Author: Chip Filson

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An Initial Reaction to the NAFCU-CUNA Merger

I have just read the general announcement.  But am looking forward to learning the details, plans and benefits as these become available.

Here are my first thoughts.  The members of both organizations will vote on the mergers.  This is a good precedent for all coop mergers.   That way the details and commitments are explained to both constituencies.   When only the merging entity votes, the acquiring firm is exempted from commenting, or even committing, to what the intended benefits will be.

The Loss of Competing Views

Competition in ideas can result in more and better options for credit unions.   NAFCU as the # 2 trade association had to always “try harder.”   This was especially important in critical moments of legislative and regulatory change when there were different “proffers” or options presented by each trade group responding to congressional or administration views.    One need only recall the give and take in passing the CUMAA in 1998.

NAFCU’s origin story in the early 1970’s was to advocate for a federal insurance option, a  position on which CUNA was extremely skeptical.   CUNA feared federal insurance would mean the dual chartering system and cooperative solutions would be subjugated to federal control and uniformity.   Both trade groups were right.

As any CEO who has merged their credit union will testify, mergers are acquisitions, not “marriages of equals,” or other PR pseudonyms.  CUNA’s culture, priorities and politics will be, absent explicit goals, the continuing model.

The Importance of Details and Plans

This first step of mobilizing political consensus at the board and CEO level for a merger is the easy lift.  Most mergers defer the messy details until after the deed is done and the surviving leadership takes over both organizations.

Intentions, promises of shared goals, enhanced capabilities, reduced costs-in sum better value for the members-are never identified or stated.  Just rhetorical promises, sometimes sugar coated by adding several directors from the old organization to the new.

Details matter when change of this magnitude and circumstance occur.  What I will be seeking in this process is how the merger will address the top two or three strategic issues facing credit unions and the future of the cooperative option in America’s financial markets.

Every party serving the cooperative system will have a different vantage point from which to provide their priority.   In my view, this strategic assessment should be the number 1 task for this most consequential change in how America’s credit unions will be represented going forward.

Some strategic issues might include:

  • What should be the role and voice of the member-owner, now largely absent, in the evolving credit union model? NCUA prefers consumer protection not member rights.  Credit unions have removed members from any meaningful role in the governance process.
  • How will the continued trends in consolidation and absence of new charters be addressed?
  • Can the unilateral and “me-first” approach of NCUA be transformed to a more collaborative, cooperative effort for oversight and project priority?
  • How can the credit union system be more engaged in addressing the key challenges members face in their communities from affordable housing, student debt overload and fair financial options?

Priorities may vary across the numerous cooperative organizations.  However, without identifying these issues, the merger outcome could be samo-samo.

Ed Callahan used to observe, people will do what they know.  Meaning they revert to the actions with which they are comfortable.   In this case a single national trade association could result is just more resources devoted to political lobbying, PAC’s and PR tacking with each change in the political and economic winds.

Without a plan for what the system should strive to be, a CUNA-NAFCU merger could just perpetuate the status quo but absent an important forum for dissenting views.

 

 

 

 

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Reporting Coop Success In the Glare of Live Market Updates

This is the season for reporting quarterly earnings by all public companies.  Even credit unions must file their 5300 financial updates with the regulator which are then open to the public.

These many forms of quarterly financial reports are required by law and regulation.   For stock companies, shareholders, traders, investment funds and market analysts, the daily news is dominated by the ups, or downs, in company performance. Here is one example of this reporting frenzy:

Earnings season marches on

This week brings another busy slate of quarterly earnings reports, from tech giants to restaurant stocks. Apple and Amazon are the biggest names due up, along with Starbucks and CVS Health. Earnings this season have so far defied expectations and have been somewhat stronger than expected. Here are the big names on deck . . .

None of those big names will be credit unions.  Credit unions are required in their bylaws to post a monthly financial report in a conspicuous place in the credit union and file the quarterly 5300, but few will provide a public description of these results.

Credit union have shareholders, as do all public companies.  The members’ interest in the performance of their firm is the same as the owners of a bank or any other firm.   How is my ownership benefitting me versus other options?

For stock companies, the market readily evaluates this performance as documented by changes in the daily stock price.   Analysts evaluate the current results and make their “calls” about whether a stock is a buy, hold or sell.  Explaining a firm’s quarterly performance to all market participants is an important skill for CFO’s and CEO’s of all companies, even the smallest.

