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.
Five observations on credit union subjects.
From Steve Jobs on credit unions:
“While many economic and social factors weigh into the success of a credit union, I’ve seen first hand the difference a passionate team can make on the bottom line. The most successful credit unions we’ve worked with have not had the best marketing, they haven’t had the most college degrees in one room, nor have they had the best circumstances.
The credit unions, which have the most success, are winning because they personally believe in their credit union. They have a mission statement and a vision they are passionate about. Their members are friends and family.
“If you don’t love something, you’re not going to go the extra mile, work the extra weekend, challenge the status quo as much. What separates the good credit unions from the great credit unions? Culture. Vision. Passion.” (Source: SECU Just Asking)
From Mark Arnold on leaders: Jim Collins found that great companies build leadership from within. He goes on to say, “Visionary companies develop, promote and carefully select managerial talent grown from inside the company to a greater degree.”
From a CSIS panel discussion on current government reform efforts:
I led two major reviews in 1999 and 2011 of top down reform experience around the world. Of the many lessons I learned, two stood out: the process of reform is as determinant of the outcome as the goals of reform. Even the best-designed civil service reforms falter when national leaders fail to lay out an affirmative vision for the role of government.
Governments, after all, are mission-driven. They are dependent both on a service ethos on the part of public employees, as well as the public’s trust in those who serve.
From Mike Higgins, consultant on scale:
The “there used to be 14,000 banks and now there only 4,000″ is an old and tired statement used to justify scale. . .there are some strong arguments that scale is not the answer.
Complexity of scale is a real thing – and complexity occurs in a lot of areas simultaneously – it’s like watching a fight between two octopuses – lots of tentacles in motion.
Two notes from Who Pays for all Those Generous Credit-Card Rewards?
It’s also worth remembering that lots of Americans don’t have incomes or credit scores that provide access to the most desirable credit cards. This means that debit-card and cash users, who tend to be lower income, are essentially paying for the credit rewards enjoyed by wealthier Americans. . .
“Nobody ever got rich through credit-card rewards, yet lives have been ruined due to credit-card debt,” Wang says. Sticking with a debit card, which comes with many fewer risks, “I think it’s totally reasonable for lots of consumers.”
Knowing history helps us navigate current uncertainties, even severe problems. This is a story of a credit union that was mismanaged. There was front page publicity about the problems, NCUA’s role, and direct quotes from NCUA, including Chairman Callahan.
The year was 1983. The credit union was charter number 435 which opened on January 1, 1935. State Department FCU also served NCUA employees.
Here are the opening paragraphs of an August 16, 1983 Washington Post article investigation of the situation:
The State Department Federal Credit Union has operated at a loss since last year and has been placed on a “problem list” by federal regulators, according to credit union officials.
The federal action is based on the credit union’s overall financial condition, but it comes at a time when the credit union’s administration is under attack from some of its members for the amount of money it spends on receptions and trips for employes and board members to conferences in places such as Las Vegas, Munich and Paris.
The credit union, which has $166 million in assets and 36,000 member accounts, reported a loss of $346,095 on total income of $8 million for the first half of this year. Last year the credit union, with a total income of $15.7 million, lost $224,200.
Examiners from the National Credit Union Administration (NCUA), which regulates federally chartered credit unions, told the board of the credit union in a meeting July 27 that the member-owned institution has been placed under special surveillance, according to Edward N. Gulli, general manager of the credit union.
Here are further detals from this lengthy report:
NCUA examiners said the credit union “would have no problem” if board members “took the steps to turn it around and become very profitable again.” . .
Some 7 percent of the 11,200 federally regulated credit unions in the United States are on the NCUA’s “problem” or “watch” list, according to Layne L. Bumgardner, director of supervision and examinations at the NCUA. . .
In an effort to conserve the credit union’s cash, Gulli said the board has voted to stop traveling first class, which was previously allowed on any trips of more than three hours’ duration, and to suspend any travel until the end of the year. However, he said travel to conferences is a necessary part of credit union activities and will be resume .. .
During 1982, the credit union spent $51,628 to send board members–who are State Department employes performing the credit union work as volunteers, receiving no extra salary–to conferences in places including Paris and Munich. . .
They spend money like water on trips, and they say they don’t have the money to hire additional tellers or pay better interest. They think we’re dumb,” said Mary Drakoulis, an employe in State’s Freedom of Information office who was one of the original organizers of protest against the credit union management. . . .
The article included five paragraphs listing individual board and senior executive travel expenses. Here is one example:
A June 26 to July 1, 1982, trip to a credit union industry conference in Las Vegas by six board members and three of their spouses costing $3,099 in hotel expenses at the Las Vegas Hilton and $9,520 in first class airfare. Five board members and a credit union employe traveled to Las Vegas again for a similar conference in May of this year. . .
NCUA’s chairman, Callahan, said the question of what is or is not a proper level of expenses is up to the members to decide. “We do not usually get down to splitting hairs as to which expense is appropriate. If it is a problem institution, I’m sure their expenses are being scrutinized,” said Callahan, who is a member of the credit union.
