Ending Autopilot Decision Making in Credit Union Mergers

No credit union merger proposal has ever been turned down by a vote of the members. In over 5,000 voluntary mergers over the last two decades, most were by credit unions that were financially sound.

So why has the voting process been so perfunctory, to the point of meaninglessness?

Why has this fundamental member-owner responsibility become so routine?

This is especially critical when much evidence exists in for-profit sector and financial services, that many mergers destroy value.

One reason why this exercise in cooperative democracy appears pointless is that the voting decisions is presented in such a way that members believe there is no real choice in the matter.

Members are given no economic facts or alternatives, and often given a nudge in the form of a special dividend to follow the course recommend by the Board and management to give up their charter.

In an article exploring why consumers may act contrary to their economic self-interest,  the authors provide the following observation from behavioral economics:

“While it may not sound like a lot of fun to think about the opportunity costs of every financial decision, we need to be careful and not get too caught up in an “autopilot” mode of decision making. Thinking about everything we could do with our money is hard. At the time you make a purchase, remember that you can spend the money only once. More costs exist, so you may miss future opportunities such as a more significant purchase, interest earned on savings, bill payments, or other possibilities. The difficulty of considering several options leads us to revert to mental shortcuts during our decision making.”

Surrendering control over an organization and legacy assets produced by the efforts of generations is hardly a routine decision. Might it be time to ask whether the so called voting process be re-evaluated based on cooperative values and fiduciary responsivity?

Heroes In a Time of Crisis: Investing in Staff and Members’ Well Being

The following is a coronavirus action plan from Doug Fecher, CEO of Wright-Patt Credit Union in Beavercreek, Ohio. He opens by honoring all those serving on the front lines, outlines changes in operations (details omitted) and summarizes the waiving of many member fees. The member actions below could reduce income by $50 million or more depending on the length of the crisis. This, he says, is why we have capital. “I’m sure there’s more we can do, and will do, but this is where we’re starting.”


What is a hero?

No matter what the dictionary says, for me it is someone who simply answers the call. Often we think of saving a life, but actually most heroic acts are things we don’t usually think about at all. More often than not, heroes are those who take care of their neighbors when nobody else will.

Some people put themselves in position to perform heroic acts. Others find themselves thrust into the role– finding themselves at a crossroads of time, place, and opportunity where a decision must be made. Do I step up or not?

Being a hero doesn’t mean we don’t have fear – it means we do what we need to do despite being afraid.

Imagine life without our everyday heroes.

First responders, members of the military, nurses, and doctors are clearly heroes. But they aren’t the only ones. So understand me when I say, with all due respect to those obvious heroes, that I consider people like us – people who work in grocery stores, pharmacies, and other typical businesses who never thought that what they do is provide essential community services – those people can be heroes too.

And make no mistake – this includes all of you! You and your colleagues at WPCU who work in a business that provides one of the most essential services of all – peace of mind. At a time when you are worrying about your own families you are also being asked by the credit union to step up for others – to make sure members don’t run out of the cash they need to manage their own way through this terrible and unprecedented event.

None of this is easy. Everybody wants passionately to get it right. I want to assure you that we are doing everything we can to balance the interests of all our stakeholders to make the best decisions we can. Things are changing daily, even hourly, and so as they change so will the decisions we make to navigate our way through each day.

Heroes. That’s what I think you are, and I don’t think I’m overstating it. I cannot thank you enough.

Now let me update you on where we are today: [internal operations omitted]

Member Temporary Emergency Relief Services

We are putting in place a set of emergency relief services to help members cope with the economic hardship of job loss or reduced income. These services will be available as soon as practical (some require programming, etc. that may take a few days).