Credit unions generally provide no such reports or future forecasts (guidance). There is no stock price to provide market feedback.   But is the interest of the member-owners any less deserving than those of public companies?  Is the responsibility to coop shareholders by the credit union’s professional staff any less than to a publicly traded or even a private firm?

When Credit Unions Did Speak Up

In the March-April closures of three banks led by Silicon Valley’s failure, credit unions launched major PR campaigns to assure their members that they were sound.  CEO’s stated there were no parallel circumstances in the coop industry.  Some credit unions devoted a major part of the Annual Meeting to this public concern.  Some of these updates highlighted the credit union’s percentage of insured shares, or capital levels, or liquidity.  The message was to assure members the credit unions were able and willing to continue meeting their needs.

I believe each quarter’s financial filing is another opportunity for credit unions to tell their special story.

What Do the Numbers Mean For Me?

Numbers matter and presenting the credit union’s financial position and key trends is a beginning.   The most important message, just like a public company, is to tell what the numbers mean to the individual owner.

How has the credit union enhanced the value it brings to members?  What investments has the credit union made and what was the member benefit?  As the interest rate environment remains high, what changes has the credit union made to its rates?

Members will assume their credit union is safe and sound, or they would have left.  Credit unions will often announce events, such as branch openings, sponsorship with a local sports team or venue, and even the comings and goings of senior management.  These PR events and community engagements matter, but are not the same as the quarterly status report.  At this time everyone presents their financial results-so how did our members specifically benefit?

The Radical Cooperative Model

Since the 2008-2009 financial crisis, there has been a singular focus within financial systems on stability.  Financial outcomes are all that matter.  The more capital the better.  The only equity that matters is net worth, not social responsibility.

Financial performance is evaluated by the money made, not by the people served.  The relevance of a coop is becomes  its size, its growth and its superior numbers.   A credit union that focuses on what it helped members accomplish becomes a radical act.

Transparency is the key to member-owner confidence and trust.  And competitive advantage.  It is as important for coop leaders as it is for those whose performance is judged daily by the fluctuation of share price in the market.

However credit union’s quarterly numbers are not merely about financial outcomes but for how the performance aligned with the aspirations of members.  Coops should be presenting the values and partnerships that demonstrate their role in communities beyond the conventional financial success measures.

We should be holding up a model that is better for individuals, especially those often unaware of better opportunities.  The quarterly updates should show how a credit union’s purpose is more than making money.   It is a report on the difference made for the members.

A Renewed Commitment to Using Numbers to Say Who We Are

As all three major U.S. stock indices closed higher for July, the S&P 500 and the Nasdaq mark their fifth consecutive months of gains, and the Dow is riding a 14-day winning streak, its longest since 1987; however  cooperatives have a different benchmark to report.

Our momentum is not market driven, but member focused.  There will be a big new batch of corporate earnings the rest of this week not to mention the July jobs report due Friday.

Instead of  live market updates, we should be offering our reports of improved member lives and opportunity.   That is the difference coops should make.

 

 

 

 

 

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How This Story Ends May Show the Future of a Unique Coop System

Oscar Abello, economic editor at the non-profit reporting site Next City, finds instances where credit unions provide “solutions for liberated cities.”  In his latest coverage, the event is a six plus years effort to charter a new credit union for North Minneapolis.

However the end of the story is not clear.   Will there be a new community financial institution, or will the process be stillborn?

Abello poses this fundamental question:  The travails of Arise Community Credit Union, set to be Minnesota’s first Black led-credit union, raise the question: How hard should it be for communities to have their own financial institutions?

The link to his analysis posted on July 11th can be read here.  While recent events are promising, the charter has yet to be granted.

I have three takeaways from his description of this new chartering effort.

Three Lessons

  1. New charters require people with passion and commitment, that is entrepreneurs who believe in their cause. His article profiles Daniel Johnson the CEO-designate who left a successful financial career to serve a clear community need where businesses have been “disinvesting” for years.

Johnson’s motive for leaving his career security: “The community said,(after George Floyd’s death) ‘We don’t want another park. We don’t want another place just to throw flowers. We want something more tangible, something that we can have as an institution that will be around long after we’re gone.’”

  1. In addition to the community’s decline, the market timing was right as Minnesota had just capped payday lenders at 50% APR: One fact: “The average borrower took out nine payday loans, at an average loan amount of $365, and was charged an average of 197% interest per loan.”

