Category: Co-ops in Capitalism

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At a Merger Inflection Point-What Should Credit Unions Be Asking?

The ordinary human being does not live long enough to draw any substantial benefit from his own experience.  And no one can benefit by the experience of others. . . each (generation) must learn its lessons anew.  (Albert Einstein) October 26, 1929)

On October 20, 2025 Callahan published an analysis with multiple charts showing how mergers are changing the institutional character of the credit union system.   The graphs have ten and twenty year times lines documenting the number, size and source by peer group of this consolidation.

The analysis, Credit Union Mergers on the Rise, provides essential macro trends to track how this consolidation is affecting the institutional structure in the credit union system.  One example is that over the past ten years the average credit union asset size has increased from $188 million to $538 million.

There are many other data points one might take from the article to help frame critical questions that should be considered, but are often overlooked.  For  many view this consolidation as inevitable and necessary.

Some Important Questions that Need Answers

The basic financial math of a credit union mergers is simple:  1 + 1 = 1.  There are no added members, shares, loans, employees or outlets.  Instead in most cases a financially strong long-standing coop has turned over all of its members’s assets, equity and future direction to another organization whose leadership they had no role in evaluating or choosing.  Sometimes the new management’s head office is hundreds or even thousands of miles distant with no connection to the merged  credit union members and community.

Credit unions are built on relationships/bonds and generations of member-owner loyalty.  That commitment was their initial capital and the foundation for much of their public reputational goodwill today.

So it is important to consider whether these trends and sometimes questionable activity are helping or hurting the system’s future.  Are mergers a symptom of a system’s weakness, an inability to sustain organic growth,  or a strength?

The Need for an Industry Conversation

Other questions that could help member-owners and cu leaders better understand and evaluate what is occurring could include:

Is consolidation resulting in fewer charters inevitable?

How has the coop system’s approach to merger changed over the past decades?  What role and benefits are third parties gaining in these combinations?

What are options for credit unions who feel the need to merge?

What should member-owners know when asked to approve the transfer of their entire coop’s assets and legacy about the performance, business priorities, and  leadership of the continuing credit union?

What is the fiduciary duty to the member-owners when leadership decides to seek a merger? How should the conflicts of interest be addressed with CEO’s negotiating their own merger benefits? 

What is the regulator’s role when reviewing merger applications?  What is their obligation to the member-owners?  Are they responsible for the information owners receive when approving the Member Notice announcing members’ voting role?

Has there been any multi-year studies of well capitalized credit union mergers and the before and after performance trends over a fiveyear period?  How did members value change? What happened to their community relationships and employees?  What are the additional immediate costs incurred by mergers?

Who Will Lead These Dialogues?

How one introduces an issue will often determine what actions are necessary.  With mergers occurring  at an average of three to four per week, there has been no industry discussion of the  implications and the benefit or hard to the members-owners.

Now, not later is the tme to understand the consequences of mergers.

Individual instances of multibillion dollar cross- country combinations or when one credit union completes three mergers in  one month (and ten in one year) are routinely announced.  But these apparent individual actions will have significant consequences for every other credit union.

For no credit union stands alone.  All are part of an interdependent  system that creates individual  opportunities and vulnerabilities.

Merger activities are having  important conseqences for the member-owners, their communities, and the shape of financial options in America.

The future of the coop system’s will be different.  This is not an effort to go back to what was.  Rather it is a necessary examination as Einstein might suggest, to plumb our wisdom now and not wait for future generations to assess past events.

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From the Field: Lending in the Member’s Best Interest

First, a recent CEO’s update to staff on the federal governments shutdown and the credit union’s response for members:

SHUTDOWN ASSISTANCE: The credit union is offering numerous options to members impacted by the government shutdown. We are offering unsecured loans based on the member’s normal net weekly or bi-weekly pay with a 7.25% APR up to 12 months. We have also extended the interest free period to 90 days and allow for a term up to 48 months to assist even more members  through this tough time. From the beginning of the shutdown through November 1st, we helped 387 members with total loans of approximately $1,911,167.00. We have also processed a considerable number of skip payments for members without any fee.

