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.
What lesson does the oldest continually operating restaurant in Bethesda have for credit unions? Especially those who believe they need size and scale to succeed?
In 1935 in the middle of the Depression, the Tastee Diner began operations serving twenty-four hours a day. (Note: the Federal Credit Union Act was passed the year before) The diner would close only 42 hours a year from noon on Christmas eve until 6:00 AM the day after Christmas. However, it reduced its hours from 5:00 AM to 10:00 PM after reopening from the covid epidemic.
Its long narrow layout is just like the typical diner: wooden booths or single seats at the counter where you can watch as the cooks prepare your meal at the open grill.
The menu specializes in “comfort food” such as a full breakfast anytime. Daily specials are offered– spaghetti or fish on Fridays, meatloaf and mashed potatoes , with two sides; and every familiar sandwich option including grilled cheese and hot dogs. The menu has daily specials and senior selections at reduced prices. Its real milkshakes are served in the metal mixer can which contains at least two full soda glasses of my favorite food.
The owner sits on a counter stool opposite the cash register to welcome you. Sit anywhere. Waitresses welcome you back. You know their names. Montgomery County police on duty stop by for takeouts. High school students gather after football games. Families have birthday celebrations with young kids and floating balloons;. “Seniors” like my wife and I, go to have an outing in a familiar setting. The tunes on the jukebox at each table still cost just a quarter to hear Johnny Cash Walk the Line or other 1960’s Rock and Roll favorites.
In September 2022 a new neighbor opened its doors. Marriott International cut the ribbon on its new headquarters, a 21 story building built using all the vacant land around the diner.
The chairman of this Fortune 500 firm (ranking at # 173) is David Marriott. In the September 21, 2022 Washington Post article celebrating the opening, he presented the company’s history and how it chose DC as the base for this Utah raised family.
In short, David’s grandfather opened a root beer business in Washington after completing his two year Mormon mission assignment on the East Coast. Ice ooid root beer from his first stand was not in great demand in winter cold, so the business expanded to hot food such as the Teen Twist Ham Sandwiches, Mighty Mo Burgers. The business’ new name: Hot Shoppes.
Today, there are no Hot Shoppes. Marriott long ago diversified into the airline catering and then lodging businesses. Now it operates 8,100 hotels with brands from Aloft to the Ritz -Carlton.
But what does this international food and hospitality conglomerate have to do with Bethesda’s Tastee Diner?
In the 2022 interview with Chairman David Marriott the oldest, longest operating Bethesda restaurant came up this way:
The views are great from atop the glassy new headquarters, designed by the firm Glensler. David pointed out the Sugarloaf Mountain in the distance. We were standing near a notch in the Building. Twenty floors below was the reason for the notch: the Tastee Diner building ,whose owners had declined to sell.
“When my parents were away, the woman who watched used take me there” he said.
Not to Hot Shoppes? “She liked “Tastee Diner,” David said.
Want to know how to counter the threat and buyout temptations of even the most aggressive credit unions?
Have loyal customers who seek your product, especially those who care for the children of the founder of a restaurant chain or even a credit union executive. Such loyalty is a variation of SECU’s mission statement: Send us your Moma! And also, keep local ownership of the business.
Following the Post story, the next time we went to Tastee I asked the owner sitting at the counter why he didn’t just sell out. He said he owned the land and they “wouldn’t offer me what I though it was worth.”
In the recent decade all of the chains and restaurants our family visited growing up have closed: Roy Rogers, McDonalds, Dominos and Pizza Hut plus other locally managed eateries. Today I know of no restaurant in Bethesda that has been in business for over ten years. Most new entrants create new concepts to appeal to a well to do clientele. These primary locations seem to change business brands about every 3-5 years. Their “newness” gets old fast.
Local matters, especially when you “own the land.” So the next time some glib acquisition broker or salesman comes calling to buy your credit union, just remember a child’s babysitter who brought the future leader of Marriott International to the Tastee Diner because “She liked the place.”