The process is not easy as Abello describes:  But chartering a new credit union today is like traversing a long-lost trail through the woods, one that used to be well-traveled but is now overgrown or littered with fallen trees or other obstacles no one has had to navigate previously.

Prior to 1970, there were 500 to 600 new credit unions chartered across the country every year. After a steep decline to near zero, the numbers have never recovered. Over the past ten years, fewer than 30 new credit unions have been chartered across the country.

Changes of leadership, loss of local funding from foundations, the challenges from Covid have led to stops and restarts.   The  Minnesota Credit Union Network and AAUC have stepped up to help.  Credit unions have contributed to a $1.0 capital fund and pledged deposits of several million when up and running.

NCUA is apparently requiring $3.0 million in committed capital based on the credit union’s projections to be $10 million in assets in three years-or a 30% net worth ratio.  This capital base would equate to 50% of the first year’s asset goal of a $6 million balance sheet.  This is an amount not required by law, regulation, or common sense.

In addition to this enormous fundraising barrier, the requirement distorts the fundamental dynamics of self-help for a new charter.   Raising capital encourages investments in fixed assets and operational capabilities that may not be required for years.  It discourages the boot-strapping and learning that must occur when a new  charter reaches out to find the best ways to serve their community.

  1. The chartering process is failing the communities which most need credit union support. Abello points out that “out of 4,700 credit unions across the country, only 500 are self-designated minority credit unions.”

The executive director of the Minnesota Credit union foundation has a new goal from this effort: “One thing that we’re working on right now is coming up with a playbook because the chartering process is quite complex, and really trying to take the learnings that that we’ve had working with Arise and trying to come up with a resource that’s going to be helpful for additional groups going forward.”

Abello tentatively answers the question he posted at the beginning with this observation:

“If a community wants it, if it can prove there is a market for such services that no one else is meeting, and if it can marshall the necessary financial, professional, technological and other resources necessary to pass regulators’ muster, then for now, any community has the right to try and answer the question for itself.”

The obvious answer is few would want to navigate this obstacle course before even entering the market’s fray.

Why did CEO-designate Johnson decide to join a startup in this context of financial consolidation, established competitors and bureaucratic barriers:  “It’s important for people to be able to see that an institution has planted a flag that really represents them and isn’t driven by stockholders.”

In other words:  You own it.  But will that motive be enough to overcome a process that discourages new coop charters?

How this story ends may be a harbinger for the future of the unique credit union financial system.

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Trego Montana, Population 805: Where Members are on Center Stage

If credit unions are about the members, then it follows that members are the best way of telling a cooperative’s story.

This short video is credit union storytelling at its best.  It captures the viewer’s attention for it shows members serving their community.

(https://www.youtube.com/watch?v=D-53C6_2Tsc)

I asked Elizabeth Kozar, marketing manager at Whitefish how this approach was developed.  Here’s her thoughts on why this media is so effective.

Authenticity and Connection

Short-form documentaries provide an opportunity to capture the authentic experiences and lives of Whitefish Credit Union members. By showcasing real people and their personal narratives, the Credit Union aims to establish a strong emotional connection with the audience.

These stories humanize the Credit Union, allowing current and potential members to relate to the circumstances and challenges faced by others in their community. 

Engaging Visual Format

Documentaries, even in a short form, offer a visually compelling way to present narratives (especially being in beautiful NW Montana). By combining interviews, real-life footage, and relevant visuals, the Credit Union can create a captivating storytelling experience. The medium helps to engage viewers and hold their attention, allowing them to immerse in the stories being told. 

Storytelling’s Impact

Humans have an innate inclination towards stories, as it helps us make sense of the world and creates emotional connections. Good stories inspire, motivate, and educate an audience. By using short-form videos, we can effectively convey the triumphs, challenges, and values of our members.

Building Trust and Credibility

In an era of increasing skepticism and mistrust, transparency and authenticity are crucial for financial institutions. Short-form documentaries enable the Credit Union to showcase our continued commitment to our members by highlighting real experiences. By sharing these narratives, the Credit Union demonstrates their dedication to serving their community and building trust.

Differentiation and Branding

In a competitive financial landscape, Whitefish Credit Union aims to distinguish itself by leveraging storytelling. The use of this form stands out from traditional marketing approaches.  It delivers content that resonates with our audience. The videos create a distinct identity and position the credit union as an institution that values its members’ experiences.