An Impact Maker Counsels a Member Not to Make a Loan

CEO’s introduction: This month’s Impact Maker is a great example of living our mission and doing good for people. We’re a lending organization and love to help members with their borrowing needs. But any loan needs to be in the members’ best interests.  In this situation, not making the loan was the better decision.

“Tammy recently spoke with our member, Betty (name withheld), who expressed interest in opening a Home EquityLine of Credit. Over the course of the conversation, the member divulged that she was taking out this loan to give funds to her daughter for flooring and renovation expenses.

Tammy dug in further – uncovering that the member really didn’t want to do this loan or assume another loan payment given her fixed income but was being pressured to do so by her adult daughter.

Tammy listened to the member’s situation but advocated against taking out a loan she wasn’t comfortable with, and explained to the member the loan options available to her daughter, should she want to apply in her own name.

Later on, the member texted to Tammy, detailing that her daughter was screaming and banging on her door, irate that Betty wasn’t moving forward with the loan. Tammy continued to support and encourage the member, advocating for her safety and for her choice to do what is best for her own financial situation. 

Betty was extremely grateful for this support, thanking Tammy for her “thought provoking” conversation.”

A Member’s First Credit Experience

This CEO’s story is about Jose (name withheld), who was aided by Isaiah  a financial coach at a local Member Center. 

“Isaiah opened Jose’s membership in February of 2024 at the  Member Center. Jose is an older gentleman with very limited credit for his age, but he wanted to start building it. Isaiah was able to help him obtain a $500 First Time User Credit Card in addition to his checking account and debit card. 

The member would reach out to Isaiah from time to time and update him about his credit score. Overtime, Jose was able to qualify for a higher credit limit. He started the process of trying to buy a car. However, he was challenged by his limited credit history, car prices and the loan to value on the cars in which he was interested. 

Overtime, Jose continued to pay on his new credit card and qualified for a larger limit again, but he still was not having success with purchasing a vehicle. Isaiah worked  to get him pre-approved for a dollar amount and began reviewing specific vehicles with their price and loan to value compared to blue book values. Finally, Jose found a vehicle he liked and qualified for.  The credit union approved his financing. 

Recently, the loan was closed, and Jose was driving his “new” car. The loan took over a year and the credit building process was over a year and a half. 

Thank you, Isaiah, for your persistence and caring approach with Jose. You lived out our purpose to build hope by being a caring financial partner.”

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A Departing CEO’s Lament

Starting an odyssey to change cooperatives.  Before you read this CEO’s statement from LinkedIn, consider a brief thought from Emily Dickinson, By a Departing Light:

By a departing light
We see acuter, quite,
Than by a wick that stays.
There’s something in the flight
That clarifies the sight
And decks the rays.

A Course Change By a Credit Union CEO

 I have always been a bit of a square peg struggling to go into a round hole. I have always pushed against the grain regardless of my role. Sometimes that has been appreciated. Other times, it has been criticized.

I have debated for years how I can best serve this wonderful industry. In a space that is riddled with hypocrisy and attrition, I have concluded that I am of more value outside the bubble than inside.

I’m not only stepping down as a CEO. I’m stepping away from working inside credit unions altogether.

There is never a good time. There are always what ifs. Unfinished work.

December 18th is my 25th anniversary in the credit union industry.

In my 25 years, we have lost more than 50% of our neighborhood or community credit unions across the country.

So what are my motives? Family. Opportunity. Change. Fit.

Change. Something has to change.

I could sit in a credit union trying desperately to conform to my round hole. To complacency. To status quo. To fit.

Or…

I can dedicate myself to change. Change to challenge complacency. Change to disrupt the status quo.

I’m betting on myself. For my family. For opportunities. But also for a chance to make an indelible change to our industry.

If we want future generations to know credit unions, we must be about the work of saving them.

If I am fortunate, I have 25 years left in my career. During that time, my priorities will be God, Family, Career. In that order.

The second half of my career will be focused on finding as many ways as possible to help our credit unions win. Creative Strategy. Next Level Results.

I won’t stand by idly watching credit unions get regulated out of existence or go quietly into the night.

So this is not a goodbye. This is a hello.

I am not leaving the fight. I’m just getting started.

November 14th. I close one door so that I can run through another.

See you then.

