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.
Summary: Hanscom FCU’s proposed bank purchase raises questions of financial and business soundness, transparency and whether it benefits the credit union’s member-owners. While writing this follow-up, I became aware of a unique group of member-owners who for over 18 months had been documenting and asking hard questions of the credit union’s board and management about the credit union’s performance. This included the bank purchase. The group’s name is Hanscom Loyal. I reviewed their communications. Their ongoing efforts, which are much broader than the bank transaction, is what makes this situation a valuable example for all credit unions.
On February 7, 2025, I wrote a post, Time to Ask WHY? about the announced purchase of The Peoples Bank ($306 million), in Chestertown, MD, by Hanscom Federal Credit Union ($1.8 Billion), headquartered on Hanscom AFB in Massachusetts, with its operations center in Littleton, MA.
This sale was singled out in a Washington Post opinion article by the former FDIC Chair Sheila Bair as an example of credit unions’ tax-free status thriving at public expense.
The more important question: Is this a wise, sound transaction in the member-owners of Hanscom FCU’s best interest?
The Peoples Bank announced the $50 million price in their 2024 Annual Report. Hanscom FCU has released no information other than a single press release from December 20, 2024 about the purchase.
Because Hanscom FCU will be paying the 619 owners of Peoples $50 million in cash in return for the firm’s assets and liabilities, the first question should be, “Is this price justified?”
Because Peoples is a public company with their stock traded daily (PEBC), we have much published data on their performance. There are several ways to analyze this purchase amount.
On a price-to-12-month earnings ratio, the sale price amount is 15 times the bank’s $3.3 million net income in 2024. That is, if current earnings continue, the time to earn back the $50 million cash outlay could be as high as 15 years.
A second ratio is price-to-book value. The $50 million is 1.4 times, or a premium of $15 million, on the net equity reported in the audited statements on December 31, 2024.
Because the bank’s stock price is traded, we can compare the market’s valuation (market cap) before and after the December 20, 2024, purchase announcement. Prior to the release, the stock had traded in the $31 to $33 price range for a total market capital value of approximately $24 million (729K shares outstanding). That is, it traded below book value. Upon news of the proposed sale, the stock price jumped to $60 per share and closed last week at $58 for market value of $42.2 million. That market cap is still less than the $50 million being offered by Hanscom FCU.
These ratios will be subject to valuation and other adjustments. For example, since Hanscom FCU pays no federal or state income tax, should that amount ($960,153 in 2024) be added to projected earnings? Or, are the balance sheet assets of good will and deferred income taxes of any value to a tax-exempt credit union?
The bottom line is that the 619 bank shareholders are getting a good deal. We can see why they would want this sale to go through. The question is whether this transaction is in the best interest of the member-owners of Hanscom FCU. Their $50 million cash outlay to the bank’s owners is 22 times the credit union’s 2024 net income.
There has been no information from Hanscom FCU other than the press release referenced earlier to support this $50 million investment. In that release, CEO Peter Rice promises more investments in Peoples: “Through this combination, we expect to expand Peoples Bank’s ability to invest in its communities across Kent, Queen Anne’s and Talbot Counties.”
Other than cash, what expertise does Hanscom FCU bring to this 110-year-old community bank serving three mostly rural counties in Maryland? How do Peoples’ business priorities align with Hanscom FCU’s strategy? Its 15 locations are mainly concentrated around metro Boston, with one small branch in a restricted access building at MITRE in McLean, VA. The three rural Maryland counties Peoples serves are 400 miles away from Boston in a very different demographic and economic setting.
Peoples has two business lines. As a community bank, only 0.5% of its loans are to consumers ($872K), 50% to residential real estate and 38% to commercial real estate, development and general commercial loans. The commercial loans include agriculture for land, cattle, ag equipment and waterman loans for people who make a living from the ocean and farming. This traditional, long-time commercially focused bank contributed 64% of 2024 net income and managed $301 million in assets.
Their insurance segment is managed by a subsidiary, Fleetwood Insurance Group, and offers a full range of insurance coverage to businesses and consumers. The business has two offices, contributed 36% of the holding company’s 2024 net income, and managed just $7.8 million of assets before intersegment eliminations.
According to Hanscom FCU’s chairperson Teresa Conrad’s quote in the May 29, 2025, press release, this business was an important part of the acquisition: “The Hanscom team is also finalizing the Peoples Bank integration, ensuring a seamless transition and united experience for every member. With the Peoples Bank acquisition, we will fill a critical gap in our financial offerings with the addition of a new insurance company that offers a robust set of new products and services.”
There are two major issues to this goal of “filling a critical financial gap in offerings.” The first, how does a two-office insurance agency in rural Maryland serving small towns and businesses with long-time, local relationships compete in greater Boston’s saturated insurance market? Why not just buy an already established agency in that market?
Secondly, that “seamless transition” is not in the business plan announced in the December press release: “Following the close of the transaction, Peoples Bank branches will be regionally managed and continue to operate under the same name and brand. The Peoples Bancorp. Inc.’s common stock will no longer be listed on any public market.”
Instead of “seamless,” the intent is to continue with the Peoples name and brand and business model. Not only is this a dubious legal way for DBA positioning, but it also begs the question of any operating savings from inter-company efficiencies. It suggests that post transaction, the financial operations will become a standalone effort drawing more cash from Hanscom FCU as a “parent” company.
The business case is completely undocumented. It is a collection of generalities that suggest little effort for how the future of the two organizations will be managed. That should concern Hanscom FCU’s member-owners.
The People Bank’s 619 owners have their $50 million in cash while the credit union’s 100,000+ member-owners are left to ask: Can their leadership actually manage an acceptable a return on this investment of their funds?
This purchase appears to be a very risky, big time financial wager with the members’ money. Whatever the price tag, if as presened below, Hanscom is unable to achieve a stable, minimum return on the assets it now has, then the whole insitution-and its member owners-suffers by just buying more at a premium price.
I reviewed the track record of Hanscom FCU under CEO Peter Rice, who replaced the long-serving David Sprague in 2022. Sprague’s service was profiled in this press release:
Sprague has been Hanscom FCU’s top executive since 1996, a well-loved and respected senior leader managing over 250 employees. The credit union’s assets have grown to $1.7 billion, and membership has more than quadrupled to over 90,000 members during his 25-year tenure. He has steered Hanscom FCU to become the fifth largest credit union in Massachusetts.