Even Larry Connell, the former NCUA Chair and now CEO of Washington Mutual Savings Bank was asked for comment. He stated: “To me,” he said, “the best enforcement is for the membership to vote on whether to continue the management. I would think the members should have reasonable access to the records of the credit union.”
Finally, the President’s compensation was published. Federal charter salaries are not required to be disclosed as is the case with state charters.
Because Gulli’s salary increases are based on the (board) recommendations, not the (U.S.) president’s decision, he got a raise last year of 18.47 percent, while federal workers got a raise of 4 percent.
Gulli currently makes $89,000 a year, about $9,000 more than Secretary of State George P. Shultz. He said that since he is not a federal worker, his salary should not be compared with the secretary of state’s. He pointed to a recent industry study showing the median salary of executives employed by the top quarter of government credit unions with assets of $80 million or more is $84,502.
“I don’t have a chauffeur-driven car or a plane at my disposal,” he said, referring to Shultz. He said he got a 15 percent increase in lieu of health insurance and a pension plan.
First, the credit union survived this very public airing of its leadership’s perks and excesses, its poor performance and being added to NCUA’s watch list.
Today State Department FCU is a $2.9 billion institution with 88,000 members, 6 branches and over 200 employees. It’s 2024 performance mirrors the industry’s overall trends: delinquency 1.14%, ROA of .34%, net worth 10.5% and loan and share growth around 6%.
Secondly, the transparency on these issues was an important catalyst for change. Members were provided the information on senior management compensation, board and staff travel and their stewardship of the members’ funds.
These details should be standard operating disclosures for all credit unions today. Special events and major business initiatives such as a bank purchase financing should be routinely provided. Such transparency not only provides essential owner information for the annual election of directors; it also induces accountability.
Thirdly, senior NCUA officials from the examiners, the RD, the DC head office and even the Chairman spoke directly to the press. If one reads between the lines, the reporter was questioning whether the regulator should be more forceful in stopping these activities. The response was that this was the responsibility of the owners, unless the excesses undermine the operations. But members must have access to all relevant facts whatever the circumstances.
Finally, the article several times refers to the entire credit union system and their role in the economy.
Credit unions are nonprofit organizations originally formed to help employes get loans when banks did not make consumer loans. The industry now has $93 billion in assets nationally and 48 million members. The State Department credit union is 46th largest among 19,630 credit unions in the country.
Each credit union today is a representative for the entire cooperative model, for good or otherwise.
My colleague Bucky Sebastian’s rule as a public employee was to never say or write anything that you wouldn’t want to read on the front page of tomorrow’s newspaper-or the lead in a blog post. However the solution is not to avoid the topic or say you can’t comment. That will just make the press more interested.
Every credit union will have performance problems. Economic cycles are just that, cycles, not straight line performance. Managers are not perfect and board oversight will vary.
The best way to prepare for these inevitable ups and downs is to be transparent with pro-active disclosure habits in all seasons. This creates a pattern that demonstrates responsibility to the owners, even in times of performance shortcomings. State Department survived this very public thrashing by the Post. NCUA was upfront about its role.
Without this practiced accountability any credit union can risk becoming the next poster child for a cooperative system that seems to have lost its way. And added to the lists of examples kept by those seeking to undo the special role of credit unions in the American economy.
Osacar Abello is the economic journalist for Next City, a web publication which reports on innovative examples of tackling long standing urban challenges.
He has written a new book, The Banks We Deserve. It is about the future of credit unions as much as he focuses on banks. He offers this reason for writing.
So how many community banks do we need? I’m not sure that me or some policymaker or expert should be the one answering that question. Maybe it should be up to each community that feels ignored or frustrated with larger, distant financial institutions to take some of that money creation power for themselves and see how they do with it.
We’ve never done anything big in this country without little banks. Yet the number of community banks in the US has been steadily declining for decades, giving way to big banks that have little connection to the communities they claim to serve.
The massive, unprecedented shift toward such a highly concentrated banking sector has weakened our ability to take action at a community level and leaves many people, especially those who have been historically marginalized, without access to capital.
In The Banks We Deserve, journalist Oscar Perry Abello argues that community banking has a crucial role to play in addressing urgent social challenges, from creating a more racially just economy to preparing for a changing climate. At their best, community banks unleash the agency and aspirations of the communities that establish them.
Abello challenges people working on racial justice, community development, or addressing climate change to start more community banks or credit unions as part of their work, while also calling for policies and regulatory reforms that will help tilt the landscape back in favor of community banking.
The Banks We Deserve tells the stories of new community banks — like Adelphi Bank, in Columbus, Ohio, the first new Black bank in 20 years; or Walden Mutual Bank in Concord, New Hampshire, the first new mutual bank since 1973 and the first chartered specifically to finance a more sustainable food system; or Climate First Bank, in St. Petersburg, Florida, which has grown exponentially since opening for business in 2021. He hopes these stories inspire others to take some of these same daunting-but-not-impossible steps.