A loyalty so special that the “child” recalls the experience four decades later. Local loyalty is priceless.
On October 15, Callahans offered a free webinar that analyzed the macro trends of all credit unions with less than $500 million in total assets.
The link to the recording and the slides can be found here. The significance of this macro-micro analysis is two-fold.
As shown below, this segment makes up over 84% of active charters. Secondly, as you listen to the analysis and comparisons with all credit union trends, the differences are not as dramatic as one might assume. On a number of indicators, this segment outperforms all credit unions since 2019 (eg. delinquency and charge offs).
The all-industry five-year trends reflect the performance of credit unions over $500 millions as these account for 85% of industry assets. However the differences are small (eg. ROA). In some cases the differences have nothing to do with scale, but rather business strategy. An example in the webinar was the higher apparent member increase in larger cu’s; however, the analyst attributed this to third party loan originations, not organic growth.
Listen to the presentation. If one were to view these 84% of charters as the movement’s seed corn, the opportunities for the future would seem promising. Especially in the 4,000 or more groups and communities they serve. What will be critical is that existing institutions and approaches support the feeding and tending of these institutions. And not their acquisition by performance-challenged larger institutions.
This is the webinar’s initial data slide showing the segments by percentage of institutions and asset size as of June 2024.
(Note: See current article in CU Today, Small Credit Unions Beating Big Credit Unions in Key Performance Area for latest confirmation of the webinar’s thesis)
From the Report’s Introduction: Since 1991, the National Cooperative Bank (NCB) has published its annual NCB Co-op 100®, highlighting America’s top 100 cooperatives. In 2023, these member-owned, member-controlled businesses generated revenues of $325 billion, a slight increase from 2022. Many of these cooperatives that appear on the list are household names and are known throughout the world.
The full listing begins on page 10. Credit unions hold 4 of the top 50 positions as follows: Navy FCU # 9; State Employees NC # 28; PenFed # 33; and BECU # 44.
Nine credit unions are in the second 50. I will let you look them up here.
I found interesting that while credit unions account for 13 of the 18 institutions in the finance category, there are five other financial cooperative charters serving specific sectors of the economy such as agriculture.
The NCB Report provides an overview of the role of major coops, many familiar to consumers: REI, Ocean Spray, Land ‘O Lakes and ACE Hardware. This summary is a quick and useful introduction to areas of the US economy which have coop options.
Fifty years ago, it was legal to deny credit to a woman without a male co-signer.
Read how this situation was changed by Congressional legislation. Since women such as Louise Herring played a vital role in the creation of the cooperative alternative, one might assume that “free market” innovation or competition can be relied upon to rectify prior shortcomings. That is not always the case. Until finally corrected by rule, generations can be denied lifetimes of equal opportunity.
Sometimes the market is only “free” for those who already occupy positions of power and advantage.
This question was asked at a recent conference in which the current campaign was a primary topic. The one answer I heard was by a person who would invest his time and effort into local organizations and issues. He believed this provided a better opportunity for compromise and creating shared solutions versus the ideological divides at the national level. He also believed that this is where democratic practice is learned and becomes a foundation for change at higher levels of political leadership.
Supporting this thesis is a movie just released on Netflix called Join or Die. The film chronicles what it calls the “unraveling” of the country’s social fabric and seeks to answer the question: “What makes a democracy work and what can I do to help?”
David Brancaccio interviews the film’s co-producers in this brief article. I will be seeing the movie this Sunday at a local church. One of the film’s messages is on the importance of community connections. I will be looking to see if credit unions are one of those local organizations mentioned.
Enough reading for one weekend! Get ready for Halloween.
The strategic advantage that is the foundation of every credit union is its local roots. Local does is not just a geographic focus. It includes connections, relationships, reputation and knowledge that extends back years, or even generations.
This advantage allows members to see the coop as part of their community. It is a financial and physical presence that helps define the character and economic opportunities for their neighbors.