Since year-end 2021, the final year of Sprague’s tenure, the following are the major firm trends under Rice for 2022 through Q1 2025 or three and a quarter years performance:
The December 2024 bank purchase announcement coincided with the poorest financial performance in Hanscom FCU’s recent history. Annual growth in shares and loans was negative. The net income of $2.3 million (0.13% ROA) was down 90% from the $23.2 million in 2023. Hanscom FCU is five times the asset size of Peoples but earned $1.0 million less than the bank in 2024.
These negative balance sheet growth trends continued in Q1 2025. That quarter’s earnings of $952,000 (0.21% ROA) were down 66% from the prior year’s first quarter. Peoples Bank again had higher net income, even after reserving for taxes.
The most concerning first quarter outcome was HFCU’s $10.8 million in net charge offs, up 642% from the $1.5 million in 2024’s quarter.
In sum, the new CEO’s leadership in the last three years has been marked by inconsistent performance and by a sharp decline in critical financial indicators over the last 15 months.
This erratic performance raises two questions. Why is this decline occurring? With this uncertain track record, what justifies sending $50 million to the Peoples Bank owners, to purchase a firm that would seem to have no geographic, strategic, or business similarities to Hanscom FCU’s core market?
Here are the last 12 months of Hanscom FCU’s financial trends compared to all credit unions in the $1 to $5 billion peer group range. This comparison shows that the industry continues to grow positively on key balance sheet and income statement indicators, but not Hanscom FCU. Why?
The inconsistent trends plus the current declines in operational outcomes raise the questions about the credit union’s leadership, the CEO, and senior management, along with the Board and Supervisory Committee’s oversight of processes and procedures.
For example, one looks in vain for any transparency or explanation to Hanscom FCU’s members or the public about this $50 million transaction. The Peoples Bank owners get a full confidential term sheet to approve the sale; the buyers paying the bill are given nothing.
I have not been able to locate a 2024 Annual Report or detailed information about the annual meeting for Hanscom FCU members, apart from a brief website announcement. There also does not appear to be any readily available confirmation of the election of directors or minutes from previous meetings. The May 29 chairperson’s statement includes no context to understand how or to whom the message was intended. It is full of marketing and PR spin about community activity, but no mention of Hanscom’s steep financial decline.
In response to my February post on the Peoples Bank purchase, I received an email from a group called Hanscom Loyal. They describe themselves as a cohort of approximately 40 current and former credit union employees, many also member-owners, deeply concerned about Hanscom FCU’s leadership.
They did not go public with their concerns. Instead, they sent detailed communications, including letters and emails, to Hanscom FCU’s individual board members, Supervisory Committee members, and copies to NCUA examiners. The FDIC was copied after the bank purchase was announced.
These multiple communications contain specific examples of violations of bylaws, board, and credit union policy, as well as questionable personnel and account transaction events. As these employees saw and experienced actions of senior management and the Board’s role, if any, the group alerted those with authority over the institution to their concerns. They did not act like whistleblowers creating public alarm. They simply asked those in positions of responsibility to investigate the factual events they listed.
Over 18 months they documented an absence of internal controls, lack of following in-place processes, and regulatory compliance failures. Their examples included specific instances of improper transactions with member accounts. They included examples of incorrect information in web and other communications. One example they provided was a credit card promotion mailer stating that Hanscom FCU was FDIC insured.
Their primary concern focused on the continued turnover and forced departures of experienced credit union personnel. The majority of Sprague’s senior team with experience has left the credit union. In instances, the resignation demand was presented as a choice: voluntarily resign to retain benefits or immediate dismissal with none.
On March 25, 2025, one employee filed suit for her dismissal. Another has submitted a formal complaint to the Massachusetts Attorney General’s Office concerning unfair wage withholding.
Such turnover in the past three years, estimated as high as 50%, is not normal. Even Hanscom FCU’s chairperson in her 2024 summary remarks acknowledges 44 internal promotions within a constant staff size of 230. This continuing exodus not only undermines morale, but it also can result in new hires or promotions without relevant experience and knowledge for the new positions.
Such internal turmoil undermines institutional performance. When informed of such institutional problems by outsiders, often the response by those in authority is to dismiss a group like Hanscom Loyal as disgruntled former employees or “troublemakers.”
Certainly, all members would or should be disappointed with these performance shortcomings. This group invested great effort to document wide-ranging examples of leadership and institutional shortcomings, with facts, not opinions. Their stated goal is to return Hanscom FCU to its prior level of member focus and service.
Both FDIC and NCUA have acknowledged receiving Hanscom Loyal’s specific detailed complaints of the past 18 months. One of NCUA’s responses on August 21, 2024, included the following:
I just want to confirm receipt and assure you we take these concerns seriously. As you are aware, we are responsible for enforcing certain rules and regulations. Employment matters, in general, are not under our purview and are governed by state law. As frustrating as those issues might be, they are not matters we regulate or enforce. Those are more matters for the credit union’s Board and your legal counsel, should you choose that route.
NCUA’s characterizing these detailed concerns as merely employment matters completely misrepresents the internal management issues that Hanscom Loyal described in detail. Suggesting these events are only for the Board and Hanscom Loyal’s legal counsel to address dismisses the ‘M’ for management, in the NCUA’s CAMELS rating. This exam component specifically assesses senior management’s performance, firm governance, and procedural oversight, including member annual meetings.
Hanscom FCU’s declining financial performance, lack of routine transparency with members, and the Board and Supervisory Committee’s failure to address documented concerns suggest a dysfunctional management team and a board and supervisory committee unable or unwilling to fulfill their responsibilities. To propose that member-owners may need to hire legal counsel is a parallel failure by NCUA to acknowledge their supervisory obligations.
Should Hanscom FCU’s $50 million proposal to purchase a bank be approved by NCUA? This effort to acquire a bank 400 miles away — without a clear business plan demonstrating any benefit for its member-owners — appears to be another example of poor management judgment. Moreover, paying out $50 million in cash adds significant financial, operational, and market risk to the credit union, already in a financial stall.
