Kerr County Federal Credit Union Uses Secondary Capital to Grow

Kerr County FCUKerr County Federal Credit Union is as remarkable as the growth they’ve experienced in the past 14 years.  Started in 1936 in the basement of a VA Hospital to serve veterans, their families and the hospital’s employees, Kerr County has expanded to serve all the residents of Kerr and Kimble Counties in south central Texas.  Sandy Lumbley joined the credit union as their accountant in 1999.  “We had assets of $8 million, didn’t loan much and were threatened with being closed down,” says Sandy of those days.  “The membership was growing, but we needed capital.”  Sandy became Kerr County FCU’s President and CEO in 2002.   Sandy needed outside capital to grow and heard about the Federation’s Secondary Capital loans.  These long-term loans count as net worth for regulatory purposes and can be leveraged by growing credit unions to expand lending in their local communities.  Today, Kerr County’s assets are over $48 million and membership has grown to 8,200, up from 5,500 at the time of their first Secondary Capital loan in 2007.

“Kerrville is 60 miles from San Antonio.  Our banks service the well-to-do of Kerr County, but largely ignore those of more modest means.  We do $2 million each month in used car loans.  Some of our members have what I like to call ‘colorful’ credit reports,” says Sandy.  “We start members out with a first car loan of $5,000.  If the loan is repaid on time each month for a year, members can step up to another car.  We want our members to feel they’ve done something right.  This step-up process works extremely well and word-of-mouth about the credit union is just tremendous.”  Sandy credits the success of Kerr County Credit Union with getting out into the community.  “There are five small car dealerships in Kerr County and we went to visit every one of them.  Now we have 100% of their car loans!”

Sandy lives in Kimble County, 65 miles from Kerrville where she and her husband own Lum’s BBQ restaurant.  Kimble County residents would bring Sandy envelopes of cash to deposit at the credit union in Kerrville.  Sandy and the Kerr County Board decided it was time to open another branch.  “About half of Kimble County’s residents are Hispanic.  Our relationship with the car dealerships makes it possible to get non-English speaking credit union members who may not have a credit history because they always use cash, get the car they need at a price they can afford.”

Sandy says she tells everyone she can about the Federation.  “It got me through some rough times and it’s a great, great program.  If we wouldn’t have gotten secondary capital loans I don’t know what would have happened, because our balance sheet would have continued to be down.  We would have been writing a restoration plan because our hands would have been tied.  We wouldn’t have been able to grow past where we needed to be to make the money to bring in our own capital.  Our examiner hadn’t even heard of secondary capital, but in the past year or 18 months the attitude has taken a 180 because they are completely for it now.”

To learn more about Kerr County Federal Credit Union contact Sandy at

The Federation makes secondary capital loans of up to $500,000 with maturities of 5-7 years. Interest rates range between 5% and 6%. To learn more about the Federation’s Secondary Capital loans click here.

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