Category: Local Effect

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A Credit Union Partner Speaks Up

Not every credit union needs to Merge

by Albert Howard  

,Over the past two months I’ve been hearing something that honestly breaks my heart about the credit union movement.

Several leaders at smaller, growing credit unions have told me they’re receiving unsolicited emails encouraging them to merge into larger institutions.

(I literally just jumped off a MiniBranch call with a local credit union CEO who just received an email today)

Sometimes these emails are framed as:
“Strategic partnerships.”
“Future sustainability.”
“Member opportunity.”

But in many cases, what’s really happening is much simpler.

Large credit unions are actively recruiting smaller credit unions to merge, and some of the individuals sending those emails are financially incentivized to do it.

In some cases, the incentive can be tens of thousands of dollars per successful merger conversation.

After a merger, the acquiring credit union may even bring the CEO on board to help identify and recruit the next credit union to merge. (As we have seen in a recent failed attempt thanks to the members)

I understand consolidation happens in every industry. But credit unions were built on something different.

Local leadership.
Local relationships.  
Local service.

Many of the “small” credit unions I work with are actually healthy, innovative, and deeply connected to their communities.

They don’t need to disappear.
They just need the right tools, technology, and support to keep growing.

So if you’re a CEO or board member at a smaller credit union and you receive one of these emails, my encouragement is simple:

Take a breath.
Ask questions.
Remember the mission you were built to serve.

Because the credit union movement doesn’t get stronger when independent institutions disappear.

It gets stronger when they succeed.
And there are a lot of people rooting for that.

So, to all the Small (Growing) Credit Unions out there fighting day in and day out for your members, Don’t Stop! Keep Fighting!

Be sure to reach out to Joshua Urbick, CCUFC and Doug Wadsworth who are doing some pretty amazing things!!

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The Member’s Voice On a Merger

ICCU  is an Idaho based state charter reporting $14.8 billion in total assets, serving 76,900 members via 63 branches and 2,000 employees.  In 2025 ICCU opened four new branches, two in Washington and two in Arizona. via a merger with Topcu.

CALCOE FCU, chartered in 1937, has $40 million in assets serving 4,000 members with its main office in Yakima, WA, and a branch in Moxee.  It is a strong credit union with deep local roots and a low income designation( LID).  At CALCOE’s Special Meeting on March 6, 2026, member voting closed on a merger proposal from ICCU whose main office is 345 miles and five hours driving time away.

This  long serving, successful community-owned and directed credit union exists no longer.  It is merely a branch operation now run by  the 18th largest credit union in the country.

Here’s what the members posted about the merger.

MOXEE COMMUNITY GROUP 🍻 
Brandon Roman

 January 18 

If you bank at Calcoe please get ready to vote as they are trying to merge with a different credit union. VOTE NO ON THE ICCU MERGER
Why CALCOE Federal Credit Union Should Remain Independent.
This merger permanently dissolves CALCOE. Members deserve the full picture before voting.
—

❌ No Direct Financial Benefit to Members

Members receive no payout or distribution of CALCOE’s accumulated net worth.
Net worth built by members over decades transfers entirely to ICCU.

—

⚠️ Executive Compensation Shows Who Truly Benefits

While members receive no financial benefit, only one person is guaranteed to financially benefit from this merger: CALCOE CEO Leslie Johnson.
Disclosed compensation tied to the merger includes:
Two retention bonuses of $13,600 each
A salary increase to $136,000
A long-term split-dollar benefit that could provide $30,000 per year for up to 20 years
No other member receives anything comparable. This creates a clear conflict of interest and raises serious concerns about whether the merger recommendation is driven by member benefit or personal gain.

—

🏛 Loss of Local Control

CALCOE is a locally governed Yakima Valley credit union.
After the merger, decisions will be made by a large, out‑of‑area institution.
Local accountability and member influence are lost permanently.

—

💸 Higher Fees & More Complex Policies Likely

CALCOE historically operates with lower minimums and fewer fees.
Large credit unions typically bring:
Higher minimum balances
More service fees
Less flexibility for members

—

🧱 CALCOE Is Financially Healthy

CALCOE has a higher net worth ratio than ICCU.
This is not a bailout or emergency merger.
A healthy credit union should explore alternatives before surrendering independence.