This transaction does not appear to be a carefully considered strategic initiative; instead, it appears to be a reaction to an opportunistic proposal from brokers eager to strike a deal with a cash-rich credit union.
If the 729,000 shares held by Peoples’ 619 shareholders receive the same pro rata of the $50 million purchase, the per-share price would be $69 dollars. That is more than double the bank’s market value before the offer. So how does this transaction serve Hanscom FCU’s member-owners whose funds would pay out the bank’s owners?
The Hanscom Loyal group has provided Hanscom FCU’s Board of Directors, Supervisory Committee, and federal regulators with details of documented mismanagement that directly affect the credit union’s financial performance. This is most evident in high employee turnover and specific examples of questionable practices that have been shared.
Hanscom Loyal has acted as member-owners should. They collected facts and brought these documented issues to the appropriate parties. Despite NCUA’s onsite annual supervisory exam and the Board’s awareness of the group’s forwarded operational issues for over a year, Hanscom FCU’s leadership nevertheless proceeded with the Peoples Bank purchase announcement in December 2024, approving it unanimously.
It should be clear to even a casual observer that Hanscom FCU’s member-owners would be best served if the credit union first put its own house in order. Spending $50 million now sends a message to concerned members that the cooperative system is not working for them. Annual meetings appear, at best, closed in-house affairs with no transparency for the owners to become involved.
NCUA’s cursory advice to members to hire legal counsel if they receive no response from the credit union is an abdication of their responsibility to ensure the safe and sound operation of the credit unions they examine.
The NCUA’s August 21, 2024, email acknowledgement to Hanscom Loyal’s list of concerns included this:
We will certainly consider any matters violating areas we are charged with overseeing, as well as evidence of fraud. All examination results are confidential and cannot be shared.
I encourage you to submit the matters below to the Supervisory Committee and the Board of Directors of the credit union, if you haven’t already. The Supervisory Committee is the “watchdog” of the credit union and is responsible for independently investigating such complaints.
What are credit union member-owners to do when there is no Supervisory Committee watchdog responding to their concerns, no Board elections that are open to all members, and no meaningful evidence that NCUA exams address either specific operational issues or an institution’s leadership shortcomings?
Instead the opposite message is sent to member-owners when the credit announces it is investing $50 million to buy banking assets in a rural market 400 miles distant.
If anyone with internal responsibility for the credit union or NCUA in its external examination findings had given any credibility to the group’s many messages, this bank purchase offer should not have seen the light of day.
Credit union leaders’ failures to respond and impotent regulatory oversight is, unfortunately, not uncommon in the credit union system. In previous blogs I have provided examples such as yesterday’s Space City merger with TDECU. Individual members spoke up, wrote their credit union and regulators with deep concerns, but were treated as “nobodies.”
The difference in this case is Hanscom Loyal’s organized effort, the volume of factual examples and a commitment going on two years to make things right. They are doing this in the right way not in public outbursts.
As uncomfortable as this example may be for some, every credit union would benefit from member-owners who believe in their credit union so deeply that they are giving time, effort and energy to make their coop better.
Hanscom FCU’s entire operating context suggests that this proposed bank purchase should be dropped immediately. The leadership issues would benefit from having persons with the expertise and commitment of Hanscom Loyal added to internal oversight roles.
Everyone’s overarching goal should be to restore the credit union as a true cooperative whose priorities serve member-owners best interests, first and always.
Note: In writing this follow-up, I have reached out to both Hanscom FCU and The Peoples Bank but have not had a response. Should I receive responses, I will update this post. The Hanscom Loyal group’s email is: hanscomloyal@proton.me
This past weekend a Houston Business Journal article noted a 30-day gap in TDECU’s disclosure of its failure to receive regulatory approval for its Sabine Bank purchase versus the date of the Bank’s online post. During this period TDECU finalized the merger of Space City CU. During the public controversy, regulators feigned impotence to do anything about this deeply flawed transaction.
To understand the significance of this regulatory inaction, it is helpful to recall some circumstances of this merger travesty.
On May 25th, I posted a two part analysis of the proposed merger of the $147 million Space City Credit Union with the $4.8 billion TEDCU.
The Member Notice was mailed on March 28th, providing the public for the first time the details of payments to senior staff. All member voting ended May 14th. The result was 862 of the 12,000 eligible members voted with 82% for and 18% against. End of story?
I summarized this sleazy event as follows: This self-dealing transaction marked by conflicts of interest, lax board oversight and member manipulation is the latest example of internal corruption in the $2.3 trillion cooperative system. . . State and federal regulators seem oblivious or powerless to stop this internal pillaging.
Here were some of the merger specifics. In distributing the surplus from Space City’s 14.6% net worth, the top three employees received $6.750 million of which $4.0 million went to the CEO. He already had a cu paid retirement plan and a $3.250 split dollar life insurance plan. This $4.0 million total was equal to 53% of the entire retained earnings of the credit union in its 60-year history!
Two components of the total payments to the CEO and COO came directly from TDECU, not Space City’s reserves. This total of $850,000, approved byTDECU’s CEO and board, was an outright “gratuity.” What was the fiduciary responsibility of these two persons with direct responsibility for arranging the merger and its approval by members when receiving direct payments by both parties?
To top off these senior staff incentives, members were given a “bonus” dividend from their collective savings. However, it was designed so that members with the least amounts of shares received the greatest percent return. Those who had the most to lose received the lowest percentage. Specifically all members with $289 in savings or less, would receive $100 bonus. If the vote were NO, you get nothing.
In addition to this blatant self-dealing, the basic concern with this merger was that the financial performance of TDECU, the continuing credit union. For the prior 15 months its financial performance had deteriorated. It reported a loss in the first quarter of 2025, and a troubled loan portfolio with 2.01% delinquency (up from 1.13% prior year) and an allowance coverage ratio one third of the peer average. Its balance sheet loan and share growth had flatlined under the new CEO.
Most importantly to TDECU’s future ambitions, it had announced in April 2024 the purchase of the Many, LA based $1.2 billion Sabine Bank. A “definitive acquisition agreement” was in place with the transaction to be completed in early 2025.
“TDECU is on a growth journey to expand across the state of Texas and beyond,” the credit union’s CEO, Isaac Johnson stated.
