Chip Filson
The Seated Boxer, an iconic ancient Greek work of art, shows a grizzled veteran of the ring, equal parts resigned and ready to spring into action.
What I like is a sense of respite from competition, the powerful athletic physique and the tiredness that surrounds his humanity. Is he a winner this day? Are there more fights to go? How will his efforts be remembered?
These are questions that all of us encounter, in literal or figurative ways, in our daily efforts.
“I think that God in creating Man somewhat overestimated his ability.” And, “The only thing to do with good advice is pass it on. It is never any use to oneself.” Oscar Wilde
With these caveats, I pass along some excerpts from a study of crypto summarized in a Banking Dive article this week:
The full Kansas Fed analysis, dated September 24, 2025, can be read here. (link)
Several conclusions pointed out in the Banking Dive summary:
The share of U.S. consumers who report using cryptocurrency for payments—purchases, money transfers, or both—has been very small and has declined slightly in recent years.[1] The light blue line in Chart 1 shows that this share declined from nearly 3 percent in 2021 and 2022 to less than 2 percent in 2023 and 2024.[
There is much consumer data about who uses crypto in the Fed study. The authors’ observation on crypto’s future as a source for payments:
Moreover, consumers’ main reason for paying with cryptocurrency has shifted from the benefits of cryptocurrency relative to alternative payment methods (such as privacy, speed, cost, and safety) to the payee’s preference for receiving money with cryptocurrency, suggesting consumers’ use of cryptocurrency for payments has become more passive in recent years. Whether and how the evolving regulatory landscape around crypto assets in general and stablecoins in particular could facilitate consumer adoption of stablecoins for payments remains to be seen.
Yesterday I spent several hours in two exercises with organizations founded on democratic principles. The first was virtual, watching the Annual Meeting of State Employees NC. The second was in person, a participatory exercise for a much larger political event this weekend.
The theme. I believe, of the two-hour credit union event was The SECU Difference. The first speaker was the parliamentarian who announced authoritatively that the meeting would be under the latest version of Robert’s Rules of Order.
This was followed by the Chairman’s speech, a SECU foundation report and video and CEO Leigh Brady’s summary of the credit union’s performance for the fiscal year ending June 30. All presentations were shown in a single, stationary camera frame, with no views of the audience or other members on stage. Brady’s speech used a split screen when she showing slides to highlight numbers and goals.
The nominating committee chair reported that the number of candidates approved for the members’ vote just equaled the number of vacancies. Therefore no action by members was necessary. This prior board selection was approved by acclamation in contrast to the previous two years where there had been contests for all open board positions.
The final hour was CEO Brady answering questions submitted in advance and read by an employee. Up to this point every speech and action was fully scripted and presented as done events with no member input.
So one would hope the members’ queries might be a bit more spontaneous and informative about The SECU Difference. In short an opportunity for a CEO to show her “chops” that is the grasp of her role and understanding of issues on members’ minds.
And the member concerns were plentiful and seemed candid even as grouped into common issues.
The questions expressed real member concerns and experiences. However every question received a written response of three to four sentences, prepared in advance, with little insight or empathy expressed about the topic. Most replies referenced a process the member should follow if they had a problem, eg. contact your . . .
My take away: this was a 100% scripted event to conduct a required legal activity with no substance or owber interaction wanted. And especially no live member involvement as in recent meetings.
The emerging SECU Difference is that the credit union is striving to be just like every other large credit union in both performance and example. Some of the CEO’s accomplishments include the replacement of over 1,000 ATMs, the installation of digital signage n the branches and the introduction of two new credit card options: a reward and a cash- back choice. There will be a core conversion but that will take at least three years to complete.
The prior offerings that SECU created within the credit union structure including the life insurance company, the investment broker license, the real estate management company and the trust services were mentioned, but no performance details provided. It is unclear if SECU still offers its ATMs without surcharges for non-members. It has stopped the income tax service and ended the operational support ties with both Latino and Civic credit unions.
SECU’s financial performance is stable and it reiterated its commitment to operate branches in all 100 NC counties and focus the foundation’s resources on non profits throughout the state. So the credit union may have refocused on its roots versus more expansive ambitions contemplated several years earlier.
What is different now is that SECU sounds and looks like virtually every other large credit union. That’s neither good nor bad, unless you believe focusing on creating member value options not readily available elsewhere was the purpose of a coop.