—

🛠 Technology Does Not Require a Merger

Modern banking tools are widely available through vendors and partnerships.
Many independent credit unions successfully upgrade technology without merging.
Losing local control is an extreme price to pay for services already available elsewhere.
—

⛔ Permanent Decision

Once CALCOE is merged, it ceases to exist forever.
Members cannot undo the decision if fees rise or service declines.

—

✅ Bottom Line

This merger does not benefit CALCOE members.
It does not provide a member payout. It does not preserve local control. It does not improve member ownership value.
The only guaranteed financial winner is Leslie Johnson, while members permanently lose their independent credit union.
Vote NO to keep CALCOE local, independent, and member-owned.
All reactions:

The Existential Question for America’s Credit Unions

Who benefits from these transfers of control of long accumulated member wealth?

From the member-owner’s point of view this is a leadership and institutional failure.  The merger  destroys the “hometown” local advantage that gives credit unions their competitive superiority.

The members have assessed the situation correctly.  Their leadership sold out. They will be credit union skeptics forever.   The legacy reputations and coop advantages are ruined for them.  The credit union system sustains another hit.

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What Credit Unions Can Learn from America’s Theater Industry

Just spent a week in New York City on a Road Scholar educational program about Broadway Theater.

In addition to talks with multiple production personnel and an actor,  we saw live performances of The Lion King, Ragtime and a show in preview, Marcel on the Train.  Disney’s Lion King is in its 25th season, the longest continuous performance on Broadway. An example of an innovative, instant and long standing theoretical success.

The 40 authorized Broadway stages are the peak of the theater industry in America,  a business that achieved national standing around the turn of the century.  I believe there is much to learn from  Broadway  success that is relevant for coops.

Key Success Factors For Broadway and Credit Unions

While credit unions in consumer finance and theater’s live entertainment serve very different needs, success in both fields depends on the same three factors:  collaboration, community and creativity (innovation).

From high school class plays to college drama departments to the professional stage, every theatrical production is an extensive collaboration of individuals with diverse skills.  American University’s (AU) theater department’s recent production of Oklahoma showcased this artistic foundation.

It had eleven leads or main roles backed up with male and female dance and singing ensembles of twenty members.  With the six orchestra members, the total performers seen by the audience was 37.

However the list of the creative and production teams was just as long.  In addition to director and choreographer roles, there were individuals  responsible for Solo Tap Choreographer, Vocal Coach, Fight Director, Intimacy Director, Scenic Design, Wardrobe Crew, Stage manager and two dozen more artistic support positions.

In our New York course, we learned that concept to stage can take anywhere from four to eight years for new shows such as Hamilton or Operation Mincemeat.   A revival will require a year or two depending on the production changes.

At every phase of development, the people behind the scenes far outnumber the performers on stage.  And that doesn’t include the business, university or 501 C3 non profit organizations backing the artistic undertaking.

A Community Enterprise

To mount a live theatrical performance requires an artistic community plus an external audience (market) hat will be interested in the play’s themes  and become supporters.

Oklahoma was Rogers and Hammerstein’s first collaboration.  It premiered in 1943 at the height of WW II.  The musical was set in 1905 right before Oklahoma achieved statehood.  The musical reflects a moment when community was essential for survival. Daily life required cooperation, shared labor and mutual dependence.

One song that illustrates the tension between individual  and community well being is The Farmer and the Cowman.  It includes this democratic assertion, I don’t say I’m no better than anybody else; but I’ll be damned if I ain’t just as good. 

(https://www.youtube.com/watch?v=31BI33T9yTI)

When Oklahoma first opened the  the public was living in an era of uncertainty and collective sacrifice.  Oklahoma offered a vision of America built on shared responsibility and thriving community interaction, not personal dominance.

The third factor in theatrical success is creativity.   While the public in the Tony awards will celebrate an individual’s role, the final result is always a collaborative effort that has resonated with a community of followers and critics.

