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How to Review a Coop’s Annual Report
in anticipation of the required Annual Meeting, most credit union publish their reports for the prior year. Even NCUA issues a virtual document by Arpil 1 with audits and details of internal processes, albeit little about the state of the industry they were created to support.
How should these documents be evaluated? Are they only the financial stewardship of ;members’ resources similar to any other consumer financial choices? Or should there be an assessment of the cooperative dimension in their role with members?
I have been reviewing the 2025Annual Report and CEO presentation of a virtual Annual Meeting I wnat to attend this week. Here are some issues I would like to see discussed by the leaders:
How did the credit union “show up” for members?
Many institutions will detail initiatives, programs, and new services deployed for members, often with large numbers. Do these efforts read like a series of programs or more like a cooperative working out its obligations to members in real time?
Democratic governance in practice
Were elections contested or director vacancies filled via board nominated candidates by those in perpetual positions of poiwer? Uncontested elections are common in credit unions. The governance implied by the annual meeting requirement can become perfunctory. The credit union is financially sound and service oriented, but is this enough to be a cooperative? Has the legacy ownership structure become merely ceremonial?
Financial philosophy
Virtually all credit unions today show stong capital positions with an industry averge over 11%.
How have he financial metrics enhanced member well being? Do the numbers describe the hardship members face and how the service culture responded?
A cooperative financial overview would also include – here’s what went wrong, here’s what it cost, here’s what we as an institution are accountable for, here’s what the board decided. These issues are as vital to understanding the stewardship of member funds as are the normal financial metric comparisons.
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The cooperative as identity vs. the cooperative as aspiration
Annual reports will often update the founding story while celebrating current contributions and roles in the community. These past and current descriptions are real, but are they more than brand positioning? An acknowledgment that credit unions are supposed to be different in their roles with members?
Is the credit union telling what it is doing to enhance its obligations as a cooperative for members in an uneven and unequal economy?
The Bottom Line
There is no such think as the “perfect” credit union cooperative. One of the advantages of the charter should be the diversity of approaches it empowers.
Cooperative behavior reflects the values of the people currently running the organization. Leadership culture matters enormously.
But the integrity of cooperatives mission cannot depend on the continued presence of mission-aligned executives. That’s not a cooperative structure. That’s a benevolent institution.
The difference matters enormously when leadership turns over, when financial pressure intensifies, or when a crisis demands accountability. Or when external offers arise to transfer control. And these chalenges wil occur. They always do.
Members who have never been treated as owners forget that they ever were. And people who have forgotten they are owners don’t rise to claim what’s theirs. They simply leave, or absorb the loss, or accept what they are told, because nothing in their experience with the institution ever suggested they had the right to do otherwise.
Being a cooperative can result in a myriad of business models. But what should be the common link is member-ownership. Does the Annual Report reflect that fact?
The New Credit Union Model: First Expand Members’ Economic Freedom– Then Become their Oppressor
Two evenings ago I received an email from Scott Rose. This 25 year member of SAFE Credit Union had been prevented from speaking of his opposition to his credit union’s proposed merger with BECU. He had informed the leaders of his intention to speak at the annual meeting. Although the Chair recognized other members, he closed the meeting before allowing Scott to present his views even though aware of his intent.
Righteous Indignation
Scott was infuriated. He disrupted the adjournment ploy, deeply angry and frustrated. He had prepared a thoughtful statement presenting his views on the proposed merger’s impact on the collective future of his 245,000 fellow member-owners.
His pain was real. It is the same deep emotion portrayed in David’s Psalm 52, The Deceitful Leader, opening stanza:
You cunning liar, why publicize your evil need to harm the good? Your slanderous tongue is razor sharp honed to fulfill malicious plans; You love the lie and hate the truth.
Following is the statement Scott wanted to deliver at the SAFE Annual meeting before being silenced by the Chair’s abrupt termination. Judge for yourself the gravity of the issues raised.
Chairman Blumenfeld, Board Members, CEO Nabhani, fellow attendees (Subheads Added)
As SAFE leadership is well aware, I have made clear my opposition to this ill-conceived transaction from Day 1. For those who do not know me, my name is Scott Rose and I have been a SAFE member for nearly 25 years. My sole interest today is to preserve SAFE Credit Union for future generations. I have no hidden agenda and no external financial interests.
A Betrayal of our Community
The Board of Directors’ decision to terminate SAFE Credit Union’s 86 year old charter is a betrayal of our community. So is their plan to hand over all $4.4 billion in SAFE assets to Boeing Employees Credit Union.
The so-called “benefits” of this transaction, as cited earlier by Ms. Nabhani, pale in comparison to the irreparable losses that our community will endure if this deal goes through.
How can an organization seven times the size of SAFE possibly benefit our members and our communities?
Giving Away $400 Million of Member Wealth
For BECU, this deal is a gift. Free money! Who doesn’t like free? $4.4 billion in assets. $3.9 billion in member deposits! $400 million in member equity!
Why would our directors agree to such a lopsided transaction?
I have met with Ms. Nabhani on two separate occasions for a total of nearly five hours. During our discussions it became evident to me that SAFE leadership not only initiated and negotiated this merger in secret, but deliberately excluded any member participation.
Member opinions were not solicited, there were no surveys, and there was never any attempt to engage the membership. The sudden announcement of a merger last November caught every member by surprise.
Board ‘s Corrupt Election
What motivated our Board of Directors to pursue this deal remains a mystery to me. But what is obvious is that this board does not represent and cannot speak for the members.
Only three of the current directors were actual SAFE members when they were nominated and elected to the board. The other nine directors were not SAFE members in good standing, as required by SAFE bylaws, until just prior to their nominations. These actions deliberately circumvented SAFE bylaws with the clear intent to exclude actual SAFE members from participating in SAFE governance.
This fraudulent pattern of election manipulation has been occurring for more than a decade, and the current plan to terminate the SAFE Credit Union charter is a direct consequence of this corruption.
The Truth
The pending consolidation of SAFE and BECU has drawn attention at the national level. BECU is now the fifth largest credit union in the country, and will become the fourth largest after the SAFE takeover. Many experts believe that credit union acquisitions like this will invite further scrutiny by regulators and accelerate recent congressional efforts to eliminate their tax-exempt status. But the truth is, if credit unions like BECU behave like banks, why should they be treated any differently?