Emergency relief services include:

  • Temporary unemployment loans are available at 4% interest
  • Early withdrawal penalties on share certificates of deposit are waived (daily cash withdrawal limits apply).
  • Late fees on loans are waived.
  • Consumer credit card limits for creditworthy borrowers are automatically increased by $1,000.00; higher limits may be available by request.
  • Commercial credit card limits may be increased upon request.
  • Members are permitted to skip up to three consumer loan payments without penalty (Skip a pay may not be available on certain loans). Additional skip-payments may be granted upon request.
  • We are temporarily suspending new foreclosures and automobile repossessions. If you are having trouble paying your bills we urge you to contact us so that we can help.

We are also implementing a temporary change to member fees in order to provide further relief:

  • Share transfer fees for NSF/overdrafts are suspended.
  • NSF/overdrafts fees are suspended.
  • Member choice transaction fees are suspended.
  • Foreign ATM fees are suspended.

Thank you …

These are difficult times, but they are temporary. We will get through this even if we don’t know just how long it will last. Our community will become more used to a new normal way of doing things including accessing cash, and this will happen even before the crisis ends. Every day that passes brings us one day closer to this being over.

I hope you understand that the actions we are taking are to protect our partners and members as best we can. Truth be told I personally hate that we can’t just close shop and have everyone go home to wait this out. But if a home catches fire the firefighters will show up. If you go to a hospital there will be doctors and nurses waiting to care for you. If you need food or medicine there will be grocery and a pharmacy open to help you. And if you need cash or can’t pay your bills, buy basic supplies, or take care of your family, we are your credit union. We will be there for you too. Closing our business is just not an option.

And that’s why I think you all are heroes. It’s not something I say lightly, and so when I say thanks for all you’re doing, I hope understand the emotion and force of those words. I simply can’t thank you enough.

Doug Fecher, CEO

Learning at the Speed of the Crisis: A Cooperative Advantage

Everything Cancelled! That is the economic and social reality today from the coronavirus crisis. Except for one critical capacity-to learn at the speed of change.

Credit unions have three distinct strengths in the current crisis:

  1. They focus locally. Regardless of national guidelines or initiatives, all execution is local. Schools, businesses, health care and all services are led and delivered specifically for each community The community is the “home field” advantage of every credit union.
  2. Members come first, not a stock price or buybacks, or jousting for a corporate takeover as competitors weaken. Members are why we exist. Their financial health is each institutions’ “social capital” of trust.
  3. Collaboration, based on the principle of self-help, is our competitive advantage. Working together even with “social distancing” is integral to our system’s design.

Turning to Action

When asked about knowing the peak of the curve tracking the virus spread, NIH infectious disease expert Dr Fauci stated: “We don’t know about it until after the fact.”

In contrast to this post-event knowledge (hindsight is always 20:20) the cooperative advantage is the ability to share and learn from each other to proceed with confidence through each phase of a crisis. Real time sharing brings insight and foresight.

Every crisis, externally imposed or internally caused, goes through a similar, predictable cycle: Discovery/incident, growing realization of impact, uncertainty creating fear and doomsday predictions; responses-local and national; slow recovery, and step by step return to normalcy.

The greatest danger is to get stuck in judgments in one part of the cycle and assume that will be the situation forever. The best example is NCUA’s actions to the corporate investment portfolios in2008/09.

Learning occurs from first-hand intra-industry sharing about credit unions plans and actions. Often in real time webinars.

“Uninterrupted Service” and “There’s a lot we can do”

One CEO’s focus in his staff communications is to ”deliver uninterrupted service to members.” He further observed:

We are offering members a variety of ways to help them. We have a temporary income replacement loan with an interest rate of 2 or 3 percent. Also a few extra free skip-a-pays (we offer one free skip-a-pay per year as a matter of routine). Our Governor closed our schools for three weeks which is creating a childcare nightmare for our mostly parent-age employees so we are considering an interest-free loan for any extra childcare expenses they incur during the crisis (we need them to come to work if they can). 

So far not much of an issue for members – we’re getting some requests for assistance but only a handful so far. I expect this could increase significantly in coming months.

Our crisis team is meeting every day to re-assess and make new decisions. I’ve been around a long time and have never seen anything like this – this is worse than the great recession because of the panic around health. We will be fine – this is what we have capital for, right? We have a lot of it so there’s a lot we can do.