When askng the state and federal credit union regulators, when and who had approved the merger, these were the replies:
From the Texas Commission: preliminary approval was given by Department (Commissioner) on February 6, 2025. . .
From the NCUA: The merger was approved by Southern Regional Director Keith Morton on March 6. . .
So long before the Space City members knew any details of the merger (Member Notice dated March 28), both credit union CEO’s knew their two regulators had approved their self-serving actions. The financial statements with the Notice were also six months old, September 2024, not even for the full 2024 yearend.
The members knew nothing until receiving the March 28 Notice, but the credit union leaders who privately put it together, knew they had the deal approved.
All the controversy after the members and public learned of these details went for naught. The regulators had said OK. It was all over but the shouting, which occurred in June when the merger was completed.
So at this point the merger just seemed another example of regulatory ineptitude, indifference or perhaps other factors such as legal or poltical intimidation preventing any relook. The members were unprotected, fleeced and alone. Those charged with protecting members’ best interests feigned impotence, or would assert, It’s just up to the members.
But on July 3rd an article appeared in the Houston Business Journal: TDECU delays rebrand as it closes Space City Credit Union merger, terminates bank acquisition
The article’s main points are that the Sabine Bank acquisition is off, the Space City merger is done, and that the rebrand using Space City is on hold.
The most interesting line however is the reporter’s final comment when reacting to this post on the Sabine Bank website about the failed purchase which reads in part:
“On June 4, TDECU and Sabine State Bank and Trust Company (Sabine) announced their mutual decision to not move forward with the planned acquisition and to terminate their agreement . . . to which the reporter added:
The termination was also not disclosed directly by TDECU via a press release or to the HBJ until July 2.
This is the example of regulatory double speak. This “definitive acquisition agreement” of Sabine needed only regulatory approval. This means NCUA and the Texas Commission would make the decision because this is where the oversight of the outcome would reside.
The deal got stopped, but was not disclosed by TDECU until July 2, Sabine’s post is dated June 4. Why?
The obvious answer is so the Space City merger can proceed unimpeded. The credit union regulators refused approval of the bank acquisition because they didn’t believe TDECU was up to the task. But go ahead and take over these 12,000 members and their future for this is an event too minor to concern us.
The TDECU regulatory hold up did not begin on June 4. The potential problems with this purchase and TDECU’s declining performance were obvious for at least six months from call reports. But proceed with the credit union takeover.
This regulatory double speak, two TDECU transaction and two opposite outcomes, is the most concerning aspect of regulatory oversight. The Texas Commission and NCUA did not respond to the deeply concerned members who spoke out only after they first learned how disgusting this deal would be. They were “nobodies.”
Besides the regulators already told the credit unions it was OK. They couldn’t go back now and change their decisions made in private because of members’ concerns.
By all the standards most members care about, the Space City merger heist was abundantly clear. The regulators ignored their own words such as the members’ best interest and fiduciary responsibility. The members are sheep left to the care of wolves. In this case both state and federal regulators aided and abetted their exploitation.
The Sabine Bank purchase was stopped by credit union regulators while they stood still during the acquisition of Space City at the very same time. TDECU’s capabilities were fine for credit union members but not a bank’s customers. TDECU is now backing away from even converting to the Space City brand—a selling point in the merger.
Today we live in a political debate where regulatory oversight is presented as one of two extremes: laissez-faire, that is let the market decide or, regulation protecting those powerless against market exploitation.
But there is a third possibility, worse than these two political extremes. This is fake regulation deceiving the public that regulators really are on the job and have rules and processes in place to ensure compliance. But the regulators do not enforce their own rules.
The credit union market sees this regulatory GAP clearly and the zealous and ambitions are rushing to take advantage. The result will be that the credit union members may lose their cooperative system because of regulatory neglect.
Freedom is not a state; it is an act. It is not some enchanted garden perched high on a distant plateau where we can finally sit down and rest. Freedom is the continuous action we all must take, and each generation must do its part to create an even more fair, more just society.
—John Lewis, Across That Bridge
Citizens marching in Bunker Hill, Massachusetts on Independence Day 2025
Remembering the Minute Men’s Call to Action
People take shelter overnight in an underground metro station during Russian missile strikes.
A portrait of fallen U.S. volunteer fighters and flags among Ukrainian ones at a makeshift memorial to Ukrainian servicemen and international volunteers killed in action on Independence Square in central Kyiv on July 2, 2025.
From the Kyiv Independent July 3, 2025: As Russia ramps up missile attacks, US halts promised air defense shipments to Ukraine. Kremlin welcomes reported pause in US arms shipments to Ukraine, says it brings war’s end closer.
The largest prisoner exchange shows the joy of freedom regained.
(https://www.youtube.com/watch?v=64J55YzwI5s)
On this 4th of July, all freedom loving people will stand at the national anthem for one country. Its people are on the front lines defending the right of all persons to determine their political destiny.
Listen as this anthem is sung from the New York Island to the Baltic Sea by the largest choir in the world.
(https://www.youtube.com/watch?v=mUfwy3f3R4s)
(https://www.youtube.com/watch?v=4INYnx5e5JI)
Before our July 4th patriotic celebrations, I want to pesent a cautionary note about the insecurities of those who wield great power.
Russia’s invasion of Ukraine has many lessons for America. I want to suggest a moment of political parallel in Russia’s conduct with an evolving situation in America. In both cases a senior, powerful wealthy political insider decides to oppose the leader who gave him national standing.
Elon Musk is an intelligent, driven, iconoclastic person capable of great business innovations and disruptive technology accomplishments.
In 2024 he decided to go all in on the presidential race. He became the leading donar to Trump’s campaign, at an estimated amount of nearly $300 million. For this contribution and other practical benefits, Trump appointed Musk as the anointed but unconfirmed leader for DOGE’s radical government downsizing.
Musk’s team wielded a wrecking ball across all government. He gave political cover for the persons confirmed by the Senate who were theoretically in charge of individual agencies. They could now fire people and shut down programs at will. For example, the Agency for International Development’s (AID) closure and transfer of any minor leftover functions to the Rubio-led State Department
Elon’s service certainly benefitted his several companies with government and foreign contracts. These include expanded agreements with Space X, Tesla and the Starlink satellite communication system, especially from new country signups during trade talks with the US.