Edward Filene was an entrepreneur who ran Filene’s department store from 1891 to 1928, but it was his pioneering effort to establish the credit union movement that is his most enduring achievement. Filene’s underlying philosophy was that a credit union is a member-owned cooperative that is legally and ethically obligated to act in the best interests of its members.
It is evident that SAFE leadership has chosen to disregard their fiduciary obligation to SAFE members by failing to act in their best interests.
BECU CEO’s Banking Resume
On a separate subject, during my discussions with Ms. Nabhani, I noted that Beverly Anderson, current CEO of BECU, gained all of her financial experience as a commercial bank executive at Wells Fargo and American Express. This explains why she lacks an understanding of the cooperative credit union philosophy. Her professed motto of “people helping people” is a just cover for her true goal of expanding BECU’s market dominance by engaging in the same predatory behavior she perfected as a banker.
Local Roots & Home Turf
We have many huge commercial financial institutions and these are readily available to anyone who wants them. But those of us who truly support SAFE Credit Union want a local institution with Sacramento roots. We don’t need the likes of BECU invading our home turf and shutting down our credit union.
Thank you. (Subheads added)
What Happens Now?
This merger is a violation of every principle multiple generations invested to bring greater economic opportunity to the Sacramento community. This transaction converts members into victims of the very institution they built with their eight decades loyalty.
That is the cooperative way of always paying forward their legacy for the benefit of their children’s children
This transaction is a heartless betrayal motivated by greed. The CEO and Board signed a “definitive legal agreement” negotiated in secret with no member input, knowledge or involvement legally obligating this transfer of all SAFE’s resources-past, present and future. Then SAFE’s CEO issued a press release announcing the deal as all but done and providing no transparency of anything about the process.
There was no explanation why transferring all future operations to BECU was in members’ best interest. Or why the half dozen or more local California credit unions who would be more logical partners to expand member value and convenience were not approached. Nor what the CEO and board negotiated for themselves as the agents of this transfer.
This is not the free market at work. It is back office, private self-interested deal making to benefit insiders clothed in rhetorical promises without verifiable substance.
This is not economic freedom. Instead the 245,000 members’ financial relationships, the 800 employees’ jobs and all local investments are being transferred to the control of a leadership group that has no connection to, knowledge of, or experience in the Sacramento community. All $4.4 billion for free including $400 million member equity. The members are not owners, just customers to be bought and sold to whomever the Board chooses.
How Much Longer?
How long must members suffer in this current environment of private profiteering and community plundering of their mutual wealth and future well being?
This predatory destruction will continue as long as people of good will, courage and belief in cooperatives stay silent. For human greed has no limits. If the leaders of the movement don’t speak out, why should the public, regulators, legislators and loyal members care?
It is time for those who believe in democratic, not autocratic leadership of credit unions, to take a stand. Cooperative credit unions are an interdependent system. Seemingly individual actions will affect the future of all others.
It takes only a few to change the course of events, because that is how all revolutions against misuse of authority begin.
Place Scott’s speech in the public record, with the California Legislature, in the public media, in the Congressional Record. It is a stand made by a person of courage, principle and diligence. It should be in every league’s newsletter and given to every state and NCUA examiner by the credit union.
For if one member of conscience and sound judgment has the fortitude and bravery to stand up, surely those who believe in the principles of the cooperative option can follow his example. We call that democracy, a duty we all have if we want to really remain free.
One CEO’s Most Vital Stewardship Attribute
The example of Boeing Employees Credit Union two recent CEO selections proves the adage that most organizations are onlly two transitions from failure. Not just performance shortfalls, but more importantly the loss or founding purpose and the associated values and culture.
See post: When the Song Fades-Leadership Turnover and the Loss of Cooperative Identity. (Link)
Newly installed CEO’s espeically from outside an organization assume they have been chosen to give new direction from their external experiences, often without first understanding the resources they now direct.
The failures are not due to lack of talent, skills or knowledge, but rather a more fundamental gap, an inability to discern the foundation for the success they inherit. That shortcoming is especially vital in democratically designed organizations such as credit unions:
In democratic organization, It turns out, in the end, there’s only one institutional factor that actually matters: Good character. Everything else in a democratically governed system follows and relies on that simple foundation.
To put the current BECU leadership culture in perspective (link), here is a summary of the legacy that Gary Oakland created upon his retirement in 2012. From a press release by CUNA.
Gary Oakland Wins Wegner Award for Lifetime Achievement
National Credit Union Foundation to Present Four Awards on February 24, 2014MADISON, WI (September 4, 2013) — In recognition of his visionary approach to leadership and extraordinary commitment to the credit union movement, the National Credit Union Foundation (NCUF) is pleased to announce Gary Oakland, retired President/CEO of BECU in Seattle, Wash., as a winners of the 2014 Herb Wegner Memorial Award for Lifetime Achievement.
“Gary is a slam dunk as a choice to bestow the Wegner Lifetime Achievement Award,” said John Gregoire, Chair of NCUF Wegner Awards Selection Committee. “Gary’s contributions to the credit union movement were so obvious as everything he touches turns to success for the average American consumer. It’s evident in the growth of BECU, the state supervision system, dual credit union chartering, Biz Kid$, NCUF, and much more. It’s also an honor to see Gary receiving the award rather than giving one.
Tireless Supporter of the Credit Union Movement
Over the course of his career, Oakland has supported the credit union movement in a myriad of ways. Those include serving on the board of the Credit Union National Association and as board chair for the Washington Credit Union League, the National Association of State Credit Union Supervisors (NASCUS), Filene Advisory Council and Board, and the National Credit Union Foundation. In his time as CEO of BECU, he guided the credit union to provide aid for more than a dozen low income credit unions across the country, often single-handedly locating the funds to keep his fellow members-first organizations afloat in times of hardship.
With his leadership, BECU was also able to play key roles in the founding of two low-income designate credit unions: TULIP Credit Union and Express Credit Union. Oakland also oversaw BECU’s creation of Prime Alliance (now Mortgage Cadence), a Credit Union Service Organization that provides mortgage solutions to approximately 600 credit unions.
“Until his recent retirement, [Gary] ably served as an intellectual thought leader on every important issue facing credit unions,” said Mary Martha Fortney, President and CEO of NASCUS. “Of particular note and importance are his dedication and efforts to make supplemental capital a reality for all natural person credit unions. We are seeing the result of Gary’s work on this issue today as supplemental capital in being considered on Capitol Hill.”