A theatrical success is timely, with events and characters that resonate in the present, as well as timeless appeal across generations.   Oklahoma captures the buoyant optimism that is America in its opening song, O what a Beautiful  Morning.  It includes a memorable phrase of boundless hope: all the sounds of the earth are like music.

(https://www.youtube.com/watch?v=Ks5TgRRhqvw)

Relevance for Credit unions

Both cooperatives and theater emerged as industries around the turn of the twentieth century.  One spoke to the need for economic justice; the other to the growing search for a national artistic identity.

Both of those needs are present today, if not more so. The same organizational capabilities that created these successful enterprises are still essential today:

  • How are the many elements of internal and external collaboration brought together?
  • What is the community whose needs are  the focus of your efforts?
  • Is the message timeless, created for the present but also expressing enduring values?

Credit unions and theater come in many sizes and complexities.  Both are much more than businesses pursuing financial sustainability.  They uniquely rely on and energize local communities. In an era of social divisions and individual isolation, Oklahoma shows us how community is formed, challenged and celebrated.

In Saturday’s final performance, the audience of AU students, friends and family, applauded and screamed with joy for what they had experienced.  From a play created three generations earlier.  And whose message is ageless.

In the show’s finale  you can feel once more the exuberance of this unique creative collaboration. Here’s hoping your performance today will leave your audience feeling as good!

(ttps://www.youtube.com/watch?v=ltQIR5j9984)

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A Merger Explained Simply

Yesterday I posted a 3,000 word analysis of the proposed merger of Spirit Financial in Levittown, PA with Credit Union 1 headquartered in Lombard, IL.

Included in the analysis are the reactions of two Spirit members from NCUA’s website:

Member Brian Stuart comment:   I am voting against the proposed merger of Spirit Financial Credit Union with Credit Union 1. Credit Union 1 is based in Lombard, Illinois. All of its branches are in Illinois. There is no advantage to the Spirit Credit Union member to merge with Credit Union 1. Merging with Credit Union 1 would take away the local Bucks County focus of Spirit Financial Credit Union, which should be its mission. . .

Member Joann Glasson:  As a long-time member of Spirit Financial Credit Union, I am sad to see this merger occur when the CD rates are so much lower at Credit Union 1 and the loan rates are so much higher at Credit Union 1.

We are retirees with large deposits at Spirit that we will be forced to move if the merger is approved. This merger is not a service to the members of Spirit Financial Credit Union

Due to the article’s length,  I sent the following summary  to  the press:

$9 MILLION IN LEVITTOWN COMMUNITY WEALTH TO BE GIVEN AWAY – CREDIT UNION CEO WOULD RECEIVE $4.4 MILLION

Spirit Financial Credit Union, a strong and profitable 72-year-old community institution, is being absorbed by Credit Union 1 of Illinois (pending a member vote) and in the process, Levittown’s families will lose nearly $9 million in community-built capital, while Spirit’s CEO personally will walk away with more than $4.4 million in payouts and benefits. Member balloting on this proposal ends Dec. 22.

Spirit Financial isn’t struggling — it is thriving:

  • highly capitalized,
  • financially stable,
  • outperforming peers,
  • and the only locally headquartered depository institution serving Levittown.

Yet in a quiet, opaque merger, every dollar of the members’ accumulated equity of approximately $9 million will be transferred to an out-of-state institution for free:

  • No payouts to Spirit Financial member-owners
  • No equity retention
  • No bonus dividend
  • No local control
  • No sole ownership

Levittown’s families built this wealth, and now it’s about to go away.

Meanwhile, the Spirit CEO who championed the merger receives:

  • A massive cash bonus at closing
  • A guaranteed five-year employment contract
  • Incentive packages to solicit more mergers
  • A fully vested multimillion-dollar retirement package, all totaling more than $4.4 million in personal enrichment.

Community wealth will be removed, assimilated, and relocated, while ordinary member-owners will be left with nothing.

Control of Levittown’s financial legacy will shift to a board in Illinois that is unreachable, unelected, and governed by mechanisms that dramatically limit member democracy.

