Month: February 2025

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Uncertainty in Washington-What are the Options?

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?

A Short Credit Union History

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.

The Critical State Advantage

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.

Expanding CU Choice Across the System

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%

More Than a State Charter Option

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.

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“Sweet Feedom’s Song”

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.

A Poem of America

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.

 

My country, ’tis of thee,
Sweet land of liberty,
Would I could sing;
Its land of Pilgrim’s pride
Also where lynched men died
With such upon her tide,
Freedom can’t reign.

My native country, thee
The world pronounce you free
Thy name I love;
But when the lynchers rise
To slaughter human lives
Thou closest up thine eyes,
Thy God’s above.

Let Negroes smell the breeze
So they can sing with ease
Sweet freedom’s song;
Let justice reign supreme,
Let men be what they seem
Break up that lyncher’s screen,
Lay down all wrong.

Our fathers’ God, to Thee,
Author of liberty,
To Thee we sing;
How can our land be bright?
Can lynching be a light?
Protect us by thy might,
Great God our king!

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)

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Thrivent FCU Members Approve Sale to a Bank & Receive Full Capital Return

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.

Special Dividend Distributes Net Worth

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.

The First Sale Since 2006

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.

Background on Thrivent FCU

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%.

Extending the Credit Union’s Mission

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.”

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A Q & A on NCUA and Trump Policy Priorities

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.

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The Source of Credit Union Power: Members Rally to Rebut Banker’s “Hit” Article

“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.

Responding to a Newspaper Opinion

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. 

How and When Is Member Power Mobilized?

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.

The Immediate Challenge

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.

 

 

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Time to ask WHY?

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? 

A Hit Piece 

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.

This Transaction’s Explanation

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. 

What About the Financials?

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.

 

 

 

 

 

 

 

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The Vital Difference: Member Voting for Directors

Member-owner governance is primarily exercised through the annual election of directors to the Board.  One person, one vote.

The problem is this “democracy” by members is too infrequently practiced to have impact.  In most credit unions there is no election contest-just approval by acclamation.

Below is an excerpt from Frontwave Credit Union’s monthly newsletter about this year’s board election.  Six nominees for three seats.  A month long voting period.  Votes can be cast by ballot, on line or in person at any of the 13 branches in a special ten-day span.

The candidates’ biographies and statements of interest are linked to the voting information.

The process is transparent, widely communicated, and easy for members to exercise over the month long voting period.

A Center of Public Attention

What makes this very transparent contest even more remarkable is that Frontwave has been at the center of attacks for its courtesy pay (overdraft fees).

It began with a March 2024 KPBS investigative report: Frontwave Creit Union reaps millions in fees when young marines run out of money.  Senator Elizabeth Warren with senators on both sides continued the attacks.

Prior to these assaults, Frontwave was the object of a class action suit several years earlier for its overdraft practices.  The suit was settled in October 2024.

During this public criticism of Frontwave, the CEO Bill Birnie engaged in frequent conversations with the media and critics.  He responded to the issues with why the credit union believed this was an appropriate practice.

This year’s election is taking place against this background of debate over fees. The members have their say.  Incumbent directors and new nominees can put their views to the owners.  That is what member governance means.

Just as important, when the credit union seeks  member participation for supporting special needs or contacting a political representative, the leadership has  established the routine  of member participation.

Voting is the ultimate test of democracy. It creates an environment of trust and accountability.  It is an essential part of cooperative design, but much underutilized and unappreciated.

 

Shape the Future of Frontwave Credit Union

Member,

Your voice matters! Voting in the 2025 Board of Directors Election is your opportunity to help guide Frontwave’s future. With three open positions on the Board and six candidates running, it’s time to get involved.

We’ve partnered with Survey & Ballot Systems (SBS) to ensure a secure and efficient election. Ballots will be distributed to eligible members starting in February, and the election results will be announced at the Annual Meeting of the Membership on March 26.

To read the latest Candidate Statements, click below!

Election Dates: February 20 – March 20

Eligibility: Active members as of December 31, 2024 (primary membership with at least $50 on deposit or an active loan).*

How to Vote:

  • Electronic Ballot: Sent via email by February 20.
  • Mail-in Ballot: Request by February 24; return by March 15.
  • In-Person Voting: Available at all 13 branches from March 3–15.

We’ll share more details about the voting process soon. In the meantime, meet the 6 candidates running to represent you and get ready to make your voice heard!

Dream Big. We Got You.

Frontwave Credit Union
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Showing the Difference with Deeds

Each month several CEO’s send me their monthly  staff updates.  These discuss the latest financial results, status of key projects, employee information, milestones and external event engagements.

These provide valuable local examples in a movement often described by the latest financial numbers, the next big merger (or bank buy) or a grand new marketing partnership with a professional sports team.

Despite radically different asset sizes, these reports share one common opening, retelling a member service story or two.  The CEO’s use these to demonstrate the culture they want the credit union to uphold. Here is an event triggered by a rollover IRA request.

Demonstrating our Purpose

Recently, Carrie visited our member center seeking help to transfer an IRA from another bank. She appeared frazzled and unsure about the steps she needed to take. Through patience, empathy, and active listening, we began to uncover the deeper reasons behind her unease.