High-Impact Commitment to Member Value Oakland is hailed for his unfaltering dedication to improving value for the credit union member. Exemplifying the effect of this commitment, BECU grew from 108,000 members when he took on the position of CEO in 1986 to over 775,000 members at the time of his retirement in 2012.
Oakland was known for accommodating the needs of Boeing employees and providing guidance in responsible financial practices. He also led the credit union to a statewide field of membership to allow more members of the community to benefit from the credit union advantage: member-focused service with better rates and fewer fees.
While this growth trajectory could have changed the organization’s culture, Oakland held BECU true to its founding principles and the credit union philosophy of People Helping People. In 2006, BECU had an opportunity to return a portion of its reserves to its member base. He instated the Member Advantage account, which reversed the interest rate tiers, providing more return for smaller savings accounts and creating incentive to start saving at a time when U.S. savings rates were at or below 0.
“At the local level, Gary advocated for the member at every turn,” said Rae K. Miles, President of Innovative Resources, LLC. “He changed policy to help Boeing employees when they needed it most and led by example in promoted the importance of thrift to the membership. His ‘people helping people’ efforts went well beyond the membership of BECU.”
Biz Kid$ Spearhead
Among Oakland’s most influential accomplishments was the role he played in the launch of the PBS program, Biz Kid$, an award-winning financial education show for youth. Through leading the production initiative, committing $500,000 initially and $1 million over-all, bringing together a group of credit unions that raised $2.6 million per year, and ultimately making the project a possibility, Oakland has become the face associated with the show’s success.
After five seasons, Biz Kid$ has won 2 Emmy Awards and was nominated for 11 more. It claims nationwide recognition and makes a daily difference in the lives of its youth audiences.
“Had it not been for Gary’s effort, leadership, financial and personal commitment, [Biz Kid$] would never have happened,” said Rudy Hanley, President and CEO of SchoolsFirst FCU. “The result has been overwhelming. After five seasons, 13 Emmy nominations and 2 Emmy awards, the program is being delivered to millions of students through a variety of channels and participating organizations. The stature of the credit union brand has been greatly enhanced thanks to his vision and leadership.”
Steadfast Dedication to Employees
Amidst his countless other commitments and initiatives, Oakland still managed to earn the full respect and gratitude of his employees for his supportive and encouraging approach to leadership. He put his employees before himself and made concerted efforts to urge them to embrace personal and career growth opportunities. As a result of Gary’s compassion and attitude, BECU claims one of the lowest employee turnover rates in the industry and five former BECU employees are now CEOs of other credit unions.
“Gary understands that ‘People Helping People’ begins at home,” said Roger Mauldin, BECU Director. “It was always important to Gary that employees have a healthy work-life balance, be paid a fair wage, receive good benefits and know they are appreciated.”
“Man of Steel” Philanthropist
Described as a “Good Samaritan”, Oakland has left a legacy that extends the credit union philosophy well outside the credit union movement. He is known for his generosity and selflessness as well as a tendency to go above and beyond the call of duty.
In 1995, at a member’s suggestion, he led the establishment of the BECU Foundation, a chartered foundation that provides college scholarships to students who excel in academics, leadership and community service. Since its creation, the BECU Foundation has awarded more than $1.5 million to 715 students.
Oakland served on the Board of Seattle’s Neighborhood Children’s Club, helping many children get on the right track to a productive future, and has guided BECU to support a number of non-profit organizations that provide affordable housing, including Habitat for Humanity, Rebuilding Together, Impact Capital and Plymouth Housing.
“Gary has been a trailblazer and a most generous and dedicated philanthropist, both inside and outside of the credit union movement,” said Robert L. Coleman, Director of Northwest Baptist FCU. “Gary Oakland’s career was spent not only ensuring the absolute best for his membership, but also ensuring the success of those surrounding him.”
(emphasis added)
Boeing Employees Credit Union Culture and the Proposed SAFE Merger
On April 13, CU Daily reported on a conversation that SAFE CU long time member Scott Rose had with the CEO Faye Nabhani. The article detailed Scott’s objections and the CEO’s response on SAFE’s new merger effort. (link)
The proposal to transfer control of the $4.4 billion SAFE and its 245,000 Sacramento area members to Boeing Employees Credit Union has had coverage in the local press (Sacramento BEE) and on blog sites. For example this post on SECU Just Asking lists four fundamental objections to the surrender of the state charter. It poses the question whether the California CU Regulator is Asheep at the Wheel? (link)
Much information has been provided by Scott and others about what this charter loss would cost SAFE members and the community. Less analysis has been provided about BECU’s leadership and financial trends. Nothing has been in the SAFE’s press releases about BECU’s performance, leadership culture, or strategy.
Last week I wrote a post describing BECU’s high cost culture resulting in an operating expense to asset ratio of 3.33%, much higher than the large credit unions in California. The nine BECU directors were paid an average compensation of $118,000 in 2024 with he Chair receiving $154,000. In California, state regulation prohibits director compensation which is the federal credit union legal situation
Insiders’ Opinions on BECU’s Culture and CEO
But what was new about the situation was the almost dozen responses to the CU Daily article by readers, They all describe a very disturbing leadership environment at BECU.
They report situations that only employees would be aware of. Have these issues been discussed by the SAFE board? Has there been any onsite due diligence? Is this a leadership culture that one would want in charge of 245,000 members’ future?
Whatever the full story might be, there is a lot more for members to know if their future should be put in hands of the BECU board and their
CEO’s recently arrived senior team.
11 Responses (link)
Performative at best.
Glad these conversations are happening and that he’s asking the right questions—he’s pushing in the way more people should.
What’s becoming clear, though, is that the credit unions don’t really have strong answers—they just have strong PR. BECU, in particular, is very good at managing perception.
Underneath that, the leadership approach feels far more like a traditional bank than a credit union. The new CEO comes across as performative at best—saying the right things publicly, but not reflecting that same philosophy behind closed doors.
Internally, employees have described leadership as political and calculated—always saying the right thing publicly, but the moment anyone questions it, they’re pushed out, fired, or laid off.
BECU isn’t new to working the layoff systems with minimal NDA’s and severance packages. Last April, several employees were let go, and shortly after, nearly identical roles were reposted and filled—often through existing networks or familiar circles. All while moving forward with a costly (millions!) and terribly structured naming rights deal.