(James McBride, CEO, Connects Federal Credit Union)

 

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A Surprise for 1,254 Credit Unions & Heads Up for Everyone Else

Vendor relationships are an essential requirement of managing a credit union.  All credit unions contract with an external vendor for their core processing operations and many ancillay addons.

Only one or two of these vendors are credit union owned CUSO’s.  The others are for profit companies some privately owned and others public.  Some serve primarily credit unions; others the entire financial market.

Credit Union DP’s Market Share

The largest market share for critical back office operations is Fiserv.  In a 2024 survey, they served 1,264 credit unions or 27% of the total market.  This share is provided through almost a dozen core options.  This variety reflects FiServ’s business model of growth through acquisitions of independent credit union dp providers.

The next highest dp vendor’s share is Jack Henry with 544 credit union clients on a single platform.

A $30 Billion Loss in Market Cap Creating a Decline of 42-44% in Share Price

Yesterday Fiserv announced its operating results for the third quarter.  The surprise result stunned the market.  From Bloomberg’s Evening Briefing:

Fiserv stock suffered a record plunge after the fintech slashed its outlook for full-year earnings and unveiled third-quarter results that confounded Wall Street analysts. Chief Executive Officer Mike Lyons, who took the reins in February, said he discovered that Fiserv wasn’t going to be able to deliver on its previous promises after a broad-based review of the business in recent months. Lyons’ predecessor running Fiserv was Frank Bisignano, who left to join the Trump administration. 

“More financial surprises emerged in the start of Q3,” Lyons told analysts on a conference call. “That prompted not just the annual strategic planning process, but this much more rigorous review into our financials. And that was also driven by some of the stuff we’re hearing from our clients.” (emphasis added) 

Analysts expressed surprise at how quickly the business appears to have soured. Trevor Williams at Jefferies said the magnitude of the earnings miss and forecast cut “is difficult to comprehend.”

“To be frank, we are struggling to recall a miss and guide down to this degree in any of the sub-sectors we have covered during our time on the Street,” Matthew Coad, an analyst at Truist Financial, said in a note to clients.

What’s Next for Fiserv?  For its Credit Union Clients?

The most revealing phrase in Fiserv CEO Lyons call was the reference to some of the stuff we’re hearing from our clients.  That is pretty frank talk from a CEO facing a market confidence meltdown.

What’s next for credit unions?  With up to twelve different core solutions and serous earnings pressures, some consolidation forgreater efficien would seem inevitable.

In addition to being aware of what changes may be coming, the next important question is what are my options?  For the short run?   And the longer run when my dp contract is up?

This uncertainty will  put the focus on other credit union dp providers, especially those who may be credit union owned.   Or credit union focused vendors who would appear to be financially stable, and not positioning for an eventual windfall sale to an outside party.

With all the public focus on new technology, it is important to remember the value of long term reliable relationships.   The unique credit union solutions of creating CUSO’s to serve common tasks becomes more promising than ever.  While CUSO’s must compete with for profit alternatives, often with greater resources, they do not confront the prospect of market sell offs driving business decisions.

Whatever the outcome of Fiserv’s fall from market grace, it should prompt a greater awareness and examination of each credit union’s core provider. What do you know about the company’s financial circumstances and client satisfaction?

 

 

 

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Why Member-Owner Participation in Credit Union Board Elections Matters

In a response to yesterday’s post citing PenFed, a member sent me the following notice requirements for an owner to be nominated for an open board potions at the credit union.

The 1% standard cited would require 28,128 member signatures based on the latest call report.  It is a mere pretense of democratic owner control.

The member added this comment:  Credit unions are becoming more like Fortune 500 companies every day. They exist not to meet the needs of customers or shareholders but entitled corporate executives. 

The notice also contained short bios of the three board nominated candidates.  The first is a retired army colonel who has been on the board since 2008 and serves on the Planning Committee.

The second is a retired USNR aviator who served for ten years on the Supervisory Committee before “joining the board” in 2022.  He also serves on multiple committees including planning and risk management.

The third board nomination joined the board in 2005 and has just retired from a 38 year career working for the federal government.  This person is the board treasurer and chair of the financial and risk committee and on the planning committee.