North Carolina is one of the most attractive states for new bank investment and branch expansion (after Texas and Florida). Will not having a strategic difference, other than a tax exemption, be a sufficient strategy? Time will tell.
The second two-hour event was a group meeting to discuss how individuals can become more engaged in influencing current political issues. It was followed by a sign-making, pizza-fueled party at a local church’s social hall. About 25 people gathered to learn and prepared to participate in the coming Saturday’s No Kings rallies around the country.
What will our children and their children inherit from our democratic organizations’ efforts today?
An important event today:
Tuesday, October 14, 2025
1:00 p.m.
You might try to watch virtually, but I am unable to find a link. Go to SECU NC website at 1:00?
Here is one member’s suggestion for Q & A. (link)
From a new website, recording the shutdown of the federal government.
https://howisthisstillhappening.com/
In March 1985 CUNA filed a friend of the court brief to support the newly chartered Local Government Employees FCU. The charter date May 23, 1983. The North Carolina Bankers Association filed suit in 1984 saying the FOM violated the FCU Act.
As reported in March 1985 issue of Credit Union Magazine (page 25) the suit was filed after the state Supreme Court ruled that State Employees CU (SECU) could not expand its FOM to county and municipal governments.
CUNA argued that “NCUA has statutory authority under the FCU Act to interpret the common bond provisions of the Act, that its interpretation is consistent with the legislative history and legal precedent and that the State Supreme Court ruling against SECU is inapplicable in this case.”
Local Government FCU won. It became an operational partner with SECU providing back office and branch support. The two grew side by side for over four decades. Local Government had its own board and began to diversify from total integration with SECU, ultimately founding a digital only charter, Civic FCU , to expand its virtual presence and business options.
After Maurice Smith retired as CEO of Local Governement, the new leadership began exploring other options. SECU’s board may or may not have made a merger overture to the new LGEFCU CEO. It depends on whom you ask. The upshot was the Local Government merged with its much smaller digital dopplinger June 1, 2025 , kept the Civic name and then proceeded to end its operational dependence on SECU. No longer were Civic members being served through SECU branches after forty years of having access.
As the newly named Civic FCU began its independent existence, the transition has not been easy as noted in its July 24 website post. (link)
As it tries to build out its own delivery system the credit union has reported negative net income for the 2023 and 2024 yearends. But the losses have begun to hemorrhage at June 30, 2025 post SECU separation.
In every critical financial and operational indicator, Civic is going backwards. It reported a loss of $24.8 million versus a $9.2 million positive gain while working with SECU in 2024. Compared to June 2024 balances, shares have declined by almost $600 million to $2.9 billion; members have gone from 407,926 to 380,898 with loan originations (-47.3%)and total loans both declining.
Civic has borrowed $320 million at June 2025 versus just $80 million one year earlier. It is bolstering its net worth ratio with $52 million of subordinated debt. Its total assets have declined from just over $4.0 billion to $3.66 in the first six months of this year.
The only increase has been in employee headcount going from 319 to 431 since 2024 yearend as the credit union opened at least ten new branches.
How will this story unfold– a new era or is it the beginning of the end? Civic In its original incarnation was an example of operational, legal and cooperative ingenuity. It succeeded in expanding credit union services by showing the power of dual chartering-a state charter in essence sponsoring a de novo federal one.
Today that spirit has been lost. Civic is struggling to just become another traditional credit union in a state with intense financial competition. This strategy is using up the financial, reputational goodwill, and cooperative legacy that created a unique solution for serving their members. Will the CEO and board find their way back to creating special value for their member-owners who seem increasingly skeptical of this independence turn?
We live in a era of competing viewpoints and rhetorical advocacy.
Often logic, reason and especially facts are missing in the fire of verbal combat or when issuing public relations statements supporting a position.
The more consequential the decision or a person’s position, the more elaborate the verbal bouquets. These communications are not meant to persuade. Rather they entertain, advocate, sometimes threaten while shimmying past critical issues.
Examples this week include the speeches by the President and Secretary of War to hundreds of senior military commanding officers, policy utterances by single NCUA board member Hauptman, or the rhetorical display announcing NCUA’s approval of the DCU merger with First Tech.