But ultimately these two men’s egos could not fit in the same room. Elon departed in June to focus on his companies. But he couldn’t help but take some parting and subsequent shots at Trump’s policies. He was especially outspoken on deficit spending in the reconciliation bill which also ended much of the government’s support addressing climate change.
Musk then threaten to oppose members of Congress who supported Trump’s positions on critical legislation. At one point he mentioned the possibility of funding a new “center” party to support his preferred policies.
Musk used X and Trump Truth Social and his presidential pulpit to clash publicly. The exchanges grew so heated that Trump recently said his administration should “DOGE” Musk’s government contracts. And perhaps research his citizenship application to see if he can be “denationalized” of his US citizenship and then eligible for deportation.
From Wikipedia: Yevgeny Viktorovich Prigozhin[a] (1 June 1961 – 23 August 2023) was a Russian mercenary leader and oligarch. He led the Wagner Group, a private military company, and was a close confidant of Russian president Vladimir Putin until launching a rebellion in June 2023.
The Wagner group had been a major ground force fighting to help Russia conquer Ukraine. However he gew increasingly frustrated with the Russian military leadership, openly criticized the Russian Defense Ministry for corruption and mishandling the war. He said the reasons Putin gave for invading were lies.[19]
On 23 June 2023, he launched a rebellion against the Russian military leadership. Wagner forces captured Rostov-on-Don and advanced hunderd of miles toward Moscow.[20] The rebellion was called off the following day, and the criminal charges against Prigozhin were dropped after he agreed to relocate his forces to Belarus.[21]
On 23 August 2023, exactly two months after the rebellion,[22] Prigozhin was killed along with nine other people when a business jet crashei jusr north of Moscow.[23] The Wall Street Journal cited sources within the US government as saying that the crash was likely caused by a bomb on board (Source: Wikipedia in Italics)
Musk and Prigozhin soared to the top of their country’s political authority with money and demonstrated success managing the critical levers of power in each society.
Prigozhin eventually turned on Putin but appeared to have reached a truce by undertaking some of Putin’s business and military “chores” in the Middle East and Africa. But Putin wasn’t taking any chances with this mercurial outspoken leader even when he re-pledged fealty. He was killed despite the public appearances of a political settlement.
Trump has threatened all of Musk’s business empires if he continues to speak out. Especially should Musk support political candidates who would oppose Trump’s endorsed supporters.
When a leader’s temperament, actions and words all speak to his goal of total authority, there is no place for opposition. Particularly when the critical words and deeds are public. And from persons who have proven political influence. If someone gets in the way of the leader’s total power, then they must go to exile, either politically or geographically, Or be totally neutered by some means.
It took Putin just two months to end any facade of a truce with Prigozhin. Trump’s timeline and methods may be different. But for every authoritarian leader one fact is true: uneasy lies the head that wears a crown.
It is increasingly hard to call an organization which serves retail customers without first navigating a series of AI driven questions about your needs.
Sometimes these automated phone trees work well; but many times people call because of a specific need that does not easily fall in one of the menu of options.
Many credit unions believe personal service is their ultimate advantage. Several credit unions share stories they send staff to illustrate the organization’s culture they believe to be their competitive difference. Here is an example from June.
The CEO: A long-time member took the time to call me to rave about Monica and tell me she doesn’t even rate shop anymore. She then forwarded me an email that she sent to Monica.
The member’s email: I want to take a moment to thank you—from the bottom of my heart—for being the absolute best mortgage advisor in the world. Working with you is not just a transaction; it’s a relationship built on trust, care, and genuine connection.
You are incredibly thorough, patient, and kind. Every time I’ve needed something, you’ve been right there—quick, clear, and supportive. You always know just what to say and when to say it, and that gift has brought so much peace to what can often be a stressful process. I trust you completely when it comes to my loans. I don’t even consider going to other lenders—I come straight to you.
You’ve earned that trust with your humility, consistency, and deep care for not just the business side of things, but for me and my family as people. You remember the details, the milestones, and the little things that matter. That personal touch sets you apart in every way. As my life changes, you’ve remained a constant. You are the go-to, hands down. No one else matches your competence, your capability, or the heart you put into your work.
It’s clear you love what you do, and that love shines through in every interaction. I am incredibly thankful, honored, and truly Blessed by Jesus to work with you. Your presence has been a gift.
This credit union’s performance exceeds their peers consistently on all financial and net promoter score indicators. While AI phone trees and “live” chat may be a solution for some activities, it will not be the means to build relationships with members.
The public facing role of leaders is especially vital during two important circumstances–when there is a transition at the top and during a crisis or moments of great uncertainty.
NCUA’s current situation meets both tests. There is the unprecented removal of two of the three board members by President Trump. This was followed by the immediate departure of up to 250 agency personnel as a cost savings ploy. And as noted below, there has been a sudden increase in credit union regulatory closings.
NCUA’s public responsibility includes timely and informed transparency about events under the agency’s control. There is uncertainty about who is on the leadership team. Who is making critical decisions? How can we trust that NCUA’s actions or inactions are being properly considered or just carried on by rote?
Since April 30, NCUA has taken possession of four FCU credit unions. Two were liquidated outright, one conserved and the other merged. This is a very high number in just two months in a relatively stable operational environment.
The four with summary data from the March 30 call reports are:
Name Date NCUA Action 1Q ‘25 Assets 1Q Net Worth
Unilever April 30 liquidated $ 47 million 9%
Aldersgate June 18 conserved $ 10.6 million 10.2%
Soul Community June 20 liquidated $308K 100%
Butler Heritage June 30 merged $9.6 million 4.92%
Some notes on each case.
For Unilever this immediate liquidation without a conservatorship, suggests a major financial loss similar to the Creighton FCU $13 million shortage in June 2024. NCUA has provided no explanation for the sudden insolvencies in either case.
Aldersgate with 10% capital, was chartered in 1956 to serve the Methodist church employees. It was conserved without explanation or even notice of who is now running the operations. NOTE: this morning NCUA stated it liquidated the credit union.
Soul Community was chartered on December 9, 2024. At March, it reported 21 members with $308K in assets, but no loans or expenses. All capital. How can a new charter which naviagates NCUA’s arduous charter steps including both credit union mentors and examiner oversight, end up stillborn?
