Small businesses and residents of South Providence lost an ally last month.
Oasis Community Development Federal Credit Union closed after the National Credit Union Administration (NCUA) announced on March 20 that the agency placed Oasis into liquidation.
The five-year-old credit union faced loan losses and saw earnings drop dramatically during the recession.
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Whether it’s the small businessperson looking for a loan to cover the cost of restocking shelves or a resident in need of a $200 personal loan, the loss of Oasis will leave a void.
“The community needs something like we provided,” said Julius Kolawole, president of Oasis. “Banks are about making a profit. Credit unions are about community, commitment and ownership.”
Kolawole said Oasis gave many residents an alternative to pawn shops, costly check-cashing businesses and expensive rent-to-own appliance and furniture businesses.
The credit union had 524 members and $919,341 in assets. It was created by Oasis International, a nonprofit formed by Nigerian-born residents to promote cultural awareness and facilitate community empowerment.
Layne L. Bumgardner, regional director of the NCUA, said the liquidation was in response to operational problems including insolvency resulting from excessive loan losses and high operating expenses.
NCUA’s Asset Management and Assistance Center (AMAC) will issue checks to each member of the credit union and notices to creditors of record in about a week.
Oasis had $56,000 worth of bad loans, most of which were personal loans.
Kolawole said another problem was a dramatic drop in return the credit union made from deposits. He said prior to the recession Oasis was getting approximately six percent return on money it did not lend. The percentage dropped to 1.75 percent.
“On top of that most people in our community were impacted by the economy,” said Kolawole.
Even though the credit union failed, Kolawole said he believes Oasis accomplished much in South Providence. He said Oasis increased awareness of the area’s needs and empowered people to take control of their economic situation.
Robert B. Kimmett, senior vice president of the Rhode Island Credit Union League, was unsure about the future of a credit union being successful in that neighborhood.
“Obviously, everybody in the credit union community and the financial services industry would like to see this community get the services they need. But, this particular business model is very difficult to run,” said Kimmett.
He said there is not a strong lending business in South Providence, which is vital to even a nonprofit group.