So it was enlightening to read someone explaining at length what is at stake in our often charged and sometimes flippant public dialogues. Here is an example:
In Boston yesterday Judge William G. Young answered an anonymous correspondent who trolled the judge on June 19 by writing a postcard that said: “TRUMP HAS PARDONS AND TANKS…. WHAT DO YOU HAVE?” Young reproduced the writing at the top of his decision finding that Trump’s attempted deportations of legal residents for their pro-Palestinian speech violated the First Amendment.
Then the judge answered: “Dear Mr. or Ms. Anonymous, Alone, I have nothing but my sense of duty. Together, We the People of the United States—you and me—have our magnificent Constitution.”
“The United States is a great nation, not because any of us say so. It is great because we still practice our frontier tradition of selflessness for the good of us all. Strangers go out of their way to help strangers when they see a need. In times of fire, flood, and national disaster, everyone pitches in to help people we’ve never met and first responders selflessly risk their lives for others. Hundreds of firefighters rushed into the Twin Towers on 9/11 without hesitation desperate to find and save survivors. That’s who we are.
“And on distant battlefields our military ‘fought and died for the men [they] marched among.’ Each day, I recognize (to paraphrase Lincoln again) that the brave men and women, living and dead, who have struggled in our Nation’s service have hallowed our Constitutional freedom far above my (or anyone’s) poor power to add or detract. The only Constitutional rights upon which we can depend are those we extend to the weakest and most reviled among us.”
“I fear President Trump believes the American people are so divided that today they will not stand up, fight for, and defend our most precious constitutional values so long as they are lulled into thinking their own personal interests are not affected.
“Is he correct?”
In this latest test of political masculinity in Washington DC, the federal government has shut down.
NCUA says it is still open for business. As evidence the agency reissued this guidance from over 14 years ago:
This test of political will and messaging on both sides has an open-ended feeling about it. No one knows for how long or at what cost this standoff will continue.
This event and its aftermaths will only add to the many economic, financial and consumer uncertainties now infecting future outcomes.
This is not the first era of credit union’s navigating broad events outside their control. Recalling previous periods of change can remind that one of the most useful responses is to have options–not merely hunker down to weather the storms.
The headline reads: Federal Credit Unions Eyeing State Charters as Rate Ceiling Hurts. It is from the Business & Finance section of the January 18, 1980 edition of the Washington Star newspaper.
The opening paragraphs:
Some federally chartered credit unions are trying to switch to state charters because the government’s 12 percent interest rate ceiling is shutting down their loan business. . .
In the last year, the 12 percent ceiling on loans has either shut down lending at some credit unions or generally restricted granting of loans in others.
Leadership is the art of changing before you have to. The Trump administration’s one consistent theme is disruption, if not the destruction, of traditional government functions.
Recently in an NCUA board meeting the single member Kyle Hauptman suggested that it was possible the agency might have no board members in the future.
Whether that was just a hypothetical musing or confirming his interest in another government position is unknown.
But assume that scenario. No board at NCUA. What would the administration do? What it has done with other vacancies, appoint an “acting Chairman” likely from Treasury. And then begin a process of assimilation like the OCC under that Department for the agency’s future.
Just one of many possibilities created when the status quo is not longer as political checks and balances are completely gone.
To protect the independence, integrity and unique role of credit unions, it may be necessary to go back to where the movement started and gained its credibility–the state chartered system.
State regulators (NASCUS), state insurance options, trade associations and every credit union, whether state or federal, should now be assessing the ability of the states to be their primary regulatory choice.
It is critical to reinvigorate the state chartering system as a real option as the federal government and NCUA seem to be careening away from any stable leadership and certain future.
Credit unions created the dual chartering system that has evolved into serving tens of milions owners. It may end up being their best hope for the future. That is just one history lesson from the 1980’s.
At the NCUA’s September single board member meeting the acting CFO announced the agency had conducted four liquidations through the first two quarters. The YTD loss allowance was increased by $17.6 million versus $2.0 million in 2024. $12 million was expensed as an insurance loss for June without any details (Unilever FCU?).
NCUSIF trends are not going in the right direction.
The most important efforts limiting NCUSIF losses are NCUA’s annual examination program.
The problem is that it is no longer annual except for selected cases. After the Agency’s April layoffs of 20% of staff, the exam cycle was extended further for apparently stable credit unions.
But it is not just the frequency of contact, but the quality of the work and the interaction with management and board on important issues.