Butler Heritage is the one example of financial underperformance, but still with 5% net worth. An ironical message on the credit union’s website assures members they are in good hands with NCUA oversight:
BHFCU is charted and supervised by the National Credit Union Administration. NCUA performs annual examinations of the credit union’s records, policies, and procedures. This ensures the credit union’s financial soundness and verifies operations are conducted in compliance with applicable laws and regulations.
This number of regulatory closings in two months is highly unusual. The lack of any factual information about these FCU’s circumstances is unsettling.
This failure to inform the public undermines trust in NCUA’s supervision, not to mention a credit union’s reputation with sponsors like Unilever. These are, or should be, unusual events. No one is explaining them.
The silence raises the question whether NCUA is using their authority to coverup supervisory or examination shortcomings with NCUSIF funding. Were there annual exams? Supervisory contacts?Especially troubling are the similarities between Creigton and Unilever’s sudden dramatic losses of published net worth.
In this time of leadership transition and growing uncertainty, public board meetings are critical to understand what the agency’s leadership is focused on.
For the past 18 months, NCUA’s board meeting schedule has been at best erratic. In 2024 Chairman Harper was on medical leave for several months and Ostka on maternity leave.
Even when a full board was present, the substance was limited and hard topics or discussions avoided.
In the first six months of 2025 only two public meetings have occurred. One was with the full board in February and Hauptman’s solo meeting in May.
The NCUA has said the schedule of future board meetings is “tentative.” In a June 6th press announcement the Agency stated: dates of NCUA Board meetings should be considered tentative until the issuance of a formal meeting notice. All future meetings’ agendas and schedules are subject to change at any time.
Some have gone further to assert there is no requirement to hold a monthly meeting period. Rather board meetings need occur only when the need arises.
Public NCUA board meetings are both a responsibility and a recognition that the Agency’s leadership is accountable to credit unions and the public.
Some credit unions have asked to end their mandatory monthly board meeting. At this point I yield my pen to Ancin Cooley.
His response to the suggestion that board meetings should be optional applies to both credit unions and NCUA. They are an inherent responsibility of what it means to be a board member as he explains below:
Monthly Board meetings are not the problem.
They serve one critical purpose: cadence.
That cadence builds a culture of reporting, transparency, and member-focused accountability. It keeps the board engaged—not just symbolically but structurally. It’s a space to learn, ask, challenge, and listen. It’s where the member’s voice is supposed to show up.
And if your board meetings are dragging or bloated? There are better ways to fix that than eliminating the meeting altogether. . .
There is a free-market capitalism running its playbook inside the cooperative movement. . .
We are watching it unfold in full view:
Each move—on its own—can be rationalized.
But taken together? It’s a pattern. A roadmap. Its “open season” on credit unions. . .
Let me get ahead of the most common rebuttal:
“It’s just removing the requirement to meet monthly. A credit union can still choose to meet every month if it wants to.”
Yes, technically, they could.
But that’s not the point.
This isn’t about convenience or choice. This is about institutional welfare.
There are some safeguards you don’t leave to chance, because they protect the collective health of the system.
That’s why we don’t suggest seatbelt use. We don’t recommend elder abuse protections. We mandate them—because of the public trust at stake. . .
This is the cooperative movement. And with that comes a higher standard of care—because the people advocating for these changes did not build these institutions with their own money. They inherited them. And now they’re chipping away at the very frameworks that make them trustworthy.
I would hope all NCUA staff would read his words. Public duty is a public trust. Regular public board meetings are an essential aspect of an NCUA board member’s obligation to well and faithfully discharge the duties of the office.
Last week CUSO Magazine announced an imaginative collaborative initiative. The editorial team pronounced July as credit union history month.
They issued a call for all to submit aticles, photos and other examples of signficant events in their history with the movement.
Here is the invitation:
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I love this imaginative effort. In every garage, storage closet, and crammed bookshelf, credit union believers have left some keepsake of a special occasion. It may be a cassette tape of a speech from a conference, a special edition of a cu publication that mentioned them, or perhaps the handout from a speical event. For example, the plastic encased credit union stamp honoring the 50th anniversary of the FCU Act in 1984.
As we remember our history and how we got to today, it can only make us proud and more inspired learning about people’s special moments with the Movement.
I would hope the participation is so voluminous that CUSO Magazine will need to increase their publication schedule from once per week to perhaps a daily to share all the examples from personal archives.
I’ll be making contributions. For example a copy of Harold Black’s last interview as an NCUA board member in 1981 and his future ambitions. Or a brief history of the first credit union share insurance fund started in 1956 in Illinois.
We all hve special moments and people whose efforts we recall years or decades later. I’m all in. Are you?
At the moment there are two strong politcal drivers animating government and the public. One is the very anti-government, “chain-saw” wing of the Republican party. The second force is represented by socialist Zohran Mamdani (let’s make it free) surprise victory in New York’s democratic mayoral primary election.
Both want to overturn the status quo represented by existing institutions.
Most credit unions would not support either approach. They seek regulatory reflief from CFPB or some NCUA proposals (succession planning). But by all means let’s keep the status quo on taxation and our anyting-goes business models.
To date the only dramatic disruption of the credit union status quo was Trump’s dismissal of the two democratic NCUA baord members. NCUA is now overseen by a single administrator. I do not inclde the DOGE inspired staff cuts as change since credit unions have been assured it will be business as usual at the agency.
However is this the time to play it safe, preserve advantages and avoid any major organizational rethinking? Or is it possible to chart new courses for the cooperative system and credit unions?
In August 2014 Mark McWatters joined the NCUA board filling the republican minority position. Fifteen months later in February 2016 he presented a 30 minute speech to CUNA’s GAC meeting in DC.
His speech offered 21 ideas for “regulatory relief.” Many of his suggesions would sound familiar today-extended exam intervals, due process on exam appeals, total review of regs, an IG exam hotline and freeing corporate credit unions from post crisis constraints.
This is the entire 30 minute speech often interrupted by audience applause. It would be fair to say that not much changed from this list.
(https://www.youtube.com/watch?v=LOssnO8QOnQ)
To prepare the coop system for what’s ahead challenging current assumptions will be critical.