All have earned advanced degrees and have served in multiple professional civilian roles.  No one would question their credentials.  However their candidate descriptions include no statements about their priorities for the credit union and its current performance.

 PenFed’s Recent Trends

At September 2023 PenFed’s total assets peaked at $35.4 billion.  As of this June the total was $30 billion.  This $5.4 billion asset decline is a continuing trend.  In the 12 months ending June 2025, shares have fallen by over 10% or $3.0 billion, and loans by 13.2%, or $3.6 billion.

In the income and expense comparison for the first six months of 2024 and 2024, total revenue is down 14.1% and operating expenses by 3.75%   The net income for both half years is positive with ROA’s of .27% and .54%.  However these  results were achieved by recording “non opeating gains” of $86.3 million and $95.3 million in the two periods.  Otherwise, net income would be negative. Non-operating gains result from the one time sales of assets such as buildings or loans.

In the past 12 months, there has also been a decline in the number of branches (4), employees and members.  It has downsized its balance sheet by reducing external borrowings from $3.8 billion at December 2023 to $756 million as of June 2025.   The reduction in total assets has resulted in a net worth ratio between 9% and 10% even with minimal earnings in the past 24 months,

In sum, PenFed is moving steadily backwards.

The Strategic Catbird’s Seat

PenFed has one of the oldest and most recognizable brands in credit unions.  It portrays strength and security suggesting a direct affiliation with the government.  The credit union  has an FOM  charter open to anyone, reporting  342 million potential members.

During the past decade, the credit union has merged over 25 credit unions across the country, acquiring their equity.  Often, after a brief transition, the local branches are closed, employees laid off, members offered only virtual services, and the buildings and other assets sold.  The local legacy relationships, representation, community presence, and reputation are gone.

PenFed has had strategic advantages many other credit union’s covet.  Scale, open membership, diverse products, a recognizable brand, multiple acquisitions of other credit union with their equity and increasing conversions to virtual and remote services.  Yet it is in decline.

Where Are the Overseers?

These declining financial trends have taken place for at least the past two and a half years.  What has the board been doing?   What changes have been tried?

Members are not being served well by their director representatives.  But what recourse do they have other than to close their account and leave?

This situation is a concrete example of why member-owner elections are important versus the habit of routine ratifications of board incumbents.   All three PenFed nominees would seem to have exceptional  credentials.  But in practice they are shepherding a significant institutional dwindling.

The financial engineering to maintain a net worth above 9% by selling off assets to record non operating gains is not sustainable.  Does the credit union even have a plan or leadershlp capable of reversing this diminishing?

This situation is why annual meetings should matter. Elections are moments for accountability not merely PR exercises.  Democratic elections empower owners and promote leader responsibility.  In the absence of member participation, there is no answerability by those in leadership positions.

When the regulator is the last resort for addressing financial and operational shortcomings, the credit union has lost its autonomy.  And member-owners’ needs are sidelined to meet the priorities of the government overseer.

When democracy as the means for leadership accountability is abandoned,  the outcome is rule by habit or authority.   Neither is a sustainable approach for long term success.

 

 

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The Big 3 Credit Unions and Member-Owner Democratic Practice

In a January 2024 blog, I described NCUA’s approval of bylaw changes for Navy and Pentagon FCU’s that effectively eliminated the ability of member-owners to nominate directors for board openings.  (link)

In the post Who is Responsible for Credit Union Democracy, I summarized these changes:

The two largest FCU’s quietly changed the required number of signatures for member nominations for the board.  In both situations the change removed the 500-signature standard bylaw and replaced it with a percentage of members.  For Navy this new signature requirement was 26,000 and for PenFed 5,800 based on their latest reported member counts.

Now the trifecta for the three largest credit unions is complete.  In 2023 and 2024 SECU NC had contested board elecrtions.  In the first year, member nominated candidates defeated the board selected ones.  The next year the board nominated candidates won with tens of thousands members casting ballots.

In 2025 there was no contested election at SECU.  The board chosen candidates were seated by acclamation.  In this post Jim Blaine, a member and former CEO, gives a summary of this voting process (link) titled The SECU Annual Meeting:  Isn’t this a Losing Struggle?

