The ability to accept Secondary Capital is one of the benefits granted to Low-Income Designated Credit Unions to support their membership. Now, as you assist your members in navigating the pandemic’s effects on employment, our economy, and a looming recession, is an opportune time to explore Secondary Capital.
For many credit unions, net worth is comprised primarily of retained earnings. Low-income credit unions, however, also have access to secondary capital, which on day one increases net worth dollar for dollar.
Secondary capital is most often utilized in the following situations:
Pandemic Response - to restore net worth to historical levels following the recent influx of deposits.
Growth - to support rates of growth that exceed a credit union’s ability maintain an optimal level of net worth.
Acquisitions - to offset capital dilution that results from the acquisition of a bank or a combination with a less well-capitalized credit union.
Fortify - to cushion a credit union’s capital in anticipation of recessionary conditions.