Keeping Credit Flowing-Lowest Borrowing Rates Ever

The Federal Reserve’s actions lowering short term rates to zero creates a potent borrowing and member lending opportunity for credit unions This morning’s fixed rate term loan advances from a FHLB ranged from .81% for one year to 1.02 for five years.

With this historically low cost of funds, credit unions can leverage their balance sheets to assist members to refinance outstanding loans. Refinanced loans have a payment history and can be secured. Lowering rates puts more cash in members’ hands or enables faster loan spay offs. Refi’s of home mortgages can benefit members years beyond the crisis.

Creating low cost short-term financing for those members and businesses subject to uncertainty is vital to an economic rebound. Credit unions have the local knowledge to direct their lending priorities where it is most needed in the community.

“An Essential Service” and “Being Good Neighbors”

I received the following excerpt in an email from a credit union:

Financial institutions are considered an essential service, so our branches are open to serve you during the shelter-in-place order impacting six Bay Area counties.

In a crisis, recovery starts from the bottom up, not the top down. While national funding can counter market’s liquidity panics, recoveries in retail sales, business re-openings and restoring normal patterns of commerce must occur locally. Dependable financial services are the oil to keep the wheels of commerce turning.

On Sunday I participated in a Zoom church gathering. The order of service was the same as if we were in the sanctuary, some music and congregational interaction through Zoom’s “gallery view.” The technology provided all regular service practices. By doing so it renewed a sense of community even without physical presence.

Learning inspires innovation. Another congregation announced in the midst of city-wide church closures in DC: “The church is not closed, but the church is changing its practices for the time being.” 

When everything is postponed or shutdown in our daily lives, all routines are unsettled.

Crisis can breed fear, even panic. One credit union reported a member who withdrew his entire share balance: $500,000.

Learning new ways to be good neighbors for our members, community and the coop system could be the most important outcome of this crisis experience. That would be an “essential service” lasting much longer than facilitating daily financial transactions.

Does Common Bond Matter Anymore?

Until the economic upheaval of the 1970s, the field of membership (common bond) was not only a legal requirement for a credit union charter. It was a practical necessity.

Credit unions for the entire 20th century were started with no financial capital. Rather, the sponsor support and subsidies as well as volunteers’ “sweat equity” enabled credit unions to slowly build up their financial capacity.

The employer based FOM was the dominant chartering model. With it came members on steady payrolls, space in the plant and personnel who would donate time to manage the daily interactions.

The field of membership was a way for beginning coops to focus their efforts on a market niche that provided a stable economic environment. Lending, long before FICO scores, was based on character and capacity. Character was determined by co-workers on the credit committee and capacity by how long you had been on the job.

The Unraveling of the FOM

Most states, and the federal regulator after 1934, interpreted the common bond literally. So, if a plant closed, a hospital merged or a business was sold, the credit union was deemed to have lost its organizing rationale and was liquidated.

From the late 1970s into the early years of the deregulation era, this rigidity resulted in closing credit unions, still financially viable, when their members were most in need. Mergers were not allowed of unlike common bonds. The dependence on stable employers was eroded by the changes in the economy that saw the Midwest manufacturing base decline into a so called rust belt. New service industries emerged which did not match the employment model of large manufacturing companies.

The Opening of the Common Bond

The economic disruption of the 1980s, the parallel deregulation of financial services and never-ending technology revolution have changed the traditional understanding of field of membership.

Today most credit unions have the ability to define their common bond in a way that matches their business goals. A few still retain a narrow common definition such as State Farm FCU, $4.2 billion in Bloomington, IL. Others such as Pentagon FCU claim a potential field of membership of 329 million. Or in other words, every American.

So does the common bond matter? Some competitors think so. One startup fintech serving the student loan market named itself Common Bond. On its website the company promotes itself with a values and social purpose philosophy versus what one might expect as offering the “best loan rates.”

