Author: Chip Filson

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A Changing of the Guard at NCUA?

From LinkedIn yesterday:

An unusual approach to assembling a leadership team for a government agency.

Persons interested might review his positions and priorities from a speech on September 9, 2024 to the ACU Congressional Caucus. In the opening paragraph he remarks that his term ends in August 2025 and his search for ideas for his “remaining days:”

Good morning and thank you. This conference is one of my favorites. One reason I’m here is to get ideas on how I should focus the remaining days I have left in this job. Around this time next year, the White House will likely announce a new Board Member. That’s because my term on the NCUA Board ends next August, so I have less than a year left. Whew, I was worried that would be an applause line.

Later he notes his regulatory approach:

in America, you deserve protection from an overbearing government. . .

If NCUA or other agencies ‘get over their skis’ and interfere in the private financial affairs of credit unions and their members, the resulting credit union use of NSF and overdraft services could have the paradoxical effect of limiting access to financial services for those who need it most.

Governments often have coercive powers far beyond any financial institution. . .

I want to mention two fascinating new technologies that we often hear about: Artificial intelligence, and blockchain and digital assets, which includes cryptocurrency. I’ve made clear that the NCUA shouldn’t be a technophobic agency. . .

In reading the full speech, there is no reference to credit unions as cooperatives and any role that design has in his regulatory agenda.

 

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Welcoming 2025

Life Awakens For Ukraine’s Future

New equipment for the Neonatal Resuscitation Unit and the Neonatal medical staff of Dnipro Hospital which was damaged by Russian missles, now reopened in December 2024.

 

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Ukraine: No Peace but Hope in a New Year

Kiev Symphony and Orchestra welcome all to this season of joy and war, with song.

(https://www.youtube.com/watch?v=vjGM3mtqmv0)

A children’s puppet show.

NOVODARIVKA, UKRAINE – JULY 21, 2023 – A press officer who goes by callsign Damian stands on top of a destroyed Russian military vehicle in Novodarivka village,  (Photo by Ukrinform/NurPhoto via Getty Images)

KYIV, UKRAINE – OCTOBER 17: A Ukrainian soldier rests on the sidewalk after the Russian attacks in Kyiv, Ukraine on October 17, 2022. I
A relative knees by the body of a teenager who died in a Russian missile strike at a bus stop in Saltivka, a northern district of the second largest Ukrainian city of Kharkiv. (Photo by SERGEY BOBOK/AFP via Getty Images)

The Messiah sung on December 9, 2024 in Kiev. Familiar music but a new experience when heard in the Ukrainian language. The promise of peace in a time of war.

(https://www.youtube.com/live/SuALTmDE1I8)

 

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Form Follows Function Even in Credit Unions

A principle of both internal and landscape architectural design is that “form follows function.” The concept was developed by Louis Sullivan, who used the phrase when he designed the Wainwright building in Chicago.  It was utilitarian in design reflecting the office work that would take place within.

Examples of this premise can be found in numerous areas of biological evolution:

  • Coral reefs, which protect other species from ocean waves and currents
  • Bears, which have sharp, curved claws to help them catch fish
  • Walruses, which have blubber to keep them warm
  • Giraffes, which have long necks to reach leaves on tall trees

More to the point, credit union organizations are subject to this same evolutionary  principle. The member owned, self-funded, locally focused, democratically elected leadership reflected the founding purpose of a financial cooperative.  That is to combine individuals’ resources to assist those left behind or preyed upon by existing consumer options.

This special economic focus on those on life’s financial margins was supported politically with a blanket exemption from federal taxation.  Credit unions were seen as an example of doing good for communities and groups rather than rewarding institutional profit and private ownership.

Today with abundant financial choices for almost all levels of society, the original purpose seems somewhat muted.  The middle class of employed workers is doing well. Those with  home ownership and savings in ever rising markets, even better.  Serving those left behind is hard.  These groups today are often the focus of special governmental or nonprofit programs

What happens to credit union design when the original function, or calling, is changed by market forces?

As in many other areas of life, the form changes as the focus of an organization evolves to serve all-comers not just those left behind by America’s promise of opportunity.  The previous cooperative design elements are replaced by institutional priorities of growth, increased marketplace visibility and reach.  These ambitions are driven by CEO’s and boards who inherited a legacy of financial resources held in common, but who chose to pivot away from traditional community and member investments.