 How Did You Identify Members to Profile?

To find members for the videos, I reached out to Whitefish Credit Union’s branch staff to gather information about individuals with compelling or unique experiences. By leveraging the staff’s personal connections, I identified potential candidates who had faced challenges or benefited from the credit union’s services.  

Respecting privacy and obtaining consent, the team collaborated to select the most diverse and relatable stories.  This collaborative effort resulted in a collection of authentic videos that highlight the positive role of the Credit Union on its members’ lives. 

The reach and impact of the Member Story videos is magnified with a multifaceted approach.  

For each video, a dedicated webpage is created that features a story write-up, accommodating those who prefer reading over watching.  We leverage :30 and :15 second clips from each story for various platforms, including broadcast TV, YouTube ads, and social media channels which expands our audience reach. 

Members also promote their stories allowing greater depth of use. Bob Marshall Wilderness Foundation played their story at the beginning of their film festival this year reaching an audience far beyond our traditional marketing channels. Ninepipes Museum has their Member Story on their homepage. 

The Future

Whitefish intends to continuously explore for new examples of inspiring narratives of members in their communities.

These stories document a larger reality.  When members’ lives are the center of a credit union’s messaging, the unique and unmatchable power of cooperative design is celebrated.

Members’ stories mirror our lives, the ups and downs.  This couple’s story captures the spirit of Montana and life’s challenges: Working with their hands: the farrier and his wife.

(https://www.youtube.com/watch?v=UaaiAne8Vz4&list=PLnh8CdRSC2lh353cuh6lb2WyLL94XW6uu&index=13)

Credit unions exist to foster community through trust and engagement.  These short-form documentaries are an art, portraying humanity at its many crossroads and living life with passion.

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What Hot Summer Can Do to a Person

THE SLUGGARD

by Isaac Watts

’Tis the voice of the Sluggard: I heard him complain,
“You have wak’d me too soon, I must slumber again;”
As the door on its hinges, so he on his bed,
Turns his sides, and his shoulders, and his heavy head.

“A little more sleep, a little more slumber,”
Thus he wastes half his days and his hours without number;
And when he gets up he sits folding his hands,
Or walks about saunt’ring, or trifling he stands.

I pass’d by his garden, and saw the wild brier,
The thorn and the thistle, grow broader and higher.
The clothes that hang on him are turning to rags:
And his money still wastes, till he starves or he begs.

I made him a visit still hoping to find
He had took better care for improving his mind:
He told me his dreams, talk’d of eating and drinking;
But he scarce reads his Bible, and never loves thinking.

Said I then to my heart, “Here’s lesson for me;
That man’s but a picture of what I might be:
But thanks to my friends for their care in my breeding,
Who taught me betimes to love working and reading.

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The Difference is Personal

A story from WEOKIE Credit Union’s CEO, used with permission:

“A critical aspect  of our vision is to “make a difference, one person at a time…by being our members’ most trusted financial partner.”

“But what exactly does that mean? During a recent visit to the Memorial Branch, the team shared a story that  exemplifies what that actually looks like.

“Mr. O, a long-time member of WEOKIE, is a frequent visitor to the Memorial branch, bringing donuts nearly every Friday. It’s clearly a nice gesture on his part, but it got me asking, “Why does he visit and bring donuts?”

“Turns out, for many years, he would drive his wife each Friday to get her hair and nails done and always brings treats for the staff. Unfortunately, his wife passed away, and he turned to Bella to assist him with managing all of the challenges of removing his wife from their financial accounts.

“Bella and the entire team took amazing care of him and continue to connect with him each time he visits the office. The void left from ending his weekly visits to the hair salon is now filled with smiles and connections with the Memorial Branch staff.

“When sharing the story  this month I  learned that many of our branches have been “adopted” by our long-time members because of the care and connections  to become their most trusted financial partner – and friend.

“A special shout out to Bella, the entire Memorial team, and every member of Team WEOKIE who is living our vision of making a difference, one person at a time. I am proud to serve with you!”

Bella and Mr. O:

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The Roots and Legacy of a Credit Union Leader

Recently I was contacted through this blog for information about Ed Callahan’s career as a high school coach, educator and administrator.

The writer was Kevin Patrowsky who is a Wisconsin high school football historian living in Milwaukee.   He wanted to add information about Ed Callahan’s tenure as a teacher and coach at Don Bosco High School.  His blog is Wi Hi Football | History of Wisconsin High School Football.