Unfortunately some actions can compromise this long standing presence, especially mergers which often eliminate any vestiges of a credit union’s roots. No more local employment, direction, or participation in community life and leadership remains. Only a virtual connection is left, which may serve some well, but others not at all.
Sometimes it is easier to see this critical role from another industry’s perspective. The following is the story of both the demise and the resilience of local newspapers. This editorial is from the October 23, 2024 Falls Church News Press.
This week is an especially sad one in the hometown of our editor. Following the termination last year of the publication of the Santa Barbara News Press, after over 100 years, this week its remains were being sold off in an online auction, bit by bit, pennies for the dollar.
Meanwhile, the old Spanish Days-styled News-Press building downtown is gutted, like mugged stabbed and left for dead behind a dumpster where so much activity and discourse on the direction of the community took place daily for so many years.
A supporter of this News-Press for which this Falls Church one was named, and where our editor began writing while in high school, made the point last week talking about the importance of community newspapers:
It’s not just about news, per se, but about the dialogue on the interests and future of the community that is a local newspaper’s essential component. It isn’t about whether or not a newspaper’s slant or editorial content is agreed to or not, but it is the way in which the newspaper enters the homes of residents, by way of being gathered off the roof or out of a rose bush as tossed by a wayward delivery boy, and read and discussed for its contents in the midst of the daily life of the community which makes it so essential.
It is the entry point for a community-wide dialogue involving everyone. It is a proxy for the community itself, as it were, its agora, or public meeting space as per the ancient Greek city-states, delivered ito every home where matters are fleshed out and elevated to everyone’s common interest and concern.
This is what a newspaper is, and to be its best, it has to be in print form in full physical, sensual and tactile presence, to function most adequately and widely where no element of an entire community can be neglected or dismissed. Also, at best it is the product of a member of that wider community, a citizen exercising a calling to provide the service in question according to the highest of principles, and not the government, to most effectively trigger that community engagement.
While the functions of a local newspaper and financial institution are very different their contribution to a sense of community is similar.
The daily role and public need for local community financial institutions mirror many of the same contributions of a local newspaper. The credit union’s presence is seen, it is locally directed by those who view their roles as volunteers or employees as a “calling.” It is the collective for borrowing and savings by individuals and organizations to better their futures. Finance, like news, is an essential service.
Decisions made locally for the welfare of all give cooperatives a special function alongside the many other institutions vital for living and working together in common purpose. By design they pay their success forward to benefit future generations.
(Note: For a current example see press release, 717 Credit Union Launches “Forever Youngstown” Initiative)
These coop business virtues sustain both large and small credit unions. They contribute to a sense of shared identity that is more than just geographic boundaries. Financial services is a critical part of the fabric of any community in which individuals choose to establish their identify and live their lives.
When credit unions make this contribution they are showing their”best selves.” Unfortunately other motivations and temptations can come along that negate these cooperative advantages. That situation will be the subject of a future case study.
This brief message is an example of a CEO using a personal story to teach the importance of a critical consumer discipline: personal savings. It should resonate with his core members at Camp Pendleton.
“Whether tackling debt, building savings, or thinking about retirement, financial fears can freeze us in our tracks. It’s easy to feel stuck, not knowing where to start.
“Here’s the thing: even the best budgeters and investors have stumbled. I know I have, and I bet you have, too. What matters isn’t our mistakes—it’s how we recover and move forward.
“In the Marines, I learned that no obstacle is too big to overcome. The key is staying focused, learning from experience, and taking that next step. The toughest situations often teach the most valuable lessons.
“I’ll never forget when I was a young Marine at Kaneohe Bay, Hawaii. Shortly after arriving, I competed for and earned a spot in the Reconnaissance Company. I could share countless examples of challenges I faced as a Recon Marine, but the one that stuck with me most wasn’t from the battlefield.
“After a week of tough training, the Company Gunnery Sergeant asked us one simple question: “What are you doing with your money?” With free housing, meals and healthcare, our expenses were minimal. His point was clear—were we making the most of it?