This is not an isolated incident. Credit Union 1 has initiated over 20 such mergers in just 3½ years, importing hundreds of millions in community assets and capital and using merger accounting to mask weak operating earnings while expanding its asset base by taking over independent, strong local credit unions.

This development raises urgent public questions:

  • How can a member-owned institution be sold without any benefit to its owners?
  • Should executives be allowed to personally profit from the liquidation of community capital?
  • Where is regulatory oversight when cooperative ownership is silently dissolved?
  • Which Pennsylvania credit union will be targeted next?

If this were a stock corporation or public company, shareholders would be compensated, and regulators would not tolerate uncompensated transfer of equity. But cooperative members will receive no payout, no recourse, and diminished legal standing.

 

 

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Thrivent Bank’s Post Credit Union Strategy

On June 1, 2025 Thrivent FCU converted to a state issued Industrial Loan Chatered (ILC) bank with FDIC insurance.   There are only 24 such charters  operating in the US,

The process took three years and had to be approved by the credit union’s member-owners with at least 20% voting on the change.. The conversion resulted in the full payout of the members’ collective equity, plus a bonus dividend on shares.  The full details are reported in the post Thrivent Members Approve Sales to a Bank. 

Thrivent Bank’s Sponsor

In its June 2 launch announcemnt, Thrivent Bank reported $1.09 billion in total assets.  It is a wholly owned subsidiary of Thrivent Financial.

The parent company,Thrivent Financial for Lutherans,  is a member-owned, fraternal benefit society.  It is a non-profit , managing over  $193 billion in administered assets, with a tax exemption based on religious affiliation.

According to Thrivent Financial’s 2024 Annual Report, it holds $18 billion in capital and serves 2.4 million members. Its primary products inlude insurance, annuities and health care programs.  The Report has statistics on its community contributions and volunteer efforts.

The parent company’s CEO said the new charter: “combines our legacy of trusted financial advice with a modern, client-first banking solution. Thrivent Bank will help us build relationships with younger clients earlier in their financial journeys – who we can then serve throughout their lives.”

The New Bank’s Strategy

In a November 12, 2025 interview with a Banking Dive reporter, the CEO outlined his focus. The conversion “aimed at broadening the financial institution’s reach nationally and attracting new clients.”

Located in Salt Lake City, the bank is digital only with no branches.

The CEO. Brian Milton’s value proposition is to combine its digital platform with  live personal advice and  the financial expertise of the Thrivent  organization:  “everything that we see out there seems to be having to pick one of those two,”

The new web banking platform is still under construction.   The current site provides a fairly standard listing of consumer services.  Savings rates would appear to be at the lower end of the market.  Auto loan rates are based on a matrix of model year and loan term.

The bank’s business financial services  appear targeted to the non-profit sector:

It takes organization, planning, passion and vision to run a business, church, school or charity. It also takes the right financial institution to help you navigate the nuances of business and nonprofit banking. Whether you’re a new or established business, church or foundation, business banking tools from Thrivent Bank will help you every step of the way.  

The one unique prodict focus would be its specfic contact center for studen loans.

A Strategy Combining the Best of Credit Unions and Banking

The web site is still under construction so there is not a lot to see at this time. The CEO stated the bank would rely on ouside vendors to meet its technology (presumably digital banking) solutions.

The banking charter gives the possibility of national reach for younger geneations of retail customers. Those at the beginning of their financial lives may not be the sponsors prime target for insurance products today.  Rather loans may be their first financial need along with basic transaction services.

The bank’s differentiation will be personal service: “We’re not going to be putting bots in front of clients, The human piece is extremely hard to replace.”  This approach is called “purpose based advice.”

The de novo has a lot going for it.  A 120-year old non-profit financial sponsor-owner with deep pockets; the experience and start up relationships from the credit union; and a philosophy of service seeking life-long member relationships.  It has an affinity client base from the parent as an initial focus.

The critical question is whether a digital only delivery strategy can effectively compete with local, personal credit union service centers staffed with experienced personnel.  Being present in and an active part of the communities served is both the foundation and special advantage of credit unions.