It all starts at the top by asking does anyone really believe NCUA is effectively fulfilling it’s Mission?
“Protecting the system of cooperative credit and its member-owners through effective chartering, supervision, regulation, and insurance.”
“Strengthen communities and protect consumers by ensuring equitable financial inclusion through a robust, safe, sound, and evolving credit union system.”
The current NCUA chair states the agency is just an “insurance company.” And every board member repeats the mantra that their “north star” is to protect the insurance fund.
Can anyone identify any NCUA efforts to strengthen and grow the role of cooperatives for Americans?
Why not embrace this disruptive politicalmoment to create a eoop system that truly serves Americans better than competitors? Are the prevailing assumptions about growth, scale and competitive advantage even valid?
Can we ask new questions? And propose options that would reignite the power of the cooperative model?
Here are some ideas being debated.
These are initial ideas. Now is the time to rethink how current trends and, members financial needs can be the basis for a re-designed cooperative system. Also to be pondered is what roles should established support organizations play?
Now is not the time for the tired phrase of regulatory relief. We’ve been there time and again. Rather now is an opportunity to re-design the coop system so that it can bring out its best promise for the future of its member owners.
The close of the NATO Summit meeting in the Hague yesterday was characterized as a success for the future of the alliance. And its continued support for Ukraine.
Even President Trump appeared to endorse the all-for-one commitment of countries to defend each other’s territory if attacked.
Why was the meeting so successful including Zelenskyy and his team’s conversation with Trump?
One analyst has traced this relationship improvment to what Zelenskyy wore to the NATO meetings and social events.
His suit – or lack thereof – was a central point in a blowup between the two leaders back in February.
Trump advisors asked Zelenskyy’s team multiple times that he should ditch his traditional military attire when visiting the Oval Office. The U.S. president was irked that he didn’t wear a suit.
This point was he subject of this Instagram folk ditty by rongello:
(https://www.instagram.com/p/DGvkNuNuyB9/?utm_source=substack&utm_medium=email)
Here is what Zelenskyy wore to the official NATO dinner on June 24, 2025 (Getty photo):
But this was only after his wife had asked that he not wear this newly designed suit instead.
Zelenskyy-ever the diplomat, shows his skill in adapting to the social realities of leadership.
For four decades (1979-2017) the State Employees Credit Union was led )by Jim Blaine. He believed in the power of cooperative design, principles and purpose to provide members a better financial option.
His approach was so successful that SECU soared in his tenure to become the second largest credit union in America. At March 30, 2025 the credit union reported assets of $55.3 billion, members of 2.8 million with 275 branches (one in every county) employing 8,100 FTE positions.
Blaine’s studied belief in the power of cooperatives infused dozens of operational and strategic decisions. He eschewed mergers preferring to partner with other credit unions such as Latino Community and Local Government FCU to support a strong state eco-system of credit unions.
His focus was strictly within North Carolina, not seeking to invest outside the members’ home state. Within the FOM the focus was on those who were unlikely through economic circumstance or financial understanding to get a fair deal from traditional for-profit consumer financial options.
His implementation of these beliefs resulted in some unusual product decisions. The lending focus was on home loans as the best way to build long term member wealth. Products such as credit cards and checking were simple, low cost and without flair. He created the only 529 on balance sheet college savings option by a credit union in America.
He provided off balance sheet investment options in a partnership with the Vanguard Mutual Fund family of low-cost index funds. The credit union founded its own life insurance company for inexpensive term life insurance. Through a $1 a month checking account debit he funded the largest credit union directed 501 C 3 foundation. Annually it donates tens of millions to organizations serving the needs of citizens and communities throughout the state. These grants were the credit union’s primary marketing effort-an example of earned versus bought media.
As the credit union system adopted risk-based lending, where a member’s loan rate was determined by their credit score, Jim fiercely resisted this almost universal pricing practice. He believed the model was discriminatory and perpetuated some of the consumer lending practices coops were meant to counter such as, those who have the least, pay the most for their loans.
Likewise, he did not believe in indirect auto lending in which the dealer set the member’s loan price based on the credit union’s buydown rate of the loan paper.
Internally the credit union grew large by staying small. The 275 branches were given authority to make and collect loans for their communities. They were aided with local advisory councils of members for decisions on scholarships, grants and even denied loan appeals. Vacancies were first filled from promotions within. No commissions or bonuses were paid to staff-just follow the principle of doing the right thing for the member.
Most importantly the credit union’s capital investments were always on behalf of members or the local community. From a surcharge free ATM network for all users, not just SECU members, to housing a museum in its main office building, to the Foundation’s investments in low cost teacher housing options, the money was to benefit owners and their communities, not for the institutional prestige of SECU.
Many organizations including large credit unions use their home market as a resource to open up into areas outside their core. Members’ resources do not go back into the local economy that funded their initial success, but into new markets.
Jim’s “old-fashioned” approach was not one emulated by others. He battled NCUA time and again over capital adequacy. “Anything over 7% is stealing from the members” was one of his truisms. At March 30, 2025 the net worth ratio was 10%. In short, while reporting superior market impact and financial performance, his approach was seen by most peers as archaic, impractical and not with the times.
One observer has asserted every successful credit union coop is only two CEO successions from losing their strategic heritage and advantage. When he retired in 2017 Jim’s successor was his CFO Mike Lord. A good description of Jim’s ten operational priorities and the succession evet is in this creditunion.com report. The torch was passed to a believer who had worked at SECU for 41 years, or as one headline read, “Only the Lord could succeed Blaine.”
But when Mike Lord retired the board went outside the credit union apparently seeking a change agent with a different vision for the future. Jim Hayes took charge in September 2021 leaving the $2.2 billion Andrews FCU as CEO. He had previous positions at WesCorp and NCUA.
The October 2022 SEU Annual meeting was going according to the agenda until the other business item. At that point former CEO Blaine, now just a member, rose with a prepared statement.
He asked how recent credit union actions were in the best interests of SECU members. The event and issues are described in this blog, SECU Members’ Spirits Awaken. The members approved Blaine’s two motions. one asking for a response to the six areas of concern. The second read: The Board update, publish, and make available to all member-owners its’ Strategic Plan for SECU no later than 90 days prior to the 2023 Annual Meeting.