It is not just the Big 3 who have shut down member elections. It has become the standard operating practice for all but a few credit unions.   So does it matter?  Why worry if everything seems to be going OK?

Why Voting Matters for the Future of Credit Unions in America

  • It empowers members in their role as owners. You are more than a customer.
  • It implements the democratic design of cooperative governance via member oversight.
  • It opens director leadership positions to the widest possible selection of candidates.
  • Voting gives current and potential candidates a chance to state their visions for the credit union.
  • Without a vote, the director nomination and selection becomes a “closed loop” that perpetuates existing leaders and their self-chosen adherents.
  • The Board’s standing to carry out its oversight and policy roles is not presented to members and increasingly makes directors totally dependent on management.
  • Without elected board leadership, the default arbiter of vital decisions about credit union activity is the regulator-e.g. bank purchases, mergers and even operational priorities.
  • With voting negated, there is an accountability gap that isolates credit union leaders from the consequences of their operational decisions and performance outcomes.

Voting determines who holds the political power in the credit union.  Without choice, power is concentrated in directors and CEO’s who assert responsibility but not answerability to the owners.   The credit union model becomes compromised, and leaders gravitate away from member needs and value to their views of organizational success.

Absent proper governance via director elections, the cooperative model descends into a system of autonomous, independent financial oligarchies.   They take generations of member-generated collective wealth to run their personal private organization.  Credit unions are increasingly financial islands protected by seawalls from taxation and the traditional market indicators or measures of accountability.

Managing financial wealth is an intoxicating and addictive activity.  It symbolizes and enables the exercise of power in every sector of society.   For many individuals, it is the ultimate indicator of personal success and meaning.

What was once common wealth has become privatized.  The cooperative model is merely a veneer from a prior era of innovation.  And to keep the critical advantage of no taxation.

Ultimately the perversion of this primary check and balance by coop owners will lead to safety and soundness issues where credit unions combine out of fear or greed. The public perception will be that multi-billion dollar credit unions no longer serve a unique public purpose or need.

For some this is the inevitable outcome n a society that worships capitalism and wealth accumulation.  For others, it will be an opportunity to innovate and find new ways to bring the common good to areas of personal needs.

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Democracy Takes Work-Especially in a Cooperative

(Note: this post continues a series exploring the democratic foundation of credit unions)

President Eisenhower:

“Dictatorial systems make one contribution to their people which leads them to tend to support such systems—freedom from the necessity of informing themselves and making up their own minds concerning…tremendous complex and difficult questions. But while this responsibility is a taxing one to a free people it is their great strength as well—from millions of individual free minds come new ideas, new adjustments to emerging problems, and tremendous vigor, vitality and progress…. While complete success will always elude us, still it is a quest which is vital to self-government and to our way of life as free men.”

This year’s fall election cycle, allbeit limited, is putting the issue of what American democracy means front and center.  Some believe it is about majority rule-the winner calls all the shots.  Others have a more nuanced view of participation, diverse representation and compromise.

One of the ways citizens in America learn about democratic practice is its use in the many civic and public organizations in which we all participate:  churches, local elections, volunteer and nonprofit groups.

Credit unions are designed to be democratically governed.  One person, one vote. The primary means for how this process is exercised is at the members’ annual meeting and the election to fill board openings.

Practice Without Substance

In a conversation with a long-time credit union member ( joined at age 5 in 1966) he said he never saw an actual election.  Instead he learned the Chair would appoint a nominating committee led by the Vice Chair.  That committee selected just the number of persons as there were open seats. The candidates were all familiar faces from the existing board or “associate board” members.   The test was loyalty-would they “go along to get along” with the rest of the board.   The tenures of several of these board members extended cases over three decades.

This description would be familiar to many credit union boards.  The election process is managed to perpetuate the incumbents or their fellow travelers.   It is democratic in neither practice nor theory.  In the end the credit union is led by persons who believe in their special skills or status to remain in office for as long as they wish.

The justification for this self-perpetuating board selection is the idea of a “leadership class” similar to trustees, that should not have to answer to voting owners, let alone face a contested election.  This is especially so when external factors suggest satisfactory organizational performance.  Why tinker with success?  Aren’t we doing what is expected, and leading well enough?