My takeaway: Credit unions have been evolving into this community role since deregulation. Who is telling their story?
Robert Gamble is a presbyterian minister who has led a mission in Ukraine since 2006. His charity, This Child Here, is a 501 C 3 non-profit. Here is What We Do from the website:
Early in the war in 2022 he wrote a long letter reflecting on the seeming contradiction of peacemaking and love in a time of war. An edited version follows.
From a letter by Robert Gamble
A time to love and a time to hate, a time for war and a time for peace.
Ecclesiastes 3:8
And now these three remain: faith, hope and love. But the greatest of these is love.
I Corinthians 13:13
It’s hard to say something not already said, but I’ve learned something knew. A hard truth.
In December I rode in a van with a Mennonite minister; we were crossing a field on a dirt and snow covered road lined with bushes and trees on both sides. In the war zone in the east. I saw a few military vehicles. I saw a Ukrainian soldier with a rifle sitting on the snow, covered in white. A tree had been cut to fall across the road ahead of us.
At first I thought we might get out and move it. But then I thought: maybe it is rigged to explode. In the field on both sides were red and white signs: Danger Mines. There was no way around the tree. We backed up about 200 yards and started on another road across the field.
That’s when I realized, this could be the plan. They knew we would go around. . . I remember sitting in the passenger seat to look out the windshield at the dirt and snow ahead in search of signs of digging to place a mine.
For the first time, I was afraid. Confronted with the TRUTH: YOU MIGHT DIE, all thoughts of peacemaking, or reconciliation between Russians and Ukrainians dissolved.
Here are some truths, spoken by people in Ukraine:
“Ordinary people, as always, suffer while politicians play games.”
“This genocide will be in history, but we do not need such a history, we need peace.”
“Today, on the eighth day of the war, I felt as if I were living in another life. The first shock has passed, there remains a persistent belief that we must be patient, and all this will pass. That everything will end well. …. Moreover, almost everyone has become close – having united in one family, they are trying together to help for the sake of victory. Children, little home front warriors, draw touching pictures calling for peace, women cut fabric into strips and weave camouflage nets, men ensure the life of the city and prepare Molotov cocktails. And all together help the weak and lonely. There has never been such a unifying, inspiring feeling…”
I don’t know what is true in this war. . .
In Ukraine, there are two LIES.
The truth is Putin is the Nazi, and Putin is invading Ukraine.
He projects his own darkness onto the country of Ukraine.
Many in Russia believe these lies. I’ve seen it… written on the walls of buildings burned “Death to Nazis”….. written by pro-russian separatists, living in Ukraine, believing that Ukraine is run by Nazis.
Media outlets in Russia Facebook, Instagram, other social media are closed. How long can he keep the truth outside Russia? 15,000 were arrested for demonstrations.
How can they keep this lie alive? They keep it alive with fear.
I was fooled by these lies.
I did not believe this war would happen. I knew he was lying and I thought it was all posturing to negotiate. What I didn’t realize was that Putin knew that I knew he was lying. And I would believe it was all posturing for negotiation. All this was like smoke covering the truth that was truly unbelievable: all along, he intended to invade.
The war began at 4am on Thursday, Feb 24th.
I was in a small city in the western and southernmost part of Ukraine. Izmail sits on the Danube; across the river is Romania. It’s a safe place to be, far from the paths of any Russian troops.
On Friday, the second day of the war, I saw a video of a Russian Submarine, cutting through the Black Sea, close to the coast of Odessa, likely in preparation for a landing of soldiers by sea. I watched videos of Russian soldiers, gunfire on the streets, a Russian tank crushing an automobile, a tiny island laid waste by a Russian warship– all 13 Ukrainian guardsmen dead. I saw crowds fleeing Kiev and citizens lining up to receive automatic weapons to defend Ukraine.
In the afternoon, my brother-in-law called, a colonel in the US Army, retired. We talked for the third time. He explained how wars steadily expand in the beginning, urging me to get out of Ukraine.
I decided it was time to leave.
I took a taxi to the border and a ferry to Romania. Volunteers from Romania met me on the other side. They offered us food and drinks. A man came and we drove an hour to his city; he took me to his home where his wife prepared dinner. Later, he put me on the train to Bucharest. “Tell the rest of the world how the good people of Romania took care of you”
I have been working for peace in the world since the 1980’s. I was in Nicaragua during that war, trying to build bridges for peace…. I’ve been working for peace in Ukraine since the war started in 2014.
This Child Here has trained many teens in peacemaking techniques: how to manage conflict, how to listen to your enemy, how to offer alternatives to violence, how to reach consensus. My hope is for a camp for Russian and Ukrainian youth together. My hope is that nations will “beat their swords in plowshares and spears into pruning hooks.”
But a time comes, rarely comes, when humans, people of faith, the people of God, and I speak as a Christian, must take up weapons to protect and save their own lives and the lives of those they love.