You can’t claim credit union values while operating like that.
100% a wolf in sheep’s clothing. Just because you “meet them and they said all the right thungs” doesn’t mean they are not well coach and performative AF. What that leadership teams says in public and what they do behind thr scenes are two very different things. . .
Anonymous says:
Someone from SAFE should ask why BECU’s General Counsel, Chief Auditor, Chief Risk Officer, Chief Impact Officer, and Chief Business Officer all decided to leave, more or less at once. Nothing normal about that.
Anonymous says:
Don’t forget the ENTIRE executive team that left within months of the new CEO coming on. It’s a revolving door in the C-Suite for a reason.
Most of the employees at BECU were very excited with this hire even knowing the CEO came from Wells Fargo, she seemed to say all the right things, talk about the movement, the members first philosophy, actually we all felt a little inspired and then reality hit.
3.5 years later BECU is a shell of what it was and there is no stewardship towards the CU movement AT ALL behind closed doors, it’s 100% toxic and performative. They have pushed out so many of the employees and leaders that made that place special.
So I am so glad Faye liked her and that Bev said “all the right things” but it is shallow and performative just like others have mentioned. She is a very very good actor in public, she very much slips up behind closed doors. To having the table slammed in front of you while profanities were flying to lying about how she was “listening” to employees with “listening sessions” but behind closed doors was saying “Gotta go pretend that I care about what they say” (jaw dropping really….) to being shushed in meetings for no reason, to tearing people up because they got one thing wrong in a speech she was giving.
The executive team is no longer local to Seattle, they live in Atlanta, New York, and LA – flying in on the companies dime with no connection to the region or any care about moving the community forward. Yes, they EMT and Board are being incentivized for a merger, so they chose a “SAFE” merger (pun intended) to get their bonuses and show they increased they asset size, cause their net growth is not great.
Anonymous says:
Good someone is asking the right questions. Fact is, Bev Anderson and her cadre of big bank execs she brought on Talk the Talk but don’t Walk the Walk when it comes to credit union values. She gutted the original EMT and slowly but surely pushed every exec who challenged what new operating values and the way people are treated out the door.
As another commenter said here, she’s amazing in public but behind closed doors treats people terribly. There is a verb in use at BECU now that you’ve “been Bev’d”, and that means she cursed at you, yelled threw a tantrum and most likely in front of your peers or even subordinates. Very inappropriate. Not to mention the Wells Fargo and Equifax background, hiring of other execs who have no clue about what Coops mean and ongoing performative gymnastics. It’s sad what BECU has become over the past few years. The board should be ashamed of themselves.
Time for More Facts on the Table
Four more comments follow, several as recently as yesterday. This is an environment that needs to be brought into the discussion more than any data or numbers or rhetorical future promises.
The facts about BECU’s new CEO’s leadership actions are just a prelude to what SAFE employees, leadership and members will encounter if control of SAFE is turned over to her.
Are Volunteers Still the Heart and Soul of the Credit Union Movement?
Many think of April as the month taxes are due. For the untaxed credit union system there is a more relevant event. In America, April is volunteer month. The country honors the millions of citizens who serve their communities and neighbors by sharing their most precious resource—their time.
This volunteer spirit is a vital part of American history and culture. Because the role of government was either nonexistent or limited in the country’s early years, citizens would volunteer to solve common needs. In 1736 Benjamin Franklin organized the first city fire department for Philadelphia, all volunteers. Today 65% of the country’s fire fighters are volunteers. Their collective effort is estimated to be valued at $50 billion if they were paid.
Down through history to the present day in every community, volunteers are at the center of vital social, civic and cultural activities It is an essential part of American culture. People take pride, have a sense of duty and enjoy the camaraderie these efforts offer. Just inventory your own involvements.
Cooperatives and Volunteers
The credit union movement was built by volunteers with governmental oversight often rushing to keep up. In the beginning, volunteers borrowed their “authority” to start the first coop and called it St. Mary’s Bank.
This essential contribution to the coop system’s creation is embodied in the public “definition”—non-profit, member-owned and volunteer-led. Until recently, “volunteer” meant unpaid. which is still the rule for federally chartered credit union board members.
Volunteers’ Founding Role
Every credit union active today gained their charter from the sweat equity of volunteer organizers. Often the first managers and staff were unpaid or seconded to oversee the effort while on the sponsor’s payroll. The physical location of these coop startups was donated either by a sponsor or even in a person’s home. These home-based coops were still common enough that in December 2013 the NCUA under Chairman Matz voted 2:1 to prohibit the practice in December 2013 board meeting. The effort was dropped.
The volunteer ethic is embedded in cooperative values. The seven cooperative principles (now eight) all infer or embrace the ideals of self-help and mutual interdependence. The words of the first principle: Credit unions are voluntary, not-for-profit financial cooperatives . . .
Today volunteers remain a vital component of credit union leadership. One example of this energetic leadership potential is from a recent a linkedIn profile. The student is donating part of her undergraduate career to a startup credit union on campus: Student at UNC Chapel Hill *4X World Record Mountaineer*3X TEDx Speaker*Blogger and Research Consultant*MUN Enthusiast*Cyclist* Runner-HM&FM*Badminton player*Artistic Roller Skater.
Concerns about Self-dealing in Coop Leadership
In the first fifty years of state charters, regulators were also worried about the temptations always present when managing other people’s financial resources.
In the early history of Illinois charters for example, senior managers, officers and directors could not borrow from their own credit unions for concern about self-dealing. The solution was to create chapter credit unions providing leaders an independent coop alternative. While this prohibition was changed, the call report today still monitors the total number and amount of loans outstanding to directors, committee members and senior management.
Volunteers No More?
Unlike the federal system in 22 states the credit unions are permitted to pay directors, some with formal rules, other with authority more open-ended.
For example, several years ago I worked with a state charter where directors met three of four times per month in board and committee meetings. This frequency was because compensation was based on the number of meetings attended. Meetings multiplied.
One rationale for paying directors is the need for qualified volunteers. A long- serving CEO whose directors were paid his entire tenure said the practice had the opposite effect. Less attentive directors became harder to replace as they did not want to give up their extra income.
Paying “Volunteers”
What can be learned from the increasing payments going to directors of state charters? Are these credit unions better performing versus their FCU peers? Are they more innovative? Are directors contributing in ways that unpaid volunteers may not?