Without Elections, Institutions Decay

However, when a minority, no matter how talented, takes control of a credit union board and its selection process, the responsiveness and accountability of the institution to its member owners is at risk.  Which means the future of the credit union is not in the hands of the members, but of a small group who eventually may tire of the task and decide to end the charter—not find new leaders.

The penultimate example is when these self-selected insiders chose to sellout their credit unions history and enter into a merger.  This ending destroys generations of value and loyalty for immediate payouts to the CEO and rhetorical promises for the future under leadership the members had no role in selecting.

Without the annual accountability via elections, the “leadership class” will become conditioned to act unilaterally.  This isolation is one reason why the number of credit unions has fallen from 6,000 to 4,000 in just the past seven years– an attrition almost all via mergers of sound institutions.

These are not financial failures.   They are failures of leadership and morale.   And it all depends on having a passive, uninvolved membership that will act as a customer and not owners-especially at the annual meeting.

Why Credit Union Democrative Practice Matters

Democracy is about more than elections. Even autocracies pretend to elect their leaders. Real elections ultimately undergird freedoms.  As Richard Rohr has stated in another context: But it’s a freedom we must choose for ourselves. It is almost impossible to turn away from what seems like the only game in town (political, economic, or religious), unless we have glimpsed a more attractive alternative. It’s hard to imagine it, much less imitate it, unless we see someone else do it first.

The example of freedom and self-governence is  the ultimate benefit credit unions contribute to a democratic society.  Without elections, the special economic opportunities from cooperative design will sooner or later be compromised by the allure of capitalist inspired greed.

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Two Democratic Movement Events

Yesterday I spent several hours in two exercises with organizations founded on democratic principles.  The first was virtual, watching the Annual Meeting of State Employees NC. The second was in person, a participatory exercise for a much larger political event this weekend.

The Coop’s Annual Meeting

The theme. I believe,  of the two-hour credit union event was The SECU Difference.  The first speaker was the parliamentarian who announced authoritatively that the meeting would be under the latest version of Robert’s Rules of Order.

This was followed by the Chairman’s speech, a SECU foundation report and video and CEO Leigh Brady’s summary of the credit union’s performance for the fiscal year ending June 30.   All presentations were shown in a single, stationary camera frame, with no views of the audience or other members on stage.  Brady’s speech used a split screen when she showing slides to highlight numbers and goals.

The nominating committee chair reported that the number of candidates approved for the members’ vote just equaled the number of vacancies.  Therefore no action by members was necessary.  This prior board selection was approved by acclamation in contrast to the previous two years where there had been contests for all  open board positions.

The  President’s Q&A

The final hour was CEO Brady answering questions submitted in advance and read by an employee.  Up to this point every speech and action was fully scripted and  presented as done events with no member input.

So one would hope the members’ queries might be a bit more spontaneous and informative about The SECU Difference.   In short an opportunity for a CEO to show her “chops” that is the grasp of her role and understanding of  issues on members’ minds.

And the member concerns were plentiful and seemed candid even as grouped into common issues.

  • What is the credit union doing to help members feeling financial pressure?
  • Why are you so hard on loan aoolications?
  • Any changes planned to the Field of Membership?
  • Will SECU seek mergers?
  • When will small business loans be available?
  • Will fixed rate mortgages be offered, not just variable?
  • What is her outlook for interest rates?
  • How will the changes at the federal level affect credit unions?
  • When will the problems with the outsourcing vendor managing excrow accounts be fixed? etc.

The questions expressed real member concerns and experiences.  However every question received a written response of three to four sentences, prepared in advance, with little insight or empathy expressed about the topic.  Most replies referenced a process the member should follow if they had a problem, eg. contact your . . .

My take away: this was a 100% scripted event to conduct a required legal activity with no substance or owber interaction wanted.  And especially no live member involvement as in recent meetings.

The emerging SECU Difference is that the credit union is striving to be just like every other large credit union in both performance and example.   Some of the CEO’s accomplishments  include the replacement of over 1,000 ATMs, the installation of digital signage n the branches and the introduction of two new credit card options: a reward and a cash- back choice.  There will be a core conversion but that will take at least three years to complete.