There is evil in the world, and at times this evil has to be stopped. The only hope lies in picking up the very same guns you hoped would go away.
I could have gotten in line for an AK 47. But do I pick up a weapon and kill? I think I am now too old and sensitive to do this… I don’t want those images in my mind.
Do I recruit Americans to go and fight? Do I pray for Russians to die.
Do I believe God is with us? Do I bless war itself?
At best, I can pray and hope it will end.
Now I want to say something personal, because what is most personal is also most universal.
I said goodbye to someone I love and care about before I stepped on the barge to cross to Romania. I said goodbye across a fence. I did not feel sympathy; I felt respect.
I fear for her life, not because she is weak but because she is brave.. This is love.
And then I realized this is how I feel for the Ukrainian people, not sympathy but respect. I fear for their lives, not because they are weak, but because they are brave. This is love.
I think about love and war. I am talking about romantic love, love for family, friends, colleagues, a country even. But it came to me, when I was looking at someone I love…. just looking at this person. I understood: love makes war bearable.
Milan Kundera who is Czech wrote about that country’s 1968 invasion in the Unbearable Lighteness of Being: “For there is nothing heavier than compassion. . .The heaviest of burdens crushes us, we sink beneath it, it pins us to the ground…. The heaviest of burdens is therefore simultaneously an image of life’s most intense fulfillment. The heavier the burden, the closer our lives come to the earth, the more real and truthful they become.
Love helps us bear the burden of war. And there is a second truth: War makes love precious.
I close with this: we say what we believe in that ancient creed, “He was crucified, dead and buried.” For Christ it was the heaviest of burdens, and was followed by the resurrection—the image of life’s most intense fulfillment.
For the people of Ukraine, and for any of us, the heavier the burden, the closer we are to the earth, the more real and true we become. It is a hard truth, and it is why “the greatest of these is love.”
Editor’s note: Rev. Gamble returned almost immediately to Ukraine and continues his work there today. In 2024 he married the woman who is the local administrator of his charity.
When I was a member of Ed Callahan’s team, he would offer two thoughts when evaluating uncertain situations: The first was “Never say never,” when talking about future possibilities. The second was “What are the options” when working through a challenge.
Each day brings more Washington rumors, supposed plans, new faces and real events that have led to increased uncertainty for NCUA and credit unions under the Trump overhaul of the federal government.
Those who see changes as a threat to the independent co-op system are urging credit unions to prepare for battle, increase lobbying efforts and deploy new member engagement tools. Others will go with the flow assuming they will be OK if they stay invisible as part of a herd of 4,500 institutions.
If a never-say-never event unfolds, how does one prepare for it? Are there options that should be ready to go beyond the standard lobbying or “fight back” efforts?
The most important means of acting as a check to an overreach or an unresponsive federal regulatory environment is the dual chartering system.
Credit unions were birthed and spread first in the state legislatures. From 1909 until the Federal Credit Union Act passed in 1934, over 25 states authorized local and varied credit union charters. These multiple state examples were the “proof of concept” that gave Congress the example to extend this unique member-owned design to all states via a federal chartering option.
But state innovation did not end with this beginning. Senator Proxmire in a 1984 hearing stated he received his first real estate loan in the 1940’s from a credit union. FCU’s did not have real estate lending power until 1978. State systems pioneered the introduction of NOW (checking accounts) in Rhode Island and share drafts in other states before this transaction authority was given all financial institutions in the Monetary Control Act of 1980.
State charters led the way in deregulating rates and terms on savings years ahead of the DIDC and NCUA action in 1982. State options have had much more flexible fields of membership, CUSO investments and other varied business options.
State credit unions lead federals in transparency with their required annual IRS 990 reports. These filings disclose director and senior executive compensation as well as listing all 501 C3 contributions and political donations, if any.
Dual chartering has been a source of diversity, change and responsiveness to local conditions. The NCUSIF’s regulations, including the risk based capital requirement, impose a one size fits all accounting and capital model on a very diverse industry.
However, there is one option that keeps the independent role of the state system intact. That is the opportunity, currently in ten states, for their credit unions to choose private versus NCUSIF deposit insurance.
At yearend ASI, the Ohio based deposit insurance company, covered the shares of approximately 100 credit unions with $23.4 billion in assets serving 1.4 million members. Six of these insured firms have over $1 billion in assets; seven have less than $1.0 million. The average asset size is $240 million.
Recently ASI presented a webinar as part of a campaign called CUChoice. The focus was on Michigan credit unions to encourage their support for a legislative change to give state charters a choice in their insurance coverage.
The full recording of the webinar is here.
(https://www.youtube.com/watch?v=hP-QN8HazKA)
The slides present the advantages of ASI vs NCUSIF. Points covered include credit union ownership, a member-elected board of directors, and the specific role of an insurer that is not a regulator. ASI’s focus is on being a business partner with its credit unions in which interests are aligned.