While these are important issues, I believe one factor and the historical concern is already obvious and concerning. Specifically, does paying directors distort decisions away from what is in member-owners’ best interest, into what is in leadership’s personal interest or benefit?
A Case Study
There has been much public commentary and analysis of the proposed merger between Sacramento based SAFE and Tukwila, OR headquartered Boeing Employees Credit Unions (BECU). An important difference in the two states’ chartering rules is that state charters can pay their directors in Washington but not in California which follows federal practice.
Boeing Employees Credit Union’s 2024 IRS 990 shows the total compensation for the directors as $1.065 million. Chairperson Somberg received $154,375. The average pay for all nine was $118,352. Each reported working six hours per week for the credit union which equates to a $380 per hour rate.
In addition, the former CEO Benson Porter who retired as BECU President in December 2022 received $931,665 with zero working hours. The CEO Beverly Anderson who succeeded Benson reported working full time for 2024 compensation of $2,708, 880 or 17 times the average employee’s salary of $159,327.
One result from this compensation culture is that BECU has one of the highest operating expense ratios to average assets at 3.33% much higher than every California credit union over $10 billion. SAFE’s operating expense ratio in 2025 was 2.56%.
If SAFE directors were truly seeking a better performing opportunity, here are California based credit unions who are much superior to BECU in financial management and branch availability:
Golden 1 (Sacramento) Assets: $21B OpEx: 2.20% Br: 62
SchoolsFirst (Tustin) Assets: $35B OpEx: 1.81% Br: 69
Patelco (Dublin) Assets: $10B OpEx: 1.84% Br: 37
First Tech (San Jose) Assets: $30B OpEx: 2.83% Br: 56
San Diego County (S. D.) Assets: $10B OpEx: 1.84% Br: 44
Redwood (Santa Rosa) Assets: $10B OpEx: 2.28% Br: 21
Logix (Valencia) Assets: $10B OpEx: 1.84% Br: 37
Star One (Sunnyvale) Assets: $10B OpEx: 0.73% Br: 7
A second outcome of this high expense environment from one analyst’s review: members of BECU, on average, pay more for loans and earn a whole lot less on savings… The cost of operating BECU is @+15% higher than all other CU peers! (link)
Given this clear underperformance by BECU versus its peers and local California options, why did the directors of the $4.4 billion SAFE sign a “definitive merger agreement” to transfer control of all operations and all assets to an out of state credit union with no local connections, experience or proximity?
The definitive agreement has not been disclosed, except to announce that several SAFE directors will be given seats on the BECU board where in 2024 the average compensation was $118,000. SAFE directors, as a California charter, are unpaid.
Who will benefit from this compensation if the merger proceeds has not been disclosed. What is known from safecu.org and clicking on SAFE management, is that only three of the current 12 directors were members prior to being nominated to the board of SAFE. SAFE bylaws clearly state that nominees must be members in good standing. In other words the board nomination and selection process would appear to be closely controlled if not irregular.
Following the money helps understand motivation. The new director compensation available post-merger raises important questions. What are the conflicts of interest as SAFE’s board decided to transfer the entire future of this strong local Sacramento institution and its 245,000 members’ $400 million of equity gifted to BECU for free? Especially as BECU’s performance on most all critical financial measures trails large California credit unions and BECU’s national peers.
The Interests of Paid Volunteers
The founders of coops understood human nature. Payments today to state credit union volunteers follow no common pattern or rules, are limited in or disclosed long after the facs in IRS 990filings, and lack transparency and context. In such circumstances human temptations are set loose.
Today there are very limited, if any, checks and. balances on volunteer compensation. As in the multiple situations where millions of dollars are paid to CEO’s who merge their credit unions, the regulators always seem to look away from these instances of self-enrichment. No one and no set of organizations will ever be perfect. Moreover, as BECU’s results suggest, there is no relation between performance and director pay, especially at a high level.
The ongoing credit union merger free-for-alls are opening up this new form of compensation incentive payments. If SAFE is approved, there will be lots of travel to California by credit unions whose boards are paid—think of Colorado and Washington as initial sources.
But the issue is more fundamental than old-fashioned corruption. The director pay practices in some state charters are leading credit unions to an even more critical cliff edge. Recall the public coop definition of non-profit, member-owned, led by volunteers. It is “volunteers” that govern how the other two characteristics of coops evolve. Can paid volunteers be entrusted with protecting these two defining credit union charter characteristics when their own personal well being is involved? Have credit unions morphed into more for-profit leadership behaviors and rewards? But without market accountability?
What’s at stake in the SAFE-BECU proposed merger and in other similar director paid merger initiated combinations is trust in the cooperative system. For the oldest test of character is: “If you have integrity, nothing else matters. And if you don’t have integrity, nothing else matters.”
A Credit Union Moon Shot
Sometime in the next 12 months the proposed Carolina Students’ Credit Union will be launched.
The crew of 31 students is backed by a support team of faculty and credit union interested folk. As noted in yesterday’s post, new charters are rare with fewer than two a year succeeding after lift off.
The Beginning
What motivated these fulltime students to organize this coop venture?
Shiva Rajbhandari is originally from Boise, Idaho. When he arrived on campus as a freshman, he was unable to deposit his scholarship check remotely, so he searched for a financial option in Chapel Hill. As a climate activist, he wished to avoid large banks with their investments in fossil fuels.
When he couldn’t find a credit union available to UNC students, he decided to start one. Shiva is now a junior studying Public Policy and Sociology. He is also the President and founder of the student chartering team.
Critical Milestones Met to Date
- By April of 2025 a board of advisors of credit union professionals and faculty was assembled.
- NCUA approved their concept with an FOM of undergraduate and graduate students at UNC in August.
- After two rounds of recruitment, the launch crew grew to 31 team members.
- From advisors’ counsel, the group is seeking a state charter with the NC Credit Union Division. North Carlina has not issued a new charter in over 30 years.
- Team members visited the student-run credit unions at Georgetown University and the University of Pennsylvania. They learned about student loan products, potential vendor partners, and university support. One critical takeaway: in the digital campus environment students value local personal service. Over 60% of the Georgetown student body are credit union members.
- The first draft of the charter application is complete and circulating to advisors for review. It includes a 40-page continuity plan.-
- Campus financial literacy presentations drew over 80 students further documenting interest.