The Common Bond Today

Ed Callahan, the former NCUA chair was sometimes accused of destroying the common bond. He would reply, “I don’t believe in THE common bond. I believe in A common bond.”

The focus Ed referred to is interpreted many ways by credit unions. Some like Ironworkers USA FCU turned its whole fortunes around by doubling down by serving more union members across the country. Many credit unions have embraced community charters even if they retain a core, legacy focus on an original sponsor.

Some credit unions reinterpret the common bond by rebranding with aspirational names: Xplore, Aspire, Brotherhood, Team 1. Others build a commitment around purpose or serving a particular need in the community such as Credit Human. Some focus on the cooperative message of ownership: My Credit Union or Western Cooperative.

What Common Bond Means

Time and again this topic arises in every credit union’s strategic journey. It is a core element of cooperative design. There is no single, clear working definition. But examples and history help us understand the importance of thinking clearly about this self-description. For it is the foundation of a credit union, not merely a legal license. Without this definition, the cooperative design becomes aimless, prey to the fates of fortune and chance. That’s not what members hope to find when they join a credit union.

The Cooperative System’s Unique Capabilities In a Crisis

Since the era of deregulation, the credit union system has navigated multiple national and local crises. These include the October 1987 stock market shock, the meltdown of the S&L system, the bankruptcy and government rescue of the FDIC and FSLIC, the Y2K uncertainty, the 9/11 terrorist attack, and the Great Recession of 2008/09.

Now the coronavirus threatens national physical and economic security.

There are three vital responses that characterize credit union capabilities in a crisis.

1. Liquidity

The number one priority for both credit unions and their members. As economic uncertainty mounts, markets begin to tighten, there is no longer rational pricing, and everyone starts to hoard cash. Consumer spending slows, job losses mount and business revenue becomes less certain.

The most important action credit unions take is to keep credit flowing. Actions include supporting members’ credit requests, financing purchases such as cars and housing, and marketing lower interest rates to help members refinance higher rate loans.

2. Act Counter-Cyclically

Credit unions are designed for crises. Cooperatives’ unique structure enables them to act counter cyclically and therefore stand against the market pressures to put institutional financial priority ahead of member interests. Credit unions are the solution to many of the individual and community economic strains a crisis brings. By keeping the loan windows open and liquidity available at normal rates, market failures can be ameliorated and the time to recovery shortened.

3. National Legislation

The national legislation that accompanies a crisis should be an opportunity to enhance the cooperative model, not queue up at the federal trough seeking taxpayer funds for an industry built on the concept of self-help.

Significant legislation to upgrade the cooperative system historically occurs once each decade. Given the rivalry with banking groups and conflicting treasury priorities, it is difficult to predict when and how any opportunity will occur.

Rather than being caught up in the bailout legislative frenzy, this is the time to upgrade the cooperative system. Necessary bold changes could include:

    1. The redesign of the CLF to bring governance by the member owners and to enhance purpose by enabling cooperative access to the secondary market via the CLF.
    2. Explicit recognition of member-owner rights in cooperative governance.
    3. Enhanced accountability and transparency by NCUA for use of member funds and the agency’s responsibility in advancing cooperative solutions.

Not Letting a Crisis Go to Waste

The urgency of a crisis can cause responsible parties to focus only on the immediate challenges and not broader opportunities. Restoring the status quo can dominate the immediate agenda.

Credit unions were created to transform market options for members. During the Depression they were a national policy response resulting in the passage of the FCU Act.

Credit unions can respond to crisis in ways firms worried about share prices and market reactions cannot. Their member ownership structure ensures credibility by placing members’ interest first. The cooperative financial structure permits patience to persevere through the cycles of value that accompany every crisis.

Leaders Who Believe in the Power of Self-Help

These features mean that credit unions, in crisis, can demonstrate practically and forcefully why America needs cooperative solutions more than ever.

The key to realizing these crisis advantages is leadership. Can the persons responsible avoid getting caught in the panics that ensue? Will leaders listen and collaborate with credit unions on the front lines already responding with creativity and resilience? Will they promote the cooperative solutions or revert to practiced roles promoting personal or political advantage?

