves at 19% or 20%,” explained Gerry.
“The Central Bank doesn’t like it when your reserves go below 10%. But realistically if your reserves go below 13% they start asking questions. In recent years, Credit Unions have reduced the amount of deposits they’ll take from their members from 100,000 down to 20,000 and 30,000. The reason they’ve done that is to improve their reserve – if you have less deposits, your reserves are better. But Castlecomer hasn’t had to do that and we still have reserves at 19%. That’s because we put ourselves in a strong position.”
Building a future
The relaunch coincides with the completion of a major building project at its Kilkenny Street offices. “We needed to do this to ensure we had a building that was fit for purpose for the next 20 years, so we can still deliver our services here.”
So why the need to generate a revenue surplus from loans and current accounts? “If we want to pay dividends on people’s shares, which is effectively another name for interest, we have to generate enough profit to do it,’ explained Gerry. “Plus, if we have more profit than we need, we usually rebate it back on the loan interest to members.
“We haven’t been able to do this for the last few years, because Central Bank suggested Credit Unions shouldn’t take back money during the pandemic given that there was negative interest in the market and that that nobody knew what effects Brexit and Covid-19 would have to the economy – they wanted us to protect the members. But we’re assuming that we’ll be back paying dividends next year.”
An increased surplus also means a bigger cash pot to use to donate to local causes. Gerry said, “In addition to providing financial services Castlecomer Credit Union makes many contributions to the local community. Since our foundation in 1967 we have supported the local GAA Clubs, the schools, Society of St. Vincent De Paul and many other charities and local sporting bodies.
“It would be fair to say that the average donations over the past 55 years is probably around €10,000 per annum, which is in excess of €500,000. The Credit Union belongs to the community and when you support it you create the ability for it to support you.”
So why should you deal with your credit union? “The more people in the community that deal with us, the more money we generate, and the more money we can put into the community.
“When we hold our official relaunch day on December 10, we will no longer be just a savings and loan bank. We will be the friendly face of modern community banking offering savings, loans, current account and various insurance products and financial services.
“We want the community to come on this journey with us.”
For more information on the range of services provided by Castlecomer Credit Union, pop in for a chat at 86 Kilkenny Street / phone: 056 441 368 / email: firstname.lastname@example.org or visit: www.castlecomercu.ie