Why a Credit Union Charter?
Founder Sarah Galdi, from Apex, NC, is a sophomore studying Economics and Mathematics. A life-long credit union member, she took for granted the value they provide communities. Then at college she realized not everyone has access to not-for-profit financial services. She describes three situations of immediate focus:
- Wells Fargo has a monopoly on our campus. International students, for example, have a difficult time opening accounts with large banks. We will be able to lower these barriers to entry as has been done at UPenn’s credit union. Two international students joined our team because they were personally drawn to our mission .
- Student organizations can be disadvantaged by the lack of financial options. To receive funding from student government, organizations must have a bank account. Wells Fargo, requires a minimum deposit to open organizational accounts, meaning students must advance this deposit requirement before receiving University funding.
- As a public university, students come from all income levels. Economic inequality on campus mirrors society at large. Some student’s parents add their name on their children’s credit card to establish a credit history. Lower income and first-generation students often lack this option. They have low or no credit scores. This is a significant economic hurdle for these students. We plan to offer credit builder loans to close this gap.
An International Student’s Story
When I first came to the U.S. at 17, I was completely on my own — new campus, new country, no idea what I was doing.
And one of the first walls I hit was just trying to access the basic financial system.
I couldn’t get a debit card because I was under 18. I couldn’t work because I didn’t have a Social Security Number yet. And without an SSN, I couldn’t apply for a credit card It was an exhausting loop—every door seemed to require a key I didn’t have.
The hardest part, honestly, wasn’t even the bureaucracy. It was doing all of it alone. I was just figuring it out as I went, confused, frustrated, and sometimes just worn down by it.
That experience stuck with me. The system isn’t just complicated — it’s genuinely inaccessible for international students, especially those who arrive young. And that’s something I really want to change.
The witer, Hasvi Mariki, joined the credit union luanch crew.
A Standing Ovation at GAC
Through the support of Carolina credit unions and ACU, three student founders attended last month’s GAC. Here is one participant’s account.
At a Credit Union Roundtable, we told the people at our table our story. They got so excited for us, they grabbed a mic. Then they asked me to stand up and share our mission with the 100–200 people in the room. They gave us a standing ovation. People were inspired that we are encouraging young people to join credit unions and work in the credit union industry. We affirmed that cooperative finance is relevant and worth building for the next generation.
An observer at that session sent me this note: The students are choosing to build. Not because it’s easy. Not because the system makes it straightforward. But because they see a gap between what finance is and what it could be.
Regulator’s Funding Requirement
An outreach committee is seeking the initial $500,000 capital now required to receive a charter. Junior Mohammad Qureshi from Greensboro, NC, is the Chair for this task.
“I came to UNC on the pre-med track. From a young age, I knew I wanted a career centered on helping people, and becoming a physician felt like the natural path. But early in my sophomore year, I realized I wasn’t happy.
I switched to economics, as i was surrounded by business growing up. But something still felt off. Most business careers prioritize profit over people, and that bothered me. I’d lost my sense of purpose; sold out on doing something meaningful.
When seeing the opportunity to join the startup, I didn’t know much about credit unions, but I’d always heard of them. I researched and something clicked: high-impact finance that puts people first.
This has been one of the most transformative experiences of my time at UNC. Bringing a credit union to campus has become my way of leaving something meaningful behind, proof that purpose and business don’t have to be in conflict.”
This is Bigger than One Credit Union
This is a more consequential effort than founding one more credit union. It demonstrates the next generation’s belief that coops can make a difference.
Whenever a brand, a product, a company or even fan loyalty created by the founders is not renewed for following generations, consumers’ interest will atrophy and die.
This de novo effort has multiple projects and specific support needs. You can learn about these by contacting Sarah Galdi, Scgaldi@unc.edu or President Shiva Rajbhandari, Shiva.rajbhandari@unc.edu.
The credit union’s website is here. Individuals can make tax exempt donations through CU De Novo, linked here.
Support of this startup will have an impact on campus for students, on the NC credit union system and the public’s perception of coop’s relevance. But most importantly you will feel good knowing you made a difference.
If you have any hesitation, I recommend you talk with one of the founders. That is what convinced me this is a special group who will complete their mission.
America’s Practice of Democracy is “Complicated”
I received three emails yesterday. All contained a common message about my ability to vote in an upcoming organizational election.
The First Request
Be the vote that counts
Dear Vanguard investor,
As an investor in these securities, you have the right to vote on important matters. This is your opportunity to make a direct impact on your investments. Your vote counts!
The specific company in this alert was:
INTERNATIONAL PAPER COMPANY
MAY 11, 2026 ANNUAL MEETING
Vote by May 10, 2026
There was a vote now link to the the company’s meeting notice, annual report and a ballot with boxes for yes, no or abstain. In addition to the election of directors and approval of the auditor. The final owner vote was as follows.
A Non-Binding Resolution to Approve the Compensation of the Company’s Named Executive Officers More Details
Vanguard has no role in this activity except to enable shareholders to quickly and easily exercise thee ownership role for persons who keep their stock with the brokerage firm. The owner must still make a judgement about their vote. Vanguard, which is owned by the investors in its mutual funds, is enabling corporate governance to be easily exercised for every publicly traded stock owned by its investors.
A Second Example
Dear Charles,
Voting is now open in this year’s elections for the Harvard University Board of Overseers and for Elected Directors of the Harvard Alumni Association (HAA). You may vote online or by paper ballot.
By voting , you can help shape Harvard’s future. Please take the time to learn about the candidates and vote.
The vote now link goes to a sign-in that includes name, college identifier and my unique registration number. Once entered the complete ballot and candidate information is listed. This same information , ballot and a return envelope is also mailed to every graduate.
A Credit Union Example
Dear Charles,
We are conducting the 2026 Annual Meeting by Electronic Transmission as provided in Section 411 of the Amended and Restated Bylaws of Patelco Credit Union effective April 28, 2017 (the “Bylaws”).
The Annual Meeting will be hosted by video conference on April 30, 2026, at 5pm PT.
Registration is required to attend
We welcome you to join us and take this opportunity to submit questions in advance. To register, please send an email to annualmeeting2026@patelco.org no later than 11:59pm PT on Friday, April 24, 2026.
Matters requiring a vote
Please note that there is no new business to discuss. The only matter requiring a vote of the members in attendance is approval of the 2025 Annual Meeting minutes.