Slides 13-29 are a presentation by CUNA’s long time chief economist Bill Hampel, now retired. In his talk he discusses the advantage of a Michigan state charter and compares the performance history of NCUSIF and ASI from 2007 though 2013. He directly answers the vital question referred to as the tall tree issue by showing how the two insurers compare in size to their single largest credit union. (slide 22)
Slide 29 is a detailed comparison of ASI’s equity to insured coverage ratio of 1.75%. to the NCUSIF’s 1.31%
The choice of deposit insurance has benefits far beyond state charters. The option enhances the vitality of the entire dual chartering cooperative model. In those states with an option, Hampel presents data suggesting those states have stronger performance.
Having an option prevents NCUA from being a total monopoly and provides real time performance comparisons. For example, ASI financial audits and reports follow private GAAP accounting, whereas the NCUSIF in 2010 adopted federal GAAP. This federal standard mischaracterizes the NCUSIF’s operations and distorts the NCUSIF’s year end financial position. Also ASI must comply with reserving requirements under both GAAP and state insurance regulations.
ASI’s most critical difference is You Do Own It. The credit union elects the board and there is an appointed advisory group. The users have a direct say and responsibility for the management of their collaborative fund.
ASI has a performance track record as long as the NCUSIF. That history had a direct impact when the NCUSIF’s financial model was redesigned by Congressional legislation in 1984. The 1% deposit model, which provides the earnings and equity foundation for the fund’s financial stability, was a direct borrowing from ASI’s structure and experience.
By offering choice, ASI provides all credit unions a check and balance on the unilateral power of a monopoly insurer/regulator. The choice follows the unique constitutional system of state and federal powers. It rests on the cooperative values of self-help and collaboration.
No one knows what the future of federal regulatory and insurance systems will be under Trump’s administration. Credit unions should further enhance their options now building on their unique dual chartering roots.
In all other areas of Americans’ insurance coverage-life, auto, health and many more, the licensing and regulation responsibility rests solely at the state level. There is no federal option-except for deposit insurance. ASI is an example of this responsibility and choice that makes the credit union system more resilient and viable than any other model yet created.
Uncertain about outcomes at the federal level? Act now because no one knows today what you might need tomorrow.
Today is Abraham Lincoln’s birthday, now celebrated as part of the President’s Day holiday. It is still vital that we honor the passion he bought to serve and save the nation and our better selves.
My Country, ‘Tis of Thee“, also known as “America“, is learned in grade school and sung at most public and patrioc events. The lyrics were written by Samuel Francis Smith.[2] The song served as one of the de facto national anthems of the United States before the adoption of “The Star-Spangled Banner” as the official U.S. national anthem in 1931.[3] (Wikipedia)
Ironically, the melody used is adapted from the national anthem of the United Kingdom, “God Save the King“. Below is a version using the song’s meter and words to communicate a message in poetry calling for Lincoln’s vision to be realized.
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Frank Barbour Coffin, born on January 12, 1870, in Holly Springs, Mississippi, was an African American poet and pharmacist who owned and operated one of the earliest drugstores serving the Black community of Little Rock, Arkansas. He authored one poetry collection, Coffin’s Poems with Ajax’ Ordeals (The Colored Advocate, 1897), and his poetry was otherwise published in journals. Coffin died on March 1, 1951, in Little Rock. (Souce: Poets.org)
On February 6, the $612 million Thrivent FCU announced that its members had approved the credit union’s purchase by the Utah licensed Thrivent Bank (in formation).
More than 33% of the credit union’s 52,000 members (47,872 eligible to cast a ballot) voted with 79% in favor of the charter change. NCUA regulations require that at least 20% of the membership must vote on this charter conversion. The “merger” is scheduled to be completed by May 31, 2025.
The member-owners will receive a special dividend of $76 million which is the credit union’s fair value as determined by an independent appraisal. This amount equates to a 12.2% “dividend” on the shares owned at the time of the announcement. As described in the Members’ Notice:
The TFCU Board of Directors has determined that in conjunction with the Merger, the members will receive a total distribution in the amount equal to the full (credit union) valuation of $76,000,000.
Members also have full access to their $617 million (December 2024) in shares should they choose not to keep them at the newly chartered bank. The Thrivent FCU board had previously assured members there would be no changes in rates or terms on loans and savings transferred to the bank.
A full description of Thrivent’s proposal is in my December 3, 2024 blog . It provides the credit unions financial standing as of the announcement in June 2024
The last time a bank bought a credit union was the sale of Nationwide FCU to its sponsor, Nationwide Insurance. In that 2006 transaction the members received their entire net worth back resulting in a special “dividend” on shares of approximately 15%.
Depending on the financial position at the time of closing, both “merger” transactions valued the credit union at approximately 1.0 to 1.3 times book value. For example Thrivent’s total GAAP capital was $80.8 million at December 2024. However, if the $26.5 million decline in the market value of investments is recognized the net equity falls to $54.3 million.