This week he posted his account of Don Bosco’s success as the Milwaukee Catholic Conference mid-1960’s powerhouse.  The following is his excerpt describing Ed’s tenure at Don Bosco and move to a new program at Boylan Catholic High School in Rockford, Illinois.

Callahan’s Career as a Coach, Teacher and School Administrator

“Coach DanFleming’s replacement at Don Bosco was Edgar “Ed” Callahan who spent five seasons as the head coach, 1955-59 going 28-12-1. Don Bosco had a 7-1-1 season in his initial season of 1955 and then a 7-1-0 year in 1957. They finished second in the Catholic those two years and in the middle of the pack the other three going 4-4-0 in 1956 and 5-3-0 in each of the 1958 and 1959 seasons.

“For coach Ed Callahan, his story is much more widely known than his predecessor. Born in 1929 in Youngstown, Ohio he attended Ursuline High School where he was a very good tackle. Standing 6’1, weighing 225, Callahan graduated in 1946. He was offered many scholarships, but he chose Marquette because he wanted to go to a Catholic Jesuit University.

“Graduating in 1951 with a B.A. in mathematics, Ed stayed on to get a Master’s Degree in Educational Administration in 1952. He then went to Don Bosco as a math teacher and an assistant coach for football and basketball, before replacing Dan Fleming as the top football man. A very principled man with high integrity he was, to say the least, a man that others thought highly of.

“In 1960 he was recruited by a new school in Rockford Illinois to start the football and basketball program at Boylan Catholic High School which opened that year. In 1966 Don Bosco played Rockford Boylan and the Don’s beat the Titan’s 26-25. Ed stayed as the football and basketball coach plus the head of the math department until 1970 when he became the school’s principal.

“In 1971 he took the job as superintendent of the Rockford Area Catholic Schools and stayed until 1975. Because Ed had a reputation as a very trustful and effective administrator, he was asked by the State of Illinois to become the Assistant Secretary of State. Shortly thereafter in 1987, the Governor appointed him Director of Financial Institutions for the state of Illinois.

“Ed and several of his assistants inherited a floundering department and set the ship right to serve the state’s financial institutions including credit unions. A life-long Democrat, Ed caught the attention of Republican President Ronald Reagan who, in 1981, asked him to serve as Chairman of the National Credit Union Administration (NCUA).

“This Washington DC-based federal government organization had been recently reorganized as an independent regulatory agency during the Carter administration.  In 1981 when Ed assumed this position, the the country was in the midst great economic uncertainty and deregulation was affecting all financial institutions.  The new agency was transitioning from its prior function as a bureau within HEW.

“Ed left in 1985 and started his own company, Callahan and Associates, Inc. which became the leading provider of financial data to credit unions in the United States. He served in several other positions before retiring in 2002 and then passing in 2009.”

The Rest of the Story

A blog devoted to high school football would not spend many words on Ed’s next career and multiple contributions to the credit union system.

In February 2003 when receiving the National Credit Union Foundation’s Herb Wegner Lifetime Achievement Award, an introductory film summarized this period of Ed’s professional accomplishments.

To understand Ed’s leadership,  I believe one must be  aware of his initial career as an educator and coach. In these multiple roles in high school education, Ed formed his multiple skills of vision, innovation,  communication  and effective management.

Here is how the Foundation described his legacy for the credit union system in this Lifetime Achievement award.

(https://www.youtube.com/watch?v=DEIymlc8OQ8&t=12s)

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Cooperation on the 4th of July

Washington’s National Cathedral is the site of a free 4th of July concert.  There is always a full house. This year’s program featured an organ duet.  Two players on one organ console.

Four hands for three manual keyboards, four feet for one pedalboard, and a single music sheet.  The Cathedral has video screens on the pillars throughout the sanctuary to provide up close views of the action.

This 1:35 minute video shows the pair playing in the concert finale,  Sousa’s Stars and Stripes Forever.  Note the four feet working the pedals and which player turns the pages.

Cooperation and collaboration in a musical celebration. The audience rises to participate at the end.

(https://youtu.be/zZNGBf2ZSdM)

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The Story of the First De Novo Mutual Bank Charter Since 1973

Next City is a non-profit national news organization focusing on  greater economic, environmental, and social justice in cities.

Its economic correspondent is Oscar Abello who has written several stories on credit union chartering efforts.   The excerpts below are from his description of a new mutual bank which opened in October 2022 and today has $44 million in assets.