Patelco Credit Union 2026 list of candidates nominated
Board of Directors – Four (4) positions to be filled by acclamation of the Board of Directors as provided in the Bylaws:
Collen Cabey
3-year term
Debra Chaw
3-year term
Vickie Rath
3-year term
Jesse Rivera
3-year term
Section 501(D) of the Patelco Credit Union Bylaws provides “If no more nominations for vacant positions are received than the number of vacant positions, the credit union may, without further action, declare that those nominated and qualified to be elected are elected.” Four candidates have been nominated to fill the four open Director seats. Therefore, the Directors nominated will be approved by acclamation of the Board of Directors as provided by the Bylaws.
The close of this email is two paragraphs of general programs and services from CEO Erin Mendez beginning with these words:
As we move into 2026 and prepare to celebrate Patelco’s 90th anniversary, our mission remains clear . . .
This Official Notice of the Annual Meeting, has no Vote Now or register here links. An owner must email to register, and then annual meeting details will be available for download after April 13.
Democracy, Due Process and Member Trust
Across most organizations which claim to be member or shareholder owned, the appearance of democratic practice is an important part of their public character and responsibility.
Harvard University has been under constant attack since the first month’s of the Trump administration. Yet it has a continuing campaign to have its several hundred thousand graduates vote for the most important leadership roles in the corporation.
Vanguard did not have to facilitate the ability of shareholders whose company stock is kept at the brokerage. But it does this as a service which facilitates the most important duty of shareholders, probably in the hundreds of thousands of emails pevery month.
Voting is both a trust and a confidence builder by an organization’s leadership with its most critical constituency-the owners. It is also a legal responsibility underlying owner governance at the annual meeting.
But appearance may have no substance supporting the process. Patelco’s efforts to prevent any normal or meaningful interaction by owners is clearly stated. Director succession is completely controlled by the board. It is a leadership group that seems unwilling or even afraid to interact with its member-owners. This process is not a confidence builder for Patelco’s leadership or the persons it serves.
When democratic processes have no substance, the other leadership model that prevais is rule by authority. That approach is not one that respects the role of its member-owners or creates a common bond of enthusiasm and support.
Are the public reputations of Vanguard and Harvard due, in part, to their active encouragement of democratic participation by their constituents?
Of all the democratically designed organizations in America, one would hope that the values-based, cooperative system’s better angels might be a shining example.
Two Reactions to AI’s Challenge
Yesterday’s post on AI’s promises and dangers, prompted two responses.
One is a personal reflection by a dedicated AI user and one from an organizational point of view based on NCUA’s application. Ironically both reach a similar conclusion about the ongoing need for human insight.
An AI User’s Perspective
(by Lara Hoyen, my daughter, posted on LinkedIn)
I felt an urge today to write down my thoughts today.
I didn’t want AI to help, though I regularly ask for assistance. To script a tough conversation with a co-worker. To translate an interview transcript into a compelling blog post. To summarize a 15 year story into a compelling couple of paragraphs.
Recently Claude’s been unlocking even more for me. I’m able to clean up years of data files and create interactive dashboards. I’ve launched webforms to standardize inputs. I’ve automated weekly email reports with project status changes.
These types of tools used to have to wait until they could move from a backlog into a sprint. Then my data team co-workers could built it.
A recent Harvard Business School study found that power users of AI, rather than being freed by AI, are busier. It intensifies their workload because they can take on broader responsibilities. The article talked about AI users experiencing “Brain Fry,” with symptoms such as mental fog and decreased focus.
This describes exactly how I’m feeling.
I’m reading to seek wisdom as I consider my response to the political upheaval that is impacting our nation, community, and neighbors. Hannah Reichel’s devotional, “For Such a Time as This,” describes the Christian church’s response to the rise of Hitler in Germany as a way to give perspectives and inspiration to Americans today. She writes about the power of letters shared between dissidents. For those that wrote them and received them, these messages helped to “clarify their thoughts, name their realities, and strengthen their resolve.”
I want to make sure I don’t lose these abilities. To reflect, apply, synthesize.
Even as I see the amazing opportunities that AI is unlocking for a resource-strapped NGO (and 501 C 3) with more work to do than people to do it.
Ann Lamott, an author I love, released a book recently on improving your writing. She explained that the power of communicating, is how we “awaken to life and to beauty… our own huge creative and imaginative spirits.” She laments that we should “stop hitting snooze… look around, breath it in, and scribble it down.”
That’s why I needed to write this post.
I wanted to reflect on the risk I face of inadvertently outsourcing my thinking to AI vs. using it as a smart assistant. I wanted to name the impact I am experiencing cognitively because of my use of these tools. And, I want to strengthen my resolve, as an antidote to these consequences, to walk through each day mindfully – noticing, reflecting, sharing, and connecting.
I’d love to hear your practices that keep you human, as you work with AI. And, where you’re seeking wisdom for such a time as this.
AI’s Organizatinal Impact & NCUA’s Example
(from RAndy Karnes, retired CEO, CU*Amswers)
What we miss in AI is that behind it all is a systemic approach to learn. Some one or thing said learn like this! Practice and learn some more. Why AI will not become the most effective teaching template for future generations is not much talked about.
While it might be difficult to teach higher functions, the basics should be simple.
And the NCUA’s oversite/audit functions should be childs play if they would apply the logic to:
1. Inventory required input and content. (eg. exams, data, regulations)
2. Summarize the content for norms amd exceptions.
3. Score the norms and exceptions.
4. Make recommendations to accelerate positive outcomes and adjust to exceptions.
If one day we want to compete with AI intellectually as a teacher and simply avoid work by just accepting its outcome – we first must teach ourselves the instant insight we seek.
Child’s play like the NCUA’s work at this point, will not be a stumbling block for credit union futures. That work we must learn to do ourselves.
Washington Post Opinion on Taxing Credit Unions
With exquisite timing during this week’s credit union GAC convention, the Washington Post published an opinion article with the title:TARGETING THIS $2.8 TRILLION TAX SHELTER COULD SOLVE A BIG U.S. PROBLEM
The opinion was authored by Scott Hodge, described as a tax policy fellow and past president of the Tax Foundation.
Hodge provides multiple examples of successful tax exempt, very profitable organizations such as AARP, the Academy of Arts and Science, the Kaiser Foundation Hospital system and the PGA as fellow travelers in the tax exempt panoply of unfair competitors.