“My answer didn’t sit well with him—and it wouldn’t be the last time. Turns out, I had a knack for getting the Gunny fired up. I proceeded to receive a 10-minute tongue-lashing on saving. He ordered me to set up an allotment to buy a Savings Bond every month—and I did because you don’t argue with a Marine Gunnery Sergeant!
“His advice didn’t stop there. He told me to increase my bond purchases with every promotion or pay raise. His final lesson? Live within your means and know the difference between needs and wants. While I admit to blurring that line at times, his advice stuck.
“Years later, as a Gunnery Sergeant myself, I cashed in those bonds to open an investment account and was amazed at how much I’d saved, bit by bit. Those lessons in saving and budgeting helped my wife and me buy our first home and start our family—something I owe, in large part, to that Gunnery Sergeant’s wisdom.
“As we close out the year, now is the perfect time to make those small moves that can set you up for success in 2025 and beyond. Start a savings habit, set achievable financial goals or fine-tune your budget. You don’t need to wait for New Year’s resolutions—starting now takes that weight off your shoulders. It’s not about being perfect. It’s about making progress.”
(Source: Frontwave’s President Bill Birnie, October 22, 2014, Notes from the CEO)
Credit Union Visionaries: Do we have so few credit union visionaries because we’re a non-prophet movement? (Jim Blaine, February 2011)
From the cadet prayer at West Point:
Encourage us in our endeavor to live above the common level of life. Make us to choose the harder right instead of the easier wrong. . .
Freedom is based on democratic elections. In these contests, there will be winners and losers.
In the current Presidential election a major portion, 45% or more of voters, will be disappointed that their candidate did not win. One candidate has yet to even acknowledge the results of the 2020 contest!
Contestants and their supporters pour their hopes, resources and emotions into the campaign. It is hard to accept a loss. But recognizing that outcome is what is required if democracy is to prevail. And if one is still committed, prepare a Plan B.
The October board contest for the four open director seats at SECU (NC) was hard fought over issues raised two years earlier. It is a rare, but vital example, of the members’ governance role in a large financial cooperative.
SECU’s election process favored the incumbent directors who were renominted by their board peers. The credit union promoted their support on social media and in PR posts.
For the member-nominated candidates and their supporters it would be easy to cry “foul” and argue the process was weighted against them. For it was.
However that was not the stance posted by Jim Blaine, the voice of the opposition candidates, who heard these complaints.
On the day after the election results were announced, he posted the following blog:
… hard to miss that statement!
In case some of you missed it (and some of us wish we had!), the SECU membership voted by a 2 to 1 margin at the Annual Meeting yesterday to elect the four incumbent directors Bob Brinson, Mark Fleming, Stelfanie Williams, and McKinley Wooten
The election was hotly contested and @100,000 SECU members participated in the election and balloting process – a remarkable turnout. A healthy sign of member interest and participation! As you’ll note from the resulting flurry of blog commenters, there was much excitement and disappointment.
What you can’t see are the numerous deleted comments complaining about a rigged election and unfair tactics, etc, etc. I happen to believe the board election process was fair – period!
We all need to “get over” the whine that if our views don’t prevail, that something underhanded was done – not so. And, that doesn’t apply to this election only, if you know what I mean.
Now, if some of you suspect that my views haven’t changed on the key issues, then we understand each other well. The reports given at the Annual Meeting provided some interesting information which we will analyze over the next few days. That review may help create a “baseline” of financial facts, against which to measure the progress of SECU, as it moves on into the future.
😎 Personally, congratulations to the new directors and – as always – I wish State Employees’ Credit Union and its staff well!
Democracy works when losers recognize the results. The next step if you believe your point of view and the election was somehow flawed is straight forward.
The corrective if one believes an outcome is not in their interest, is to practice more democracy. Get back to your feet and ready to run the race again.
The annual election of directors is a critical process that transforms members into owners. It is a “habit to be practiced” if credit unions are to fulfill their unique role in America’s financial system.
In a political or financial democracy, contested elections are the foundation for all our freedoms. Both winning and losing parties must support the outcome-period, as Blaine affirms. Then everyone wins.