The cooperative message is that we are not prisoners of fate in a crisis. Credit unions demonstrate the many ways to overcome the doubts of today for a better tomorrow.

Credit Unions Purchasing Banks: One Step to Improve the Process

It is hard to know if credit union bank purchases are working out or not. Are they in members’ best interests? Are the terms reasonable? How will the financial benefits be realized?

One difficulty in these deals is that only one side is required to disclose the terms: the selling bank. That disclosure can be further limited if the bank is privately held.

The Importance of Transparency

Because credit unions do not have stock and the resulting marketplace pressures that this reality places on boards and managers, it is difficult to track whether a credit union bank buy is working or not.

From 2015-2019 consulting firms estimate that the average premium to book value on bank mergers has ranged from a low of 136% (2016) to a high of 175% (2018).

This is just one element of disclosure for public companies. The bigger the transaction, the more details provided. For a stock company being merged, the details matter in that competitors might offer a competing bid if selling shareholders feel the price is too low.

For an acquirer, the impact of a transaction on future performance is an important factor to justify paying premiums over book value.

An Absence of Public Information

In credit unions, there is limited disclosure on the front end of a purchase. There are rarely any projections of future performance. There are undoubtedly reams of financial information required to gain both board and regulatory approval. But this data is not shared.

When deals are secret, no one can learn from the experience. Secrecy can lead to a lack of accountability. The process can be manipulated by interested parties to the transaction or those directly responsible to ensure member assets are not wasted.

Public relations messages dominate the information presented. This or that purchase will increase “service to the community, enhance customer relationships, provide greater expertise and expand growth opportunities” in a new market. But rarely are facts offered to support these generalizations.

Market-Based Transactions?

NCUA Chairman Hood defended credit union purchases of banks describing them as market-based transactions. He is only half right. For credit union members receive neither the financial data that bank shareholders receive when selling, nor the subsequent performance monitoring provided by a daily stock price.

Today credit union bank purchases are unknown events. They may indeed be win-win for all parties. Only one group of “shareholders” receives the information to make that judgment. Shouldn’t credit union shareholders have the same “level playing field?”

Examples of Financial Datapoints in Press Releases of Bank Purchases

Under the terms of the transaction, shareholders of Edon Bancorp will receive $103.50 in cash in exchange for each share of Edon Bancorp common stock for a transaction valued in aggregate at approximately $15.5 million. The consideration represents approximately 135% of Edon Bancorp’s tangible book value per share as of December 31, 2019.

On a pro forma basis, the transaction is expected to be accretive to SB One Bancorp’s 2019 earnings per share by approximately 8% and approximately 1% dilutive to tangible book value per share at closing assuming a transaction close in the fourth quarter of 2018 and 30% in annual cost savings. The earn back of the tangible book value dilution is projected to be less than one year.


The transaction is presently valued at $45.54 per Wellesley common share, or approximately $122 million in the aggregate, based upon Cambridge Bancorp’s 10-day average closing price of $78.53 as of December 4, 2019. On a pro forma basis the transaction is expected to be approximately 4.4% accretive to Cambridge’s 2021 earnings per share and approximately 1.6% dilutive to tangible book value per share with an expected earnback period of approximately 2.2 years.


Under the terms of the transaction, shareholders of Damariscotta will receive $27.00 in cash in exchange for each share of Damariscotta common stock for a transaction valued in aggregate at approximately $35 million. The consideration represents approximately 185% of Damariscotta’s tangible book value per share as of September 30, 2019.

How to Really Open Eyes

One year ago, CUNA began a digital-first marketing campaign on behalf of the credit union system.

The purpose is “overcoming industry myths and raising the profile of credit unions amidst an ever-competitive financial services marketplace. By the end of 2019, Open Your Eyes to a Credit Union® had reached tens of millions of consumers and earned more than 130 million video views.”

The program has spent approximately $50 million and now operates in 19 states. The hope is to double this effort in 2020.