This de novo start up is a fascinating story.   It also is a contrast with a very similar credit union effort, Maine Harvest FCU.   The credit union closed after two plus years of operation to become a new department within Five County Credit Union, in Bath, ME.

Here is Oscar’s introduction to his story about this new mutual:

“Banking was social long before it was anything else. Five thousand years ago, on the plains of ancient Mesopotamia, farmers, merchants and artisans conducted business with each other based on credit, with others they trusted as committed members of a community. The earliest writings found are clay tablets on which people essentially kept each others’ tabs. It was something early human beings did as part of surviving as a civilization, or even as a species.

“For all the problems and shortcomings of the U.S. banking system, perhaps the one redeeming quality it ever had was how much it relied (until recently) on local relationships built on trust.

“Fast forward to today. Many things have changed, but can banking still be part of how we address challenges together as a society? Today’s story offers an example that points to yes. Is the banking system supposed to have a social mission in addition to purely financial goals?”

How To Build A Bank To Scale Up Local Food Ecosystems

I was intrigued by Abello’s brief history of the mutual charter and its demise.  An additional takeaway is why it was believed preferable to a credit union for the founders.

It is also the story of Charley Cummings and his wife, who had a vision of creating a new, sustainable, local food system.

They  had found a financing gap in the market and  thought a mutual was the best solution. Excerpts follow.

“That  gap in the market for small- and mid-scale producers and also other value chain participants wasn’t well addressed by farm credit either, like manufacturers, distributors, consumer brands, trade brands,” Cummings says.

To fill in that niche, Cummings landed on a very old solution: a mutual bank. It’s a bank that doesn’t have conventional shareholders. Instead it’s owned and controlled by its depositors, similar to a credit union.

It already has more than a thousand depositors and $44 million in assets, including loans to farmers, organic food production facilities and even a project to build a solar array over a sheep grazing meadow to add some income for the farmer. 

“The reason we’re structured as a mutual is because it’s intended to be permanent,” Cummings says. “The mutual bank model has proven its longevity and the structure gives the impact mission of the (mutual) bank teeth from a governance perspective in a way that shareholder ownership does not.”

A Brief History of Mutuals (excerpt)

Mutual banks emerged as a way for working class or poorer households — often recent immigrants — to pool their savings, earning a modest amount of interest while investing in each others’ homes. They clustered in the northeast because during the 19th and early 20th century it was the country’s most populated region, with new immigrants coming over from Europe in waves. . .

The Federal Deposit Insurance Corporation today lists 427 mutual banks across 43 states, though they’re still largely concentrated geographically in the northeast, Ohio or Illinois. Without the pressure to grow and generate profits for shareholders, mutual banks are mostly smaller institutions focusing on a specific geographic market. 

Why Not a Credit Union?

Cummings did look into starting a credit union, which is a much more common example of a cooperatively-owned and -governed financial institution, but there are a few reasons why it wasn’t quite a fit. Regulators generally don’t allow new credit unions to do commercial lending in their first two or three years. Beyond that, current laws limit credit union business lending to 25% of their loan portfolios unless a majority of their members come from low-income census tracts. These restrictions just didn’t make sense for a new financial institution whose core business was going to be agriculture and food businesses. 

For many decades, banking regulators and policymakers got caught up in an ideological backlash against the mutual bank model, fueled by the idea that all companies including banks were better off putting profits for shareholders above all else.

It took more than the usual amount of convincing just to give Walden Mutual the chance to find startup investors who would be willing to limit their own returns so the bank could retain enough earning.

The Funding Source for the Mutual

It turns out having a clear social mission protected by a mutual structure was a big draw for the growing segment of ESG investors — the acronym is short for “environmental, social and governance.” Walden Mutual was able to, in essence, borrow nearly $25 million for startup capital from investors who know they cannot profit later from selling an ownership stake in the bank.

With an FDIC-insured bank, he says, you have an entity with a lower cost of capital than the government itself. “Our theory of change is that by lowering the cost of capital for these types of farms and businesses, we can really help the ecosystem to grow.”

“There’s nothing more strategically aligned in financial services than saying to a potential depositor, ‘hey, there’s nobody else here, we work for you and in your best interests,’” Cummings says. “Whereas with a shareholder-owned bank, that is not always the case.”

There is much more in the full story which you can read here.