This blog series uses video excerpts of credit union leaders’ wisdom, some retired, some still active. (best seen in browser mode)
They still speak to our present circumstances as their core messages are timeless.
These two videos go to the heart of what makes Wright-Patt, Dayton, Ohio a leading credit union.
The first is a one minute video by former CEO Doug Fecher on how credit unions succeed: “We show members the difference. We listen to them and act in their interest.”
(https://www.youtube.com/watch?v=MYWkI0eY8Z0)
This second video from Wright-Patt CU are members’ stories of how the credit union helped them to buy or to stay in their home. This was recorded right after the 2009 financial crisis caused many financial institutions to foreclose on home owners.
These examples illustrate the credit union’s goal of “showing the credit union difference” described by CEO Fecher.
(https://www.youtube.com/watch?v=yMJT0nneRaM)
This week’s blogs are video excerpts of wisdom from prior credit union leaders. (best seen in browser mode)
They still speak to our present circumstances as their core messages are timeless.
Grantng credit is the primary function of a cooperative. In the last 20 years risk based pricing has become the dominate practice for consumer loans. It appeals to conventional wisdom. Those who have financial success should not pay the same rate as those who have blemished credit.
However, credit unions were supposed to be a paradigm shift from the free market theory that anyone should have credit available-at the right price.
Jim Blaine, former SECU (NC) CEO, believes the initial credit union lending approach is core to the cooperative model. Risk based pricing for loans discriminates against those who most rely on credit unions for a fair deal.
In this three minute video from 2010 he provides his logic. Although retired in 2017, he continues to expand his arguments with recent studies in his blog SECU-Just Asking.
One interpretation of Jim’s approach is in this 2010 GAC interview with Wayne Vann, CEO of NavyArmy Credit Union (now Rally CU). His two keys: putting a pulse to every loan and the autonomy of lenders to make decisions. (1.14 minutes)
(https://www.youtube.com/watch?v=rSXa3T8iGTY)
This week’s blogs are video excerpts from prior credit union events. (best seen in browser mode)
Today’s are brief CNN and CNBC news excerpts recommending credit unions as an option consumers should consider.
This short clips are during the 2010 financial crisis They tell why credit unions might be a better choice.
They highlight the system’s reputation earned during the 2008/2009 financial crisis as a reliable source for loans as banks were forced to draw back.
(https://www.youtube.com/watch?v=H0dNHDsFvuE)
The following CNN excerpt compares credit union and bank average rates as part of Why Credit Unions are Better.
!https://www.youtube.com/watch?v=I_CaoDPGl7Y)
Credit unions described as an unusual source for home loans during the financial crisis.
(https://youtu.be/EwbLgsyWcjI)
What would the news report about credit unions today?
This blog series uses video excerpts with wisdom from prior credit union leaders. (best read in browser mode)
They still speak to our present circumstances as their core messages are timeless. Both excerpts were in response to the regulatory “backlash” in response to the 2008-2009 financial crisis.
The first video is a very brief excerpt from Jim Blaine, CEO of SECU (NC) in 2010 reacting to the prospect of increased regulation prompted by the financial crisis (37 seconds). His view is then referenced in the second video.
(https://www.youtube.com/watch?v=E1tnDcE6Xjo)
In 2010 Dave Serlo PSCU President analyzes credit union performance during th 2009 financial crisis in a talk called Different by Design. The context was PSCU’s annual users’ meeting.
In this 14-minute presentation he cites Jim Blaine’s remarks on regulation. Most importantly he outlines opportunities for credit unions and the “credit union promise.” He closes with four priorities for the CUSO. Now is the time to be on offense, especially for expanded lending.
Dave was a remarkable speaker using no notes or other prompts. Most importantly is his deep insight into the power and importance of the credit union model and CUSO collaboration. His final words still resonate: Carpe Diem, seize the promise of this day.
(https://www.youtube.com/watch?v=6uS7Zl3lROE)