The prior offerings that SECU created within the credit union structure including the life insurance company, the investment broker license, the real estate management company and the trust services were mentioned, but no performance details provided.   It is unclear if SECU still offers its ATMs without surcharges for non-members.  It has stopped the income tax service and ended the operational support ties with both Latino and Civic credit unions.

SECU’s financial performance is stable and it reiterated its commitment to operate branches in all 100 NC counties and focus the foundation’s resources on non profits throughout the state.  So the credit union may have refocused on its roots versus more expansive ambitions contemplated several years earlier.

What is different now is that SECU sounds and looks like virtually every other large credit union.  That’s neither good nor bad, unless you believe  focusing on creating member value options not readily available  elsewhere was the purpose of a coop.

North Carolina is one of the most attractive  states for new bank investment and branch expansion (after Texas and Florida).   Will not having a strategic difference, other than a tax exemption, be a sufficient strategy?  Time will tell.

Preparing to Participate in Democracy

The second two-hour event was a group meeting to discuss how individuals can become more engaged in influencing current political issues. It was followed by a sign-making, pizza-fueled party at a local church’s social hall. About 25 people gathered to learn and prepared to participate in the coming Saturday’s No Kings rallies around the country.

Seeing the Difference in Democratic Practice.

 

Our Legacies

What will our children and their children inherit from our democratic organizations’ efforts today?

 

 

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A Unique Beginning, But Is Now the End?

In March 1985 CUNA filed a friend of the court brief to support the newly chartered Local Government Employees FCU.   The charter date May 23, 1983.  The North Carolina Bankers Association filed suit in 1984 saying the FOM violated the FCU Act.

As reported in March 1985 issue of Credit Union Magazine (page 25) the suit was filed after the state Supreme Court ruled that State Employees CU (SECU) could not expand its FOM to county and municipal governments.

CUNA argued that “NCUA has statutory authority under the FCU Act to interpret the common bond provisions of the Act, that its interpretation is consistent with the legislative history and legal precedent and that the State Supreme Court ruling against SECU is inapplicable in this case.” 

Local Government FCU won.  It became an operational partner with SECU providing back office and branch support.  The two grew side by side for over four decades.  Local Government had its own board and began to diversify from total integration with SECU, ultimately founding a digital only charter, Civic FCU , to expand its virtual presence and business options.

After Maurice Smith retired as CEO of Local Governement, the new leadership began exploring other options.  SECU’s board may or may not have made a merger overture to the new LGEFCU CEO.  It depends on whom you ask. The upshot was the Local Government merged with its much smaller digital dopplinger June 1, 2025 , kept the Civic name and then proceeded to end its operational dependence on SECU.  No longer were Civic members being served through SECU branches after forty years of having access.

The Beginning of an End?

As the newly named Civic FCU began its independent existence, the transition has not been easy as noted in its July 24 website post. (link)

As it tries to build out its own delivery system the credit union has reported negative net income for the 2023 and 2024 yearends.   But the losses have begun to hemorrhage at June 30, 2025 post SECU separation.

In every critical financial and operational indicator, Civic is going backwards.  It reported a loss of $24.8 million versus a $9.2 million positive gain while working with SECU in  2024.  Compared to June 2024 balances, shares have declined by almost $600 million to $2.9 billion; members have gone from 407,926 to 380,898 with loan originations (-47.3%)and total loans both declining.

Civic has borrowed $320 million at June 2025 versus just $80 million one year earlier.  It is bolstering its net worth ratio with $52 million of subordinated debt.  Its total assets have declined from just over $4.0 billion to $3.66 in the first six months of this year.

The only increase has been in employee headcount going from 319 to 431 since 2024 yearend as the credit union opened at least ten new branches.

How will this story unfold– a new era or is it the beginning of the end?  Civic In its original incarnation was an example of operational, legal and cooperative ingenuity.   It succeeded in expanding credit union services by showing the power of dual chartering-a state charter in essence sponsoring  a de novo federal one.

Today that spirit has been lost.  Civic is struggling to just become another traditional credit union in a state with intense financial competition.  This strategy is using up the financial, reputational goodwill, and cooperative legacy that created a unique solution for serving their members.   Will the CEO and board find their way back to creating special value for their member-owners who seem increasingly skeptical of this independence turn?