Digital offerings for most credit unions, compliment but do not replace  the option for in-person service.  And community presence and involvement. In the few cases where digital-first is the primary go to market effort, those credit unions are struggling compared to the performance of their more grounded peers.

The Thrivent Bank is very unlikely to fail.  The real question is how successful the digital only strategy will be? And at what cost to create a clear value advantage for users?  Especially in a virtual world where options are just a click or AI search away?

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

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

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

An Impact Maker Counsels a Member Not to Make a Loan

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

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

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

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

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

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

A Member’s First Credit Experience

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

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

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

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

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

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

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A Departing CEO’s Lament

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

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

A Course Change By a Credit Union CEO

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

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

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

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

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

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

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

Change. Something has to change.

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

Or…

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

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

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

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

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

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

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

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

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

See you then.

(James McBride, CEO, Connects Federal Credit Union)

 

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Should My First Military Home be on the National Historic Register?

Anerica has a housing shortage.  Many different solutions are being offered.  During my initial assignment to the Navy Supply School in Athens, GA, the only available housing on arrival was a trailer home.

My wife who was seven months pregnant and I lived there for several months until base housing became available.  Little did we know that we occupied, albeit briefly, an example of America’s housing creativity from WWII as explained in An Unexpected Idea for Preserving America’s Mobile Homes. 

This ability of trailers to quickly mobilize wherever and whenever needed was again on display following the passage of the GI Bill. Look at aerial photos of postwar college campuses; chances are you’ll see rows and rows of trailers nearby, providing on-demand housing to new students and their families.

Today there are over 21 million manufactured housing homes.  Some are temporary, but most are permanent residences.

Home to 21 Million Americans

Recently the digital journal Next City posted a long article about how manufactured housing/mobile homes could become an integral part of solving America’s housing shortage.  Here are the opening paragraphs:

Punctuating the country is an unknown world of mobile home parks that are often seen but rarely recognized. These communities are everywhere: scattered along highways, in urban crannies in California, Florida, and the Sunbelt, on exurban territory from the Northeast to the Pacific Northwest, next to factories, farmland, mines and military bases. Blink and you’ll miss them. The National Register of Historic Places certainly has.

There is not a single mobile home or mobile home park in the National Register — a glaring omission that, if addressed, challenges the preservation field to join the fight for affordable housing.

Over the last hundred years, mobile homes have housed millions as and where needed. Today, they are home to 21 million people, or about one in every 16 Americans. They are legitimate and permanent parts of the American landscape. Even so, city officials, historians and preservation professionals have largely disregarded mobile homes, and their residents, as aberrations.

A Role for Credit Unions?

The article provides the history of the transitiion from “trailer” to mobile homes to manufactured housing and notes:

The truth is, mobile homes are not very different from the average suburban home. The vast majority do not move once they are sited, nor do their residents. Some 71% of mobile home residents own their homes, higher than the national homeownership rate for all forms of housing. The biggest difference is their affordability: On average, a new site-built home costs four times as much as a new “manufactured” home.

These manufactured home estates have become an attractive investment for private equity:

In recent years, some of the largest private equity firms, including Blackstone, Apollo Global Management, and The Carlyle Group, are making big “recession-proof” bets on mobile home parks. Between 2014 to 2022, investors purchased 800,000 lots, representing nearly 20% of all mobile homes — double the rate of private equity ownership of apartment units.

Some credit unions have been active in leding to this sector for years.  Credit Human in San Antonio developed a national speciality with manufactured housing sellers for financing these purchases.  They report holding 22,329 loans totaling $1.459 billlion at yearend 2024. These loans however, are different from the standard site-built, stand alone residence..

What is unique to mobile homes is that they are still classified as “chattel,” or moveable personal property — such as a car — rather than real estate. This means that not only do mobile homes decrease in value over time, but that residents, even those who own their home outright, must still pay rent on the land underneath.

And the private equity trend has brought new problems besides the traditional challenges of zoning and site ownership:

By increasing both lending and rental rates, investment firms are squeezing the vulnerable at every turn. As private equity moves in, costs and delayed repairs pile up. Parks purchased by investors have seen rents and fees balloon. Evictions have increased, as has wholesale destruction to make room for redevelopment. . .