She shared that her husband had passed away unexpectedly in his sleep the day after Father’s Day. He had not been sick. His death had blindsided their family.

Left to navigate the aftermath, she was overwhelmed by the financial responsibilities suddenly resting on her shoulders. She needed to transfer her husband’s IRA, open a new rollover account to avoid penalties, and manage the yearend timelines and logistics — all while grappling with profound grief.

As she spoke, it was clear she was struggling. The holidays had been particularly painful for her children. With the new year just a few days away, she felt the weight of 2024 closing and the uncertainties of 2025 looming ahead.

Jackie and her colleague, Becky, guided Carrie through every step of the process.  They explained  the IRA transfer, the required paperwork, and  timing to ensure everything was completed smoothly.

But more than that, they gave her space to share her story, her fears, and her heartache. They listened as she reflected on her loss and the daunting responsibility of building a future for her family without her best friend and soulmate by her side.

Before she left, they gave her their contact information, assuring her that she could reach out anytime she felt overwhelmed.  Jackie committed to following up with her to confirm  everything was in place and to check on her progress.

When Carrie walked out of the member center, she carried herself differently—less burdened, more focused.  She deeply appreciated all the support, knowing she was not alone in navigating these challenges.  She felt she had a team behind her ready to help.

This experience is a reminder of the profound impact we can have when we combine our financial expertise with genuine care and compassion.  It is moments like these that underscore the importance of what we do: being there for our members as trusted partners during life’s most difficult transitions.   Thank you Jackie and Becky for this great effort demonstrating our purpose. 

My Takeaway

As future options of the credit unions system come under debate In DC with the new administration, how do we present the credit union difference?   I believe it is with stories about our member-owner mission.  It is the difference we make in members’ lives that make cooperatives special.

PS:  In case you assume this must be a smaller credit union, the CEO leads a $10 billion coop serving over 500,000 members.

 

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Opinions On Scale and the Year Ahead

From banking consultant John Maxwell’s blog:

Now, of course, one of the dirtiest secrets in finance is that anyone can grow a bank. That’s the power of infinite demand. The bigger challenge is creating shareholder value. And that, my friends, tends to be inversely correlated to a bank’s growth. Remember that the next time a purported expert tells you that, “Scale is key.”

From a January 17, 2025 post by CNBC  financial analyst Kelly Evans:

But a friend of mine who works in the investment banking business says his firm has the biggest backlog of merger deals heading into this year that they’ve ever had. . .

. . .one area that could get very busy is on the banking front. Having 4,500 or so different banks in this country may not be sustainable, especially when 77% of them have less than a billion dollars in assets, per Raymond James. These deals may be on the smaller side and not garner big headlines; we’ve already seen small acquisitions in Idaho and Texas this week that have generally flown under the radar. 

Indeed the mid-sized banks–and mid-sized companies in general–could see the biggest wave of activity. The typical mid-sized bank saw its share price jump 10% in the weeks after the election, per Barclays. There used to be 80 bank deals a year under the first Trump administration, they note, versus just 30 a year under Biden. 

What makes market work is differing opinions.  Going forward I will review some of the largest mergers in the past three years to see if Maxwell’s point is born out.  Or is member value increased?

 

 

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Deportees: When We Need to Listen to a Song

All institutions have a purpose.  Their reason for being is to succeed at something:  making money, doing  good for others, or enjoying our chosen life style.

Caring for the vulnerable is an often overlooked calling.

Some organizations do serve  society’s neglected and forgotten.  At points in our cooperative past, credit unions responded to those left behind by creating communities of self-help.

Who speaks for those without a voice? Sometimes that role falls to a folk songwriter.

In 1948 Woody Guthrie wrote what became the folk song Deportee.  While the specifics that prompted his lyrics are different from  today’s, those persons taken away are  still treated the same.

In the poem, Guthrie assigned symbolic identities  to those rounded up and  put on a plane, only to die: “Goodbye to my Juan, goodbye Rosalita; adiós, mis amigos, Jesús y María…”[6] 

Here is the song using Guthries’ words by the Kingston Trio in the late 1950’s.

(https://www.youtube.com/watch?v=L2tUJZWfAO8)

 

The Message Returns in 2013

Credit unions are founded on nurturing  relationships.  Often these individuals and groups were viewed as unimportant people by those in authority.

Immigrants don’t just perform essential tasks that others shun.  Their presence has helped present the United States as a unique destination to the vulnerable across the globe. Today however, these recent arrivals have become targets of cacophonous cruelty by leaders in our federal government.

How will self-help communities founded on the value of each person’s dignity react?  Can credit unions be seen as pillars of their communities when they stay silent as they are torn apart?  Aren’t co-op pillars more than balance sheets of assets?

Here is the same music from 2013 during another deportation crackdown:

(https://www.youtube.com/watch?v=VR_AC0E0rgA)

This administration’s inhuman deportation blitz is captured in  Guthrie’s prophetic words: “You won’t  have a name when you ride the big airplane, all they will call you is deportees.”

No names.  Denying the identity of others is the opposite of cooperative and human values.  It strikes at the soul of America.  If you can’t raise your voice, at least play the music so others might hear the cry.