Credit Union Times published a history of the credit union and the newly formed Thrivent bank’s business plan in a June 25, 2024 report: Thrivent FCU to Merge Into Thrivent Bank. The article states the new bank will offer digital service only from one location in Salt Lake City. The primary reason for this conversion was to access the capital resources of the sponsor, Thrivent Financial.
The Times article pointed out that since the December 2012 date of Thrivent’s initial conversion from a bank, the credit union’s assets had doubled from $478 million to $930 million. Loans had increased from $341 million to $635 million.
As of December 2024 Thrivent FCU’s shares, loans, members, and assets have declined compared to the 2023 year end results. The most recent December call report shows net worth at 10.3% and ROA of.46%. Delinquency is only .29%.
In Thrivent’s press release reporting the vote, Board Chair Beth Lewis states: “The merger opportunity with Thrivent Bank will extend the mission of our credit union and provide our members with simple and competitive banking products, easy-to-use digital experiences and direct access to human support. Our board of directors is pleased that a majority of our members came to the conclusion that this merger is in their best interest.”
What has been the impact of the Trump administration’s executive orders on NCUA operations? After appointing republican member Hauptman as the new chair of the three person board, have there been other changes?
Following are a series of Q&A’s sent to NCUA last Friday to learn about further impacts. Responses were received today from an NCUA spokesperson.
Q. Have NCUA policies on working in the DC office been changed? If so in what way? If not changed, what is he current in-office policy for the head office?
Pursuant to President Trump’s Return-to In-Person Work Presidential Memorandum, NCUA non-bargaining unit employees are required to return to office, full time, beginning Monday, Feb. 24. NCUA employees in field positions (mobile workforce), including but not limited to examiners, problem case officers, supervisory examiners, and regional specialists, are not within the scope of the Presidential Memorandum.
Q. Has the NCUA withdrawn job offers since the change of administration? Is there a hiring freeze?
The NCUA rescinded 12 offers in compliance with the Executive Order instituting a hiring freeze for all federal positions.
Q. Have there been any changes in senior staff responsibilities under the new chair?
No.
Q. Did NCUA employees receive the resignation emails DOGE sent to all federal employees? Is NCUA staff eligible to apply for this option?
NCUA employees received the same communication sent by OPM about the deferred resignation program. NCUA staff are eligible to participate in this program.
Q. Has NCUA stopped payments under any contracts or programs it administers?
Four DEI contracts have been terminated.
Q. Have members of DOGE or its representatives contacted NCUA or been in NCUA’s offices?
None yet.
Has Chairman Hauptman filled any of his vacant Schedule C positions? If yes, their titles and names?
Not yet. When these positions are filled they will be publicly announced.
Currently, Chairman Hauptman’s immediate staff includes Chief of Staff Sarah Bang and Confidential Assistant Natalie More. Three positions allocated to the Chairman are currently vacant.
Q. Who is the best person to contact during this transition period to learn about events? Should I reach out directly to individual board members? Or, can you set these up?
Please contact NCUA’s Office of External Affairs and Communications.
Q. When is the next NCUA board meeting and when will an agenda be released?
The next NCUA Board meeting will take place on Feb. 27. The agenda will be posted to the NCUA’s website on the afternoon of Feb.20.
“You will pry my credit union from my cold middle class dead hands.” Words of defiance from a credit union believer. One of hundreds of comments posted last week.(source below)
A leader’s ultimate success much depends on how the person manages the instruments of power. For some in authority, the point of power is to use it to expand one’s dominion. Using requires building up an institution’s size, scope of activity and resources to control or dominate.
However, there is another leadership model.These individuals believe that the role of authority is empowering others. Credit unions at their most effective are subversive of status quo structures. They organize from the bottom up. By the grass roots, not by investors hoping to make money. No capital, just personal sweat equity, time and collaborative effort to accomplish common purpose.
This counter-cultural, not-for-profit cooperative design is also the key to credit unions’ latent political power. Here is a case study from last week of what this looks like in practice.
Last week the Washington Post published an Opinion article by the former chair of the FDIC, Sheila Bair, titled: Tax-free credit unions are thriving at public expense. Her bank in Chesterton, MD, The Peoples Bank, accepted a purchase offer from a Massachusetts credit union “using some of their untaxed income.”
Her article referenced other examples of credit union branding and expansion. Her recommendation was to level the playing field with community banks by taxing credit unions. Otherwise, she warned, ““Give them an inch and they’ll take a mile.”
I had used the credit union’s purchase of “her” bank as an example in a blog Time to Ask WHY. My p;oint was to illustrate the bigger public stage on which credit union actions are now viewed.
I did not foresee the Post’s readers’ reaction to her article. When the postings were stopped 253 comments had been submitted, almost all from credit union members.
The members universally defended their credit unions, called the article a “hit” piece, and provided hundreds of firsthand examples of how credit unions provide special member value.
Following are a few examples of the readers’ responses unleashed by this former banking regulator’s critique of credit union’s tax status.