Is This the Best Way to Open Eyes?

Digital marketing is the latest craze in corporate investment. Combining the technology of large databases and the analysis of artificial intelligence programs, it is now possible to target micro segments. These tactics are the financial wellsprings driving the growth of the large digital retail and social platforms. They are the dominant advertising tactics in political campaigns.

But is this multi-million-dollar marketing spend the best way to promote the credit union message?

The Challenge

In 2020, current trends suggest the total number of credit unions will fall below 5,000. The last time that few a number were operating was in 1935. By the following year the numbers had increased to 3,490 state charters and 1,865 FCUs reaching out to a population of 127 million.

While credit unions are larger and serving more members, the industry is harvesting seeds planted generations ago. The last time there were more new federal charters issued than those cancelled was in 1978 (348 new, 298 cancelled). Simply growing existing institutions without new entrants, will only discourage innovative ideas and the passions that startups attract.

Another Option for the Next $50 Million

Here is another option. Today the NCUA requires a minimum capital commitment of $500,000 to $2.5 million to charter a new credit union.

Why not tap into the timeless passion that people have to help their communities and to own and control their own assets by offering to provide the seed capital for 50 new charters this year?

It would be an unprecedented undertaking. Nothing like this has happened since 1986. To accomplish this goal would require an “all hands on deck” approach involving leagues, state and federal regulators, CUSOs, credit union mentors and all other parties who support the credit union system.

The project could begin with a national “call out” for groups, especially in “credit deserts” that want to start their own financial cooperative. Criteria could be established for screening applications based on some of the same requirements for chartering (founders’ experience, community/sponsor commitment). But it could also include expressions of support from leagues, local credit unions, and vendors willing to underwrite their future relationships in the critical launch years.

Why This Effort Would Really Open Eyes

  1. It would show the movement’s continuing support for new groups willing to embrace cooperative solutions.
  2. It would reverse the industry’s collapsing numbers and demonstrate the continued attraction of the credit union business model.
  3. It would reignite the imaginations of persons looking for ways to support their communities, especially in areas now lacking locally owned financial choices.
  4. It would draw upon the most potent of cooperative advantages: collaboration.
  5. It would fire up the entrepreneurial instincts and provide an attractive opportunity for the next generation of credit union leaders.

Instead of industry resources spent defending the status quo or seeking minimalist changes in regulations, this effort would put the powerful attraction of the cooperative model on display for all to see.

This approach would take effort and be riskier than just sending money to Facebook et al. But can you imagine the enthusiasm and cooperative spirit it could create. Fifty new charters in fifty states! Now that’s a campaign everyone could support.

What’s Special about a Cooperative’s Overdraft Fee?

Most would answer “nothing.” The fee is just another way to grow non-interest revenue.

An article about Alpena Credit Union lowering its overdraft fee again, from $19.52 to $17.50, brought to mind a conversation I recently had with a CEO.

A $35 Fee for “Courtesy” Pay

The discussion was how to explain a $35 fee for clearing a member’s check on an overdrawn account.

This amount would equal a half day’s (four hours) take home pay for a member earning at or near the minimum wage of $10 per hour in their community. The team needs more money to make budget. What choice do we have? The CEO responded, what kind of a co-op do we want to be?

Finding the Right Performance Metric as a Co-op

He further asked whether the strategy was to grow income or member relationships?

The lack of clarity was further confused by the metrics the credit union tracked for acceptable performance. All of the ratios had to do with balance sheet financial outcomes: growth, ROA, expense ratios, productivity goals, etc. In other words, an examiner’s financial checklist.

Members were not the focus of any tactical criteria, except to get more of their business.

He then raised the topic of cooperative metrics. How are we tracking cooperative tactical success? What would these say about who we are and what our business evolution should look like?

His point of view was that to be true to ourselves, credit unions are supposed to enhance member well-being. Absent meaningful metrics, there can be no practical oversight or peer comparisons for what makes cooperatives different. The risk is that members will see credit unions as insincere, just another financial option with a gentler persona.