Six months after credit union fireside chats and other communications responding to the motions, Jim launched a public blog SECU-Just Asking! He re-presented the issues that energized members and employees had asked him raise at the Annual Meeting.The blog became the platform for members nominating their own candidates for board openings at the 2023 Annual Meeting.
In 2023 the concerned members nominated three candidates who supported their views for the open board seats. Around 14,000 members voted in the contested election in which all three board nominated incumbents were ousted. The members had succeeded in challenging the changes via the election process.
In 2024 the election was again contested and almost 100,000 members voted. This time the incumbents were reelected, but the top alternative candidates received almost 30,000 votes. SECU spent substantially to promote incumbent s in this second contested election.
The 2024 meeting was broadcast live on YouTube. My closing blog observation was: One cannot help but come away with the feeling that this year’s event was a reaction to the two prior meetings where the board must have felt things moved out of their control. This time the outcome which had some excellent content, especially the member questions, was an exercise in the power of incumbency.
Since the launch in March 2023, the Just Asking blog has cumulative views of 2.53 million and 14k posted comments, according to Blaine. He says interest peaks as the board election cycle gets under way in July/August. Currently views average around 2,500 per day.
By any measure it is a blog followed by a significant number of SECU members and one presumes employees. The blog is a unique member-owner effort in its longevity and substance trying to influence the credit union’s direction .
Jim Hayes, the new CEO implementing the changes challenged in the October 2022 Annual Meeting, left in June of 2023. The board promoted the long- time COO Leigh Brady who has continued most of the internal and member-facing changes.
The controversy has somewhat slowed the credit union’s momentum. When Mike Lord left in August 2021, the credit union was $50 billion in assets versus today’s $55 billion (a 2.5% cagr)
Today as SECU evolves into a traditional credit union provider, it remains a Unicorn for another reason. It is the only large credit union to have contested board elections for the past two years. This member-owner involvement is unique and yet what the coop design was intended to ensure. The members’ role using the democratic principle of one person, one vote, is the critical governance function.
Member choice in contested elections is essential to active owner accountability versus the habit of internal succession controlled by sitting board members.
Democratic organizations (or countries) rarely fail because of external market competition. Rather most failures come from within. They are leadership and commitment shortcomings.
The two CEO successions from failure observation is a critical issue for credit unions. Financial failure is very rare, but failure to grasp and enhance the unique business design and principles that are the foundation of every credit union can be quickly lost. New visions and corporate aspirations can take credit unions away from their special strenths.
Credit unions were founded with no capital, just human passion, When that initial belief is not sustained, the accumulated net worth can just become the CEO and board’s treasure chest, not a member-enhancing resource.
SECU’s policy and financial performance continue debated in daily posts, The credit union’s primary response has been to limit or eliminate the members’ role in the annual meeting activity.
In the last two years SECU’s board has changed its bylaws to better control the annual meeting and election processes. The agenda has been closed to open member discussion. The timing and procedure for member nominated candidates in elections have been shortened making it more difficult for non-incumbents to get on the ballot.
In short, the board has tried to shut down the effort that raised the original concerns in 2022. The unique coop member governance check and balance on credit union priorities is being stifled to the point of elimination. And following recent blogs, the NC state regulator is trying to avoid any oversight of the board ‘s efforts to eliminate all member governance rights.
This issues profiled by Blaine are not an isolated concern. Other credit union members are facing similar challenges in being heard. Rarely does a merger go by without some members asking why? Bank purchases using members’ accumulated capital rewards bank owners, not the credit union’s owners.
The future of the country’s second largest credit union has implications for the cooperative system as member-centric financial alternatives. Members are seeing investments disconnected from their well being or traditional purpose.
When owner involvement is silenced at required annual meetings, a credit union’s future is in the control of self-selected, perpetual unelected volunteers. That is a dangerous separation of responsibility from accountability when owners are left out.
There is now over $250 billion in collective reserves under credit union boards’ control. Keeping the 100 million coop member-owners from influencing how these funds are used will bring temptations from all corners of the capital markets, brokers and hedge fund investors.
Boards will feel free to do whatever they choose, initiatives unhindered by either principle or purpose. Dramatic visions of power and influence financed with billions of members’ collective wealth willl be in play.
With members seen as only customers, just a means to greater ends, the cooperative alternative will have lost its way.
From Socrates and throughout Old Testament stories, the prophet’s voice has been a source of wisdom and discomfort for those in authority.
The idiom “a prophet is without honor” comes from the New Testament. It refers to someone whose message is not appreciated by their own community.
It takes unusual courage to make a public stand against those in authority. When done by someone with expertise and experience, they will be accused of failing to give others their turn at the wheel.
Blaine is blunt even caustic at times in his writing. He does not believe in nuance. When others are not direct, he will call out lies.
He believes coops were designed and have the responsibility to correct a fundamental flaw in consumer financial services. In his words, “those that have the least or know the least, pay the most for financial services in America.” The problem has only gotten worse as income inequality continues to grow.
Credit, that is consumer borrowing, is the most important way for almost all to succeed in a free market economy. There are no scholarships for life’s essential purchases.
Yet when CEO’s and Boards’ tenures grow to oversee hundreds of millions or billions in assets, it is tempting to gravitate towards those well-off in life. Making Tesla or Lexis auto loans is a better opportunity than members needing to buy a car at an Enterprise used car sale.
Events will influence how Blaine’s initial six concerns will resolve. Local Government FCU, now Civic, has ended their partnership with SECU at great cost to both sides. Risk-based pricing may or may not increase SECU’s consumer loan share. The question is whether real estate lending continues to be a priority or whether it will convert to just another “conforming” service.
Blaine’s most recent effort to request the North Carolina regulator to preserve the rights of members in overseeing their coop may seem ironical given his history of battling NCUA when CEO.
But that issue is the bottom line now, not differing judgments about products or services. SECU is at a turning point, already taken by most. Will the rights of member-owners to be heard with their elected leadership be upheld? Without that check and balance, there will be billions of dollars of members’ collective resources without any accountability.
I will give Blaine the last word from this brief statement on the role of regulation in 2010.
(https://www.youtube.com/watch?v=E1tnDcE6Xjo)