This evolution places profits before people, thus turning upside down the cooperative priority.  Growth comes from acquisitions using the collective capital pursuing other financial organizations. Internal value creation for the member-owners is seen as boring. Geographic diversity, new revenue sources and investing in fintech startups are the key to future success.

In short, these new designs make some credit unions indistinguishable from their for-profit privately owned competitors.  Members are no more than customers, each a potential revenue or profit center.

This evolution is neither inevitable nor the ultimate outcome.  But it does garner the headlines and lots of external brokers, consultants, advisors who introduce credit unions, as their next meal ticket, to the wonders of market capitalism. Credit union boards, executives and even external advisors who have limited grasp of their organizations’ legacies are easily seduced by the thrills of this market-place capture.

Self-awareness and self-restraint are hard characteristics to nurture when one is in a position of power and privilege.  However, I believe the leaders of credit unions in the year ahead will be those whose vision may seem modest compared to more dramatic short term activities.

For values that sustain are not the result of temporary market success, but rather the hard-earned relationships nurtured over years. These values shape the functions to which leaders give priority.  For those in positions of credit union leadership, cooperative design is still true to the original purpose.

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Yes Virginia, There is a Santa Claus

I just discovered the movie Yes Virginia, There is a Santa Claus. the family drama based on a fictional story of the creation of this most reprinted of all newspaper editorials.

The New York Sun editorial, printed in 1897 by Francis Church, responds to a letter from an eight-year-old Virginia O’Hanlon asking if Santa Claus is real.  The film presents social circumstances still present today—anger at immigrants., poverty and unemployment, the corruption of big money, women’s roles, and the sanitizing power of the press.

But the editorial’s message resonates still because it offers an understanding of belief and hope.  After affirming Yes, There is a Santa Claus, the writer provides his logic:

Alas! How dreary would be the world if there were no Santa Claus! It would be as dreary as if there were no Virginias. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished. . .

. . .there is a veil covering the unseen world which not even the strongest man . . . could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernatural beauty and glory beyond. . .

No Santa Claus? Thank God he lives and he lives forever. A thousand years from now, maybe 10 times 10,000 years from now, he will continue to make glad the hearts of children. 

Presence Versus Presents

The editorial captures the hope of this season.  It is rooted in the lives and circumstances we all share. Hope “exists as certainly as love and generosity and devotion exist and give to our life its highest beauty and joy. “

It is these diverse presences, not presents, that bring forth this season of gratitude and love.

 

 

 

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Merry Christmas 2024

For those who want an uplifting and new musical experience, here is Dan Forest’s Jubilate Deo.  An oratorio in eight languages and numerous musical idioms.

(https://www.youtube.com/watch?v=BVyCzNg6o0o)

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It’s a Wonderful Life in Ravalli County Montana

Ravalli County FCU is a $75 million credit union with its main office in Hamilton, Mt.

It is an organization led by three women who  believe and daily implement the credit union spirit.  It is the same commitment memorialized in the Christmas classic movie, It’s a Wonderful Life.

With 17 employees and 5,924 members out of a county population of  48,000, its focus is lifting up the entire community.  Their mission statement:

We Believe in Our Community!

At Ravalli County Credit Union, we believe in “People Helping People”, we believe in better banking, and we believe in creating beneficial, life-long, financial relationships for our members and community. As a credit union member, you can take pride in knowing you are part of something bigger. Throughout the year, Ravalli County Credit Union volunteers, sponsors, and donates to local non-profits and schools to enrich the lives of those in our community.

Examples of this commitment on its website are the Thanksgiving meals provided, scholarships awarded, completed VITA tax returns and the volunteer hours by employees and the organizations they support.

It’s $53 million loan portfolio is growing over 8% this year.  The delinquency rate is just .06% with net recoveries of $117,710.  Capital is 12.8%.

A Community Need

What caught my attention was a December 2, 2024 article in Next City by Connie Aitcheson, In One Montana Town, Women in Need Get New Financial Support.

The article describes the credit union’s initiative helping single mothers and working women in poverty to improve their opportunities. 

The need: “There are so many women in our area living at the poverty level,” says Darci Parsons, the president and CEO of a local credit union called Ravalli County Credit Union (RCCU).  Some of the reasons for the large amount of women living at the poverty level are the death of a spouse, divorce, unplanned children, domestic violence and the high cost of housing in the area.