Against this recent NCUSIF update, yesterday’s NCUA press release was especially unsettling. On the surface, the single board member Kyle Hauptman announced NCUA’s goal to conform agency policy with the political ideology of the current administration.
The Headline read: NCUA Eliminates Use of Reputational Risk, (link). But the change was much more extensive as described by Ancin Cooley in a post in which he focuses on this paragraph:
In addition to eliminating reputation risk, NCUA has discontinued the practice of assigning ratings to the Risk Categories (also referred to as Risk Areas) for the examination and supervision program. Historically, examiners assessed the amount and direction of risk exposure in seven Risk Categories: Credit, Interest Rate, Liquidity, Transaction, Compliance, Reputation, and Strategic.
This brief excerpt does not specify what this change means. Will the 1-5 CAMELS ratings be affected? Will the “high, moderate, or low” summary comment on risk areas be ended?
With credit union failures and NCUSIF losses trending higher, reduced examination efforts, and continuing economic uncertainty, is now the time to muzzle examiner judgements? Here is Cooley’s reaction:
Credit unions purchases of for-profit banks have become a more frequent and accepted coop strategy. The most recent total count is 77 purchases since 2010 with 22 announced in 2024.
Buying banks requires the credit union to pay cash versus the option of issuing new shares or partial cash and share offers when banks purchase each another.
This cash outlay means the members’ collective equity is being used to pay bank owners for their shares, often at premiums of 1.5 to 2.0 times the bank’s net worth. The gain or increase is booked as “good will” a non-earning asset that must be evaluated for future write downs.
In all these situations the members have no say. They are informed after the deal is signed subject only to “regulatory approval.” Information as to how and why this outlay of the credit union’s capital will benefit the members is rarely presented.
Moreover, most of these transactions are serendipitous bought to the credit union by brokers hoping to facilitate a sale for a fee. There is often no connection or knowledge of the bank. Sometimes it is far removed from the coop’s existing market. In one case in Arizona, the credit union converted to a state charter to acquire a bank outside its FCU’s field of membership.
What should the credit union owners be told about this use of their cash? The most important question is how this transaction will benefit the members.
When purchases are completed within the banking industry the standard disclosures are straight forward-what will be the impact on earnings, dividends and recovery of the capital outlay.
Yesterday the $1.9 billion QNBC Bancorp (QNBC) (Quakertwon, PA)announced the purchase of the $477 million Victory Bancorp in Limerick PA. As both are publicly traded companies, there is much market and call report information about both firms.
The press release led with the total purchase price of $41 million, based on the closing price of QNB shares in this all share transaction.
While there were other general details of the benefits of the sale such as similar culture, business models and greater combined resources, the crux of the announcement was the financial justification for the transaction for both banks’ shareholders.
In the case of the seller, Victory, the stock price (VTYB) has fluctuated between $10-$11 per share even though it reported a net book value of over $15 at the June 30, 2025 call report. Last night the stock closed at $18.20 per share.
The $41 million total price is 132% of the banks shareholder net equity of $31 million. The bank’s YTD performance though the second quarter was an ROE of 9.07% and ROA of .59%. Both OK numbers, but not great. But what stands out is that Victory reported zero delinquencies and charge offs in the first six months of 2025.
It is clear why Victory shareholders might be interested in this instant gain in the value of their shares. But what will the purchasing bank owners gain. This was discussed at length with specific goals in the announcement under the heading, Financial Benefits of the Merger. Following are from the proforma financial projections how this transaction will impact QNBC’s owners:
The transaction is projected to deliver approximately 16% EPS accretion to QNB’s 2026 estimated EPS and approximately 19% EPS accretion to QNB’s 2027 estimated EPS. . . The expected tangible book value earn-back period is approximately 3.3 years. . .
On a pro-forma basis for the year 2027, the combined business is expected to deliver top-tier operating and profitability metrics upon fully phased-in integration plans, including:
The pro-forma combined company financial metrics are based on estimated combined company cost synergies, anticipated purchase accounting adjustments, and the expected merger closing time horizon.
Specific financial outcomes based on proforma estimates. This is what shareholders expect to see when their shares are diluted with this purchase using newly issued shares. This is what regulators will use to evaluate their supervision and approval.
The announcement also contains the traditional statements about future hopes:
Beyond just this transaction, this partnership represents an exciting opportunity to build one of the most dynamic and growth-oriented community bank franchises in all of Pennsylvania.”