The right metrics are a choice for every credit union. In this case, is your credit union a $35 or $17.50 co-op? What would your member choose?

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Has Anything Changed?

Almost twenty years ago, Callahans had a program of hiring five new college grads annually for the company’s future growth. There was a two week, full-time orientation to introduce the credit union movement and the company’s history before the new employees began a six month rotation among the firm’s operating units.

In the two-week introduction , we would invite a credit union CEO to speak about why they chose a career in credit unions and their vision for cooperatives.

A frequent guest was Jim Blaine, the now retired CEO of State Employees Credit Union in North Carolina. It was and is the 2nd largest credit union in the country.

Jim is a master story teller. He makes his points with directness. He seeks agreement as he goes along. He wants you to share his beliefs.

The Never Ending Credit Union Challenge

Even with all of his distinctive rhetorical skills, the one assertion that stands out for me from his presentations is:

“In America today, those that have the least, or know the least, pay the most for financial services.”

From this factual foundation, he would then describe his business tactics: the non-conforming variable mortgage with every member paying the same rate, no indirect auto loans, a simple savings account, no paid advertising, etc.

While one might debate the tactics, his observation still stands as a challenge for today’s cooperative executives: what are credit unions doing about this persistent market reality for America’s consumers?

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Why the Past Matters Today

Recently I posted two blogs that lifted stories Jeff Farver, a former credit union CEO turnaround artist, wrote for his family and friends about his career.

In three multi-year workouts, two as CEO, he saved these credit unions from liquidation. He did so in partnership with the NCUA who recognized his talents and innovative approach to resolutions. For example, his Good CU and Bad CU distinction and his ability to fashion a long term plan.

Credit union difficulties in New York City are continuing front page news.

Regret Yet Contentment

At the end of his short history, Jeff added this paragraph:

One of my regrets in retirement is the loss of fellowship with my fellow Credit union CEO’s, but especially those who were problem solvers, risk takers and cooperative adventurers. As I reflect on my career, I must acknowledge how those past successes have led to my positive outlook on the future and self-esteem and contentment.

The Regret that Should Inform Us All

Today NCUA and state regulators struggle with how to resolve problem situations. The instinct is to want them to go away. Merge them so someone else with excess capital can figure out what to do. Or in harder cases, just spend money to make the problem disappear—the most expensive and destructive option of all. Moreover, members don’t vanish when a credit union is liquidated, as we see in the example of NCUA’s mishandled taxi medallion liquidations.

Jeff knew that turnarounds were not a math problem to achieve the right net worth result. Competent leadership was the key. Like life itself, effective management takes multiple paths for success and flexibility for changing circumstances.

Jeff was not the only workout road warrior for the cooperative system. Other names that come to mind then and today include: Jim Ray (now deceased), Gordon Dames (former NCUA examiner), Don McKinnon, Bill Connors, Andy Hunter, John Tippets and Steve Winninger.

And it was not just RD John Ruffin but a whole class of NCUA Regional Directors who became partners with credit union workout leaders. These senior NCUA managers encouraged turnarounds not simply ending charters. Dozens of CEOs also persevered often in the face of irrational NCUA demands to downsize. They resisted the demand to shrink until the remaining capital was sufficient to meet a net worth ratio goal, but maybe not sustainable for the long term.

The Key Success Factor in CU Turnarounds

The key success factor in resolving the inevitable problems credit unions will encounter is wise leadership. When this wisdom is lacking, replaced by panic or fear for one’s reputation, then responding effectively to problems is literally short-changed. Every NCUA  response becomes a nail to be hit with a hammer, until it disappears into the wood.

Jeff characterizes the qualities needed “problem solvers, risk takers and cooperative adventurers.” He laments their absence. He modeled these necessary capabilities. That is leaders informed by the lessons of the past and the ambition for resolving credit union challenges with sustainable solutions.

Thank you, Jeff, for your life of cooperative service. Hopefully your example will inspire others to emulate your venturing spirit.

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