From a bank customer and credit union member:
I have business both with a major bank and a credit union-right now the rate on my major bank credit card is 27.99% (they cut my rate a whopping 2% from 29.99% a few months ago!)
Right now, the rate on my credit union credit card is 8.99%
You can probably surmise from the above anecdote who gets most of my business…
From a 30 year member::
I have been a credit union member for 30 years. No hidden fees, low interest credit card, interest on my checking and savings, no service charges, talking to real people, great service, the list goes on and on. I would prefer to never have to deal with a bank again. I’m sure big banks would love to crush credit unions.(Reader comment ratings: Provocative/Thoughtful 61)
From a member with mortgage loans for 37 years;
I’ve had a mortgage since 1988 on my successive residences, usually with an escrow account to pay property tax and homeowners insurance. Refinancing in 2012 with a credit union was the first time I managed to persuade my lender to include California Earthquake Authority premiums in the escrow account associated with my mortgage.
I’ve been much more satisfied with the service I’ve received from a credit union than from any of the big banks I’ve patronized over the years….
A Question posed: The difference, who cares more about you?
Ask yourself a simple question. WHO cares more about YOU as an individual? A big bank or the credit union where you are a member?
Notice that YOU are a member of the credit union – not just a customer. With banks – YOU are just another income source.
A question: Why the article?
Of all the non-profits that exist (and ALL credit unions are non-profit) – why attack the one group that actually takes care of their members instead of pushing propaganda as part of a political agenda?
Attacking the for-profit Washington Post:
Wow, taking a shot at non-profit banking!?!? Proof once again that the Post is in the bag for corporate interests. Where is the guest opinion on the mis-deeds of for profit banks? Instead of recommending that credit unions return to stricter membership rules, or limit their ability to purchase commercial banks, you go right for their non-profit status. I have not used a for profit bank in 25 years. Thankfully almost everyone on Capitol Hill banks with the Congressional Federal Credit Union (as do I) so they understand the value of a credit union.
A comment on the Opinion author:
As others have pointed out, Shelia Bair was chair of FDIC during the 2008 financial meltdown. She was a major architect of the TARP bailout of Chase, Bank of America, Wells Fargo, and the other big banks.
This is an unadulterated hit piece against Navy Federal Credit Union, which is competing with the big banks directly in their consumer banking business.
The comments extend for another 240+ reader reactions. These words are not lobbying jargon, irrelevant numbers or cliches. They are from lived experience motivated by personal feelings.
Implicit in these words is a readiness for action. This potential is the real source of credit union power, not the amount of PAC dollars donated. It is the member-owner-voter’s relationship with their credit union.
This foundation of the movement is a latent, “sleeping giant”-a phrase used by Ed Callahan during the 50th anniversary of the FCU Act in 1984 and afterwards. Deregulation had placed the responsibility for the future of credit unions back where it started, in the hands of boards and members, not the federal government.
America is in an era of political disruption. The issue of taxation will undoubtedly arise in several contexts. But the real challenge of crafting a new beginning, a rethinking of who we want to be, is much greater. And it may be beyond the grasp of those who seek only to defend the existing co-op status quo.
What is necessary are new models to tackle critical opportunities for clarity about credit unions’ future role in the American economy and members’ lives.
The country is hungry to reset foundations, recommit to fundamental values and for new generations of leaders who can innovate with cooperative design.
We should avoid marketing our fear of change to garner internal support, but rather take this fluid moment to rally our members for a renewed vision of what we can be.
And like the initial founders, or the change makers who led deregulation, this new era can be both frightening and enlightening. This redesign may involve both government/regulatory relationships and new realities for industry participants taking responsibility for our future. It may entail new organizational relationships and partnerships.
If one looks closely the seeds for a new future are already there. Some have been planted by those seemingly old school; others are in the enthusiasm of a generation that seeks to change the world. Our skill will be to identify those whose directions empower others with their vision, versus those intent on enhancing their existing legacy returns.
Let the conversations begin. If you have any doubts about what members value, just go the article and read some of the several hundred more comments. The members’ voice is there if we really listen.
On December 31, Credit Union Times reported the $1.8 billion Hanscom FCU’s (Littleton, MA) intent to purchase the $306 million Peoples Bank of Chesterton, MD.
The Peoples Bank, founded in 1910, operates seven branches with 78 employees serving approximately 20,000 customers.
The Times article stated this was the 21st proposed bank purchase in 2024. It seemed like just another example of a credit union buying bank customers to demonstrate the advantages of being part of a cooperative.
But then this announcement became the lead example in a Washington Post February 3, 2025 opinion piece written by Sheila Bair, the former Chair of the FDIC. The title tells the article’s purpose: Tax-free credit unions are thriving at public expense.
To illustrate her thesis that “many credit unions have been abusing their nonprofit and tax-exempt status to expand beyond their mandate,” Bair provides a personal example. “I will soon become the customer of a Massachusetts credit union that is using some of its untaxed income to buy my Maryland community bank.” Note the use of “my” turning the credit union ownership idea upside down.