For single mothers in the area, poverty rates jump to 49%, also according to the American Community Survey 2019. In Hamilton, the largest city in Ravalli County, a staggering 83% of single mothers are in poverty and earn 75% less than married couples with children — an average of $18,074 vs. $71,429. About 30% of RCCU’s clients are female-headed households, and their median earnings are 20% less than men.  

The article summarizes the recent demographic changes occurring in the county:

Their community of Ravalli County is experiencing a tension familiar to many metro areas across the country. A new wave of retirees and remote workers — in part sparked by COVID-19 — have moved into Montana, increasing both housing costs and the general cost of living. The median price for a home in the county, according to Realtor.com, has risen to nearly $770,000.

The good news is that the credit union has received a $560,000 grant from the US Treasury’s CDFI fund to underwrite this effort.

“There are a lot of people who move to our area with means,” Parsons says. “And, unfortunately, there’s a lot of people in our area who are underserved, who are struggling to make ends meet. Our job is to have that balancing act of where we’re serving new members who move into our area who have funds as well as the large population of people in our area who do not — primarily women.” 

How the CDFI grant will be used: “We can write loans for people who are maybe more credit challenged … or who might have collections.”

The credit union also offers an account that protects against overdraft fees and offers a $500 line of credit — regardless of someone’s credit score. They also do not perform background checks on any applicants. “If they’ve had problems at other financial institutions, they can still open a checking account with us,” Parsons says. “We can write loans for people who are maybe more credit challenged … or who might have collections.”

According to Parsons, many women “don’t have that confidence in themselves.” 

“As a credit union, our mission is helping people, and that’s what we do every day,” Parsons says. “I have an amazing staff who embody that and make a difference in the lives of our community.”

The angels from George Bailey’s story can now be found, collectively leading a Montana cooperative.

Darci Parsons,   Ravalli County FCU – CEO

Why Ravalli County FCU? The better question is WHY NOT Ravalli County FCU? Our philosophy is all about people helping people and our promise to you is to: simplify your financial life, work in your best interest and partner with you to achieve financial success. We get it.

Sirikit Vieyra, Ravalli County FCU – COO

Ravalli County FCU has served this amazing community for 66+ years and is going strong! We even added another branch in Florence, MT. It is a privilege working for you and with you and as we update and increase our services, I’ll always strive to meet your financial needs and goals. We get it.

Laci Rose,  Ravalli County FCU – CFO

At Ravalli County FCU we ARE people helping people. I love that we are constantly working to improve technology and increase services to better serve our members with all their financial needs. We get it.

 

 

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The Second Expression: Credit Unions Member-Facing Value Stories

Yesterday I  compared credit union’s public personas  to the tragedy-comedy masks of ancient Greek theater.

The face I discussed was that of credit union’s institutional achievements:  the growing sponsorship of stadiums and sports teams, the continuing mergers of long standing organizations with no member benefit, and the rebranding from legacy origins to aspirational names (Bethpage FCU to FOURLEAF FCU).

Today’s alternate face is member focused.  They celebrate the many ways credit unions are sharing and enhancing their value for members and communities.

It is for the reader to decide which credit union expression may be tragic or life affirming.

Sharing the Annual Financial Harvest

The most frequent member-centric announcements this time of year are the numerous bonus dividends credit unions pay members.  This is a pattern of member value sharing that goes back decades.  Some examples.

The largest  yearend bonus in credit union history.  That is how the Ogden, Utah Goldenwest Credit Union described its recent $3.5 million  bonus dividend.  It added, “During the last 21 years, Goldenwest has returned more than $30 million to its members.”

These distribtutions are is not new or unusual.   If one types “bonus dividends” into the search box on CU Today’s  home page, 2,482 matches are listed.  Some stories go back decades of coops sharing success their with member-owners.

These payments can be structured in many creative ways.  On December 2, 2024 CEFCU (Peoria, Il) announced a $55 million Extraordinary Dividend:  $52.25 million shared equally between borrowers and savers, and $2.75 million going to CEFCU Debit Mastercard users. The video announcement  states the credit union has distributed over $500 million in bonus dividends since 2000. Listen to CEO Matt Mamer’s explanation for why and how this bonus was paid.  You may view one of many member’s stories featured on the site, that of a single women buying her first home.