But the bottom line on this event is the financial benefits to the owners of both financial fimrs.
This is an example of the financial disclosures and goals credit union CEO’s should be providing their owners when announcing bank buyouts. It is standard industry practice and obliquitory for regulatory review.
When credit union’s buy banks the bank shareholders are given full financial details as to why this is a good deal for them. The NCUA and FDIC require full financial proformas to analyze for safety and soundness issues.
The only owners left in the dark at the credit union members whose funds are being used to pay a premium to the bank’s owners. It’s past time for credit union owners to have this full information. It is essential to understand whether the transaction makes financial sense and to hold their leaders accountable for the proforma outcomes. Right now everyone else has the details except the owners footing the bill.
If credit unions want to compete to buy banks, then they should be held to the same financial disclosures to their member-owners as the banking industry requires of their institutions. Otherwise we risk creating a dark market where the facts are unknown and accountability for investing member funds is lacking.
The bottom line is that it is the CEO’s fiduciary responsibility to the credit union’s owners to be fully transparent when using their capital to buy a bank. It is the Board’s duty to ensure this disclosure takes place.
We live in odd times.
hashtag#CEOs, I know you’ve had frustrating encounters with auditors and regulators. They can feel burdensome, even annoying. But this latest move from National Credit Union Administration (NCUA) isn’t a win for the reduction of “regulatory burden”—it’s something far more concerning.
Although the headlines highlight the elimination of reputation risk, please read further. In addition to eliminating reputation risk as a rating, NCUA has discontinued assigning ratings to all seven risk categories:
• Credit
• Interest Rate
• Liquidity
• Transaction
• Compliance
• Reputation
• Strategic
Imagine someone removing all the smoke detectors from your building and telling you, “Don’t worry, we’ll let you know when we see fire.”
The purpose of these risk ratings was never busywork. At the aggregate level, they provided field offices, regions, and national leadership with a top-down view of where risk was accumulating. From a staffing standpoint, if a credit union’s liquidity risk was rated high, it signaled the need for additional expertise at the next examination.
Examiners and ERM professionals assess each category based on quantity, direction, and the quality of risk management. The point was never to penalize higher-risk profiles. It was to ensure that if you accepted a higher risk, your management practices were robust enough to handle it.
America’s Credit Unions, NASCUS, and American Association of Credit Union Leagues
How is this a win for the members and the safety and soundness of credit unions? Why do we only hear about tax status, and none of these moves requested are discussed with the same intensity?
A couple of foot notes: NCUA Credit Risk Webinar
On July 15, 2025, in an NCUA (https://lnkd.in/ednAJjCE) credit risk webinar, an examiner (Min 13:49) discussed the benefits of key concepts like risk appetite, risk tolerance, and risk capacity. Those are excellent tools for boards and executives. They’re the backbone of modern ERM.
But here’s the contradiction: NCUA is now saying those concepts are helpful for credit unions to adopt, while simultaneously discontinuing examiner use of risk ratings for the seven categories (credit, liquidity, interest rate, compliance, transaction, reputation, and strategic).
National Credit Union Administration:
Additional Actions Needed to Strengthen Oversight
On Sept. 23, 2021, the Government Accountability Office issued a report stating NCUA has opportunities to improve its use of supervisory information to address deteriorating credit unions. By more fully leveraging the additional predictive value of the CAMEL component ratings, NCUA could take earlier, targeted supervisory action to help address credit union risks and mitigate losses to the NCUSIF. As of today, one of the recommendations is still open, and another is partially addressed.
END
As Hauptman tries to burnish his reputation with the administration’s anti-government ideology, the dangers of a single political point of view determining regulatory priorities in a so-called independent agency becomes clear.
This press release is not about ensuring the safety and soundness of members’ funds or enhancing the cooperative systems critical roles. It is simply posturing for another assignment in an administration bent on governmental disruption.
The financial and institutional integrity of the cooperative system requires a competent, active regulatory oversight. Institutions that manage financial assets for others are especially vulnerable to self-dealing. That is why almost every form of money lending, transfer, safe-keeping and advice is subject to governmental licensing and oversight.
Without effective supervision not only will credit unions continue to be lost, the playing field will become crowded with internal and external predators trying to cash in on the abdication of, and disrespect for, regulatory oversight.