She asks: What does a credit union 20 miles outside Boston know about the needs of our small, rural Eastern Shore communities nearly 400 miles away?
Bair’s opinion article is a professionally written “attack piece” using her prior FDIC role to give it a professional aura. It references multiple credit union public shortcomings covered by the press in the past six months. There is no analysis of the transaction. Using her FDIC credential and the personal reference to “my bank” she adds a credible face to a bank lobbying position in DC. She implies, without evidence, her community is losing an important local asset, when it is those owners themselves who must approve the sale.
In both size and example, credit unions are more and more in the public’s eye. When coop boards and CEOs believe their actions are merely private transactions, they miss the reputational impact on the entire system. As one observer has said: The “Bigger Picture”?… there is one even if you don’t understand it.
The parties’ joint press release was sparse on specifics and long on rhetoric:
“Hanscom and Peoples Bank share similar values, placing our members, customers and people first,” said Peter Rice, CEO of Hanscom. “Through this combination, we expect to expand Peoples Bank’s ability to invest in its communities across Kent, Queen Anne’s and Talbot Counties. Additionally, with this enhanced geographic reach, and proximity to Washington D.C., we expect to further support our founding mission by bettering our ability to serve all individuals that serve our nation. We are proud to honor Peoples Bank’s legacy and look forward to welcoming its talented team and nearly 20,000 customers to Hanscom. Together, we will bring expanded financial opportunities to a region rich with potential.”
This explanation does not address Bair’s obvious question how a Massachusetts credit union located 20 miles outside Boston will better serve Maryland’s Eastern Shore counties. The area is a peninsula that stretches from the Chesapeake Bay to the Atlantic Ocean. The region’s economy is dominated by three industrial sectors: fishing along the coasts, especially for shellfish such as blue crab; farming, especially large-scale chicken farms; and tourism, centered on the Atlantic coast and beach resort of Ocean City.
Hanscom says nothing about any connection to the area or how it will serve this very different, distant region. Peoples Bank chairman states: Hanscom is the ideal partner to carry forward our 114-year legacy. Its commitment to community investment, our nation’s service members and innovation matches the values that our employees and customers hold dear. This combination ensures our customers and business partners gain access to a broader range of resources and innovative solutions. . .which we expect will redefine banking in our region.
The full 2024 results for both organizations are now available. Each firm seems stable but neither has shown balance sheet growth for a number of years. Hanscom’s total shares, loans and assets at yearend 2024 have declined from December 2022. Delinquency has gone from .25% of loans to 1.56% in the same period. Net income for 2024 was $2.3 million a steep decline from $23.2 million in 2023. Net worth is 11.8% and it reports three fewer branches compared to a year earlier.
From 2020 through 2024, Peoples Bank deposits are virtually the same at $268 million. Loans have grown from $174 to $187 million while total assets are static at $305 million. In these five years, total shareholder capital has increased from $30.2 to $35.5 million. The bank’s 2024 net income was $3.3 million, or $1.0 million greater than Hanscom’s.
Both financial institutions’ balance sheets have flat lined. Earnings are down from the prior year. Peoples Bank relies on its wholly owned insurance subsidiary for a significant portion of its non interest revenue which flows through to the bottom line.
So why would Hanscom decide to purchase this financial institution distant in both miles and market environment from its home base? The question becomes especially critical when no price is provided in the announcement.
At yesterday’s closing, Peoples Bank has a market capitalization of $37.9 million at a price of $52.11 and 728,918 shares outstanding. This is just above the bank’s book value of $35.6 million at yearend 2024. The price is also about 60% above the per share trading range of $31-$33 during 2024 prior to the December purchase offer.
If the purchase is similar to other transactions at 1.25-1.5 times book value, Hanscom’s total cash outlay would be approximately $50 million. It is clear why Peoples Bank’s owners would be interested in this sale. However the critical question is how are Hanscom’s current members and traditional communities benefiting from this purchase?
The distance between the two markets means there are no traditional “network effects.” The announcement says Hanscom intends to retain the branches, staff and name Peoples Bank and operate with a regional manager. Is this just a cash injection in a new area to revive a static franchise? If there is to be a new brand at some point to combine operations, will both market legacies be lost?
Sheila Bair’s personal reference to this proposed transaction placed it in the public spotlight. It raises a fundamental question: Why did Hanscom do this? There is no business case presented. Is this just a serendipitous response to a broker shopping a bank looking for a buyer with lots of cash?
The circumstances of this example are used to reinforce the intent of her article that credit unions are just another form of financial choice with no special purpose. And their actions are no different from community banks, except they pay no taxes.
Hanscom’s announced intent to purchase Peoples Bank may have a more studied plan. But at the moment, the only reason seems to be, because it has the money. If that is the case, it just proves Bair’s thesis and becomes part of the bigger picture, even if you don’t at first see it.