The $1.9 billion Tyndall CU paid $1.6 million using the following formula:   To get their holiday cash, members had to participate in everyday banking activities, such as online banking, bill pay, direct deposit, card usage, e-statements, and loans. Each member had the opportunity to receive up to $700.

More Than Special Dividends

Being part of a community is more than sharing financial success.  It is leaders’ personal participation in special events as described in these LinkIn posts:

From the CEO of Desert Financial:  My family and I had the opportunity to volunteer with the Desert Financial team at a special Hometown Heroes event last night at the Phoenix Zoo. The highlight of the night was seeing the kids’ faces light up as they picked out gifts and met Santa. This initiative is a small gesture of gratitude for the sacrifices these veteran and first responder families make for our community and country.

From San Francisco Fire’s CEO: This is my favorite time of year when SF Fire Credit Union staff volunteer alongside members of the San Francisco Fire Department and others to give out toys to children in our local community as part of the annual SFFirefightersToyProgram. Thanks to all who joined us and everyone who supports this amazing program.

Special Community Investments

From the December 11, 2024 Youngstown Business Journal:

YOUNGSTOWN, Ohio – The city has selected 717 Credit Union to administer $13 million in American Rescue Plan Act funds across three programs to improve housing. 

As part of the Youngstown Affordable Loan Program, the city allocated $8 million for the construction and/or rehabilitation of quality affordable housing. The credit union proposed to parlay the $8 million into not only funding for housing development, but also $35 million worth of discounted mortgage financing.

To begin development, 717 will create a $5 million revolving commercial development fund to be used for developers to rehabilitate vacant downtown buildings into residential condos, to build homes on vacant lots and to develop neighborhoods. After renovation or construction, the units will be sold to individual buyers and the funds recuperated to be invested in additional projects. 

A press release yesterday from SECU North Carolina:

SECU Foundation Initiates Phase Two Disaster 
Relief Package of $1.75 Million for Western North Carolina 
RALEIGH, N.C. – SECU Foundation’s Board of Directors approved a phase two disaster relief package with an additional $1.75 million in grants to three organizations, providing intermediate assistance to the hardest hit residents and communities impacted by Hurricane Helene. Funds awarded will help address temporary housing needs, financial crises, and food insecurity. Grantees include:

  • Baptists on Mission – a $1 million grant to support its Essential Rapid Repairs program.
  • The Salvation Army of the Carolinas – a $500,000 grant to expand its capacity and help ensure impacted families receive financial aid to recover effectively.
  • MANNA Food Bank – a $250,000 grant for a six-month produce distribution pilot program beginning December 2024 that will expand accessibility of fresh fruits and vegetables to impacted communities.

Phase two funding builds upon the Foundation’s $3.75 million relief package announced in October to help expedite provisions of water, food, supplies, shelter, and other emergency services to Western North Carolina.

Credit Union Teams Having Fun Supporting their Community

The annual polar plunge with purpose video from Affinity Plus FCU (St. Paul, MN) for the Special Olympics program.

Polar Plunge With A Purpose

(https://creditunions.com/features/polar-plunge-with-a-purpose/)

A Credit Union’s Example of It’s  a Wonderful Life

Every day in numerous communities, credit unions put their members’ well being first in all they do.  They are the current expression of  George Bailey’s mutual savings and loan in Frank Capra’s memorable film .

Here is one real life example from Wright-Patt Credit Union in Dayton, Ohio:

(https://www.youtube.com/watch?v=yMJT0nneRaM&t=18s)

The Credit Union Challenge

Which mask, the corporate or the member facing one, will the American public see in  credit unions today?

Will it be the continuing acquisitions fueled by payments to senior leaders, the public branding campaigns and naming rights on buildings, suplemented with continued efforts to purchase banks?   Or, wlll member-owners recount stories of goodwill, shared financial success  and innovative projects with partners to advance their communities?

If institutional success dominates public discussion and headline events, the results could be tragic for a separate, member-owned cooperative system.  Does American really need more growth maximizing financial firms fueled by internal and external acquisitions?

If special member value delivered results are the lead story, America could certainly benefit from these modern day George Bailey-like coops.   Ones where purpose for member and community progress are the priority.

I believe it is clear which expression members prefer; but will their leaders meet this moment for their institution’s choice?  And the movement’s future?