Here is Hodge’s paragraph singling out the credit union exemption:
With more than $2.3 trillion in assets, the tax-exempt credit union industry has long outgrown its depression-era roots. Originally exempted to serve working-class people of “small means” who lack access to banking, credit unions are now indistinguishable from commercial banks. They offer mortgages, auto loans, credit cards and investment services—and they’re using tax free cash to buy banks. In the past decade, credit unions have purchased nearly 100 commercial banks, converting taxpaying businesses into tax-exempt ones. Imagine Gold’s Gym buying your local YMCA.
His example of coops buying banks has logic and common sense. As one observer has stated:
I’d invite anyone willing to discuss the original purpose of credit unions and why neither the FED, OCC nor the FDIC wanted to regulate them.
Short answer: Credit Unions are not banks. They are member-owned cooperatives created as a safety net and alternative to banks. As a result, credit unions were granted nonprofit status, were not taxed, and were placed under social services
But would that be a sufficient response to this recurring threat?
History of the Tax Exemption
State chartered credit unions received their federal tax exemption via an IRS ruling. FCU’s are tax exempt in the Federal Credit Union Act. One consequence of these two processes is that some states have passed franchise or other taxes on state charters. Another critical difference is public disclosures. State charters must file an annual IRS 990 with facts on salaries and benefits of highly compensated employees and list all charitable donations and political contributions.
Coops’ special service purpose was endorsed by FDR in this 1936 note to the Treasury Secretary. The Pesident encourages publicity for these new institutions, supervised bythe Department of Agriculture, saying they are popular.
In the modern era of an Independent NCUA regulator, the agency’s first two board chairs were not hesitantin their support of credit unions’ tax status. (photo from 1981. left to right Larry Connell, PA Mack, Ed Callahan )
Today’s NCUA board has been agnostic on credit unions’ tax exemption saying the issue is up to Congress. This is similar to Board’s silence on the bank purchases referenced in the Post opinion even though NCUA approval is required for every transaction,.
How the Tax Exemption Formed the industry
For the first 100 years of credit union formation, all were started with no financial capital with minimal share donations by the organizers. Today NCUA requires at least $500,000 in equity to receive a charter, but that is not how 99% of active credit unions today achieved their net worth.
Until NCUA insurance was required for all FCU’s in 1970, member shares were equity, ranking last in payout priority in the event of failure. One of CUNA’s concerns about a federal insurance program was that it would reduce members’ ownership attention.
During the bank holiday in FDR’s first year in office when many customers lost savings due to bank closures, credit unions noted that not a single state charter failed in this period. There were no FCU’s until 1934; but just like the states, all member shares were at risk.
Federal share insurance was not passed because of member losses or credit union failures. Rather it was a reward for performance that demonstrated member shares were as safe as insured deposits in banks. It was not untill the mid-1980’s that the Public Accounting Standards Board classified credit union shares as liabilities and not equity in GAAP presentationa.
The Imposition of Bank Capital Concepts
Even after multiple coop share insurance programs were available, until passage of the Credit Union Member Access Act (CUMAA) in 1998, reversing a Supreme Court interpretation of NCUA’s field of membership rule, credit union capital adequacy was determined on a flow, or earnings set aside requirement.
Net worth was created by allocating 6% of income into a statutory regular reserve account until that total was at least 4% of risk assets. At that level, the transfer was lowered to 5% until a ratio of 6% of risk assets (primarily loans) was achieved. Retained earnings were on top of this required capital account. The tax exemption on net income was a critical factor in coop net worth build up.
A 6% ratio of total net worth to assets was considered well-capitalized. However CUMAA changed the capital creation from a coop model to a banking concept. Now the required ratio was determined by the amount of capital on hand at any point in time versus the flow of earnings into reserves. To be well-capitalized credit unions needed to have at least 7% net worth at all times.
For almost 100 years the tax exemption was critical to building total capital. This was the sole source of credit union bet worth. This process took time before startups could become financially self sufficient without sponsor support or location and convenience advantages.
Member loyalty was the intangible but essential foundation because reserve accumulation could take a generation or more to become self-sustaining. Growing a credit union’s balance sheet from 1998 was now internally governed by the credit unions growth of equity, or ROE.
The Financial Ethos Today- CEO’s Born on Third Base
In his brief history of FCU supervision, Ancin Cooley points out (link) how this founding role of credit unions has been eroded as the founders and builders have left the scene.
Few CEO’s today have had to worry about building capital and ROE performance. There is no external market accountability as there is no stock to be valued and traded. The industry’s average capital ratio is 11%, far above the 7% well capitalized rule requirement. Risk based capital measures are even greater.
Most newly hired or promoted CEO’s, especially in the three decades since CUMAA in 1998, are unaware of how the wealth legacy they now direct was built by generations of member loyalty.
A baseball metaphor for this historical blind spot of incoming CEO’s is useful: “Some people are born on third base and go through life thinking they hit a triple.”
And so the focus of these newcomer CEO’s, often with board blessing, is how to take the credit union to a new institutional level. Not how to enhance the well-being of the member-owners whose relationships were the unique foundation of cooperative success.
Excess capital makes the allure and seeming ease of purchasing banks or other third party assets, and moving beyond community to a financial intermediary, a ready breakout strategy. With the help of brokers and financial consultants the option is hard to resist. Organic growth seems so common place and difficult versus using surplus funds to acquire assets originated by others.
Instead of fulfilling cooperative purpose, the acquisition or ‘”transfer of control” (mergers) of eternal assets becomes the go-to success tactic. A coterie of consultants, lawyers, financial agents and lobbyists will facilitate these instant growth possibilities.
Responding to the Tax Exempt Challenge
Today GAC attendees will hear urgent appeals for political action protecting the credit union tax exemption. But is that the best framing of the challenge?
Should the question intead be, if our organization were to taxed, would that change our mission? If the answer is yes, then maybe the first response is to discuss whether the vision-mission statement needs a review.
And secondly, what changes are needed for credit unions to continue their unique role for members, their community and in the overall financial markets whatever the tax status?
The 18 month no layoff should be little assurance. BECU needs those employees until they get on the same system. After they do, and when the SAFE CEO leaves at 18 months, there won’t be local leadership and no one to protect the local employees and community. Since BECU’s expense issue is so severe, there will be a lot of job reductions in CA.