Global Credit Union, formerly Alaska USA, lays off 78 Alaska employees

Alaska’s largest credit union laid off 185 employees this week at its operations in five states, including 78 in Alaska, an official with the company said.

Global Credit Union, formerly Alaska USA Federal Credit Union, is responding to a downturn in lending activity after the rapid rise in interest rates that have slowed borrowing nationally, said Tim Woolston, a spokesman.

“These are hard conversations to have, but it’s a necessary step to right-size the operations based on the volumes of activity in certain areas of lending,” he said.

“Anybody in our business nationally is having to look at the same sort of thing because we’re in such a different place in terms of lending,” he said.

After a pandemic-related rise in borrowing that caused a staff buildup, the company has now experienced a drop in lending activity for mortgages, real estate and consumer loans, such as for automobiles, in response to the higher interest rates, he said.

Global Credit Union had granted about 16,000 loans this year through the end of March, it reported to federal regulators. That’s down from 27,000 last year.

Most of the cuts at the credit union have come in its lending operations, from an overall workforce of 2,240 people spread across Alaska, Arizona, California, Idaho and Washington, he said. Smaller staff reductions will occur in the project management and technology departments.

[‘Richcession’? ‘Rolling recession’? Or no recession at all?]

Proportionally fewer cuts are happening in Alaska than in the Lower 48, he said. Half the company’s workforce is located in Alaska, and those operations are seeing about a 7% reduction in staff.

The layoffs were effective this week but the employees are still on the payroll under a 30-day severance package, he said.

The credit union will work to find many of them new jobs within the company, Woolston said. They will get preferential treatment for more than 100 open positions, many of them at call centers, that are no longer being publicly advertised so they can be filled internally, he said. He said many of the open positions are in Alaska, and the credit union’s layoff numbers are expected to shrink significantly, he said.

“That’s what organizations have to do,” he said. “You have to shift people around to meet the demands as the demands of the business change.”

Services to customers will continue the same as before, including the operation of staffed call centers in Alaska and Arizona that are open all week, around the clock, he said.

The federal government has pushed interest rates sharply higher over the last year to tamp down inflation. The Federal Reserve recently took a pause on raising rates, but signaled more increases are likely.

The higher rates, though they remain historically low, have pushed up borrowing costs, forcing some people to put off big purchases.

The higher rates this year contributed to the collapse of major banks, such as California-based Silicon Valley Bank. The higher rates devalued long-term bonds held by that bank and others, hurting their ability to raise cash when investors pulled deposits.

Alaska regulators have said banks and credit unions operating in Alaska, including Global Credit, are typically much smaller than the banks that failed. They operate differently and are on solid ground, they said.

[Rental prices are finally starting to drop from pandemic highs]

The troubles that rocked the much-larger banks are not a problem at Global Credit, and are not a contributor to the layoffs, Woolston said.

“Absolutely not,” he said. “In terms of the balance sheet and the financial strength of the organization, it’s as strong as it’s ever been.”

Even after the layoffs, the credit union still employs more people than before the pandemic began in 2020, he said.

During the pandemic, the lender beefed up its staff to process increased lending, he said. At the time, American incomes were boosted by government stimulus checks and interest rates were extremely low, factors supporting borrowing.

Global Credit Union has 27 branches in Alaska, dozens of others in the Lower 48, and three at U.S. military installations in Italy. It holds more than $12 billion in assets and has 760,000 members.

Alaska USA, founded in the state in 1948, merged with Global Credit Union last year. Its headquarters are in Anchorage but it took the smaller company’s name this year, as it looks to expand its footprint in Alaska and outside the state.

Woolston said the layoffs are not a result of the corporate merger.

“These decisions have zero to do with any of that,” he said.