One solution the article referenced is cooperative ownership.  However, the Next City article proposes putting long term mobile home locations on the National Register of Historical Places.  The idea in brief:

To potentially be listed in the National Register of Historic Places, properties must meet certain criteria, including historic significance to a time at least 50 years in the past. Given their contributions to mid-century American history, the argument for the significance of older mobile home parks is easy to make.

But the designation is not easy to achieve.  In the meantime credit unions can help sustain this housing option by financing and supporting the traditional buying and selling process that underwrites all home ownership.

The immediate opportunity would be to visit the mobile home sites in your community, talk with local dealers (if any) and become familiar with the financial needs of the residents.   It is a national need with local markets-a perfect fit for credit union solutions.

I’d be interested in examples from credit unions that have experience serving these members and their communities.

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46 Credit Unions Close their Doors in Q 1 2025

Forty-six credit unions managing over $3.7 billion in assets cancelled their charters in the first quarter.   The credit union’s data is from December 2024 call reports.  Because they closed their doors, the credit unions filed no data for March 2025.

This total of closings is much higher than the 35 mergers NCUA reported in the first quarter.

The 256,000 members with with $2.4 billion in loans, have now lost their own institution some with  histories serving generations.  List with loan totals.

These credit unions ranged in size from the $560 million LA Financial to as small as $3,000  Asbury FCU in DC. This pdf with ROA and net worth is shown from largest to smallest by assets.

Not Financial Failures

On this listing, the weighted average net worth of the group was 10.7% at December.  Many had equity ratios much higher than this.  Two had net worth exceeding 30% including Gibbs Aluminum (KY) at 33% and Telco Roswell New Mexico at 34%.

Only 7 had a net worth ration below the 7% well- capitalized benchmark with the lowest two at 4.9% and 4.2% of assets. Six of these had negative ROA’s in 2024 but all were still solvent.

If these are not financial failures, why were the charters ended, largely by not entirely, via mergers?

Some would explaine that this is just the “creative destruction” that economists describe as an essential outcome from competition in a capitalist market system.  Underperformers are forced out of business and replaced with better options.  This is a necessary and healthy culling that makes capitalism strong, innovative  and prosperous for the greater community.

While there is an element of truth in this dynamic, cooperatives are supposed to be an alternative to the winner takes all mentality of market competition.  These coops are long standing with charters that go back over 100 years in some cases.

Two Internal System Weaknesses

I would suggest that these charter failures, and they are just that, of financially sound firms results more from cooperatives’ internal shortcomings, not external competition.

One critical deficiency is the lack of system support for some of these smaller credit unions who have decided to give up.  Surrendering charters versus adapting to new opportunities costs the industry between $100,000 to $500,000 each time a charter is lost.

Those amounts are the range of donated capital NCUA now requires for chartering a new credit union.  These 46 charters have a total “market” value as much as $23 million at the higher required capital level.  For example, Arise Community CU opened its doors on Juneteenth 2025 with over $1.0 million in capital donations.

New charters are extremely difficult to achieve with NCUA approving only 2-4 per year.  It would seem in everyone’s best interest, but especially leagues, CUSO’s, vendors and others supporting coop options  to find ways to preserve or transform existing charters to those willing to take the reins of leadership.  Press reports have said NCUA has over 90 new charter requests in various stages at this time. This suggests public interest in coops is still widespread.

Benign Neglect?

A tiny example of this system weakness, or neglect, is the smallest credit union on the list, Asbury at $3k and 100% capital.   The 100% net worth suggests that the credit union  has been self-liquidating for some time.  The credit union still has a web presence via a third party.  It was not invisible.

More tragically when one looks up Asbury’s history, the credit union was chartered in 1945–it is over 110 years old and insured by NCUA in 1972.  Virtually invisible and surviving, but  ignored by the system that created it.

The More Common Deficiency: Leadership Failings

The second largest credit union failure is NextMark FCU (VA) with $550 million in assets and 16.3% net worth.  The CEO and board requested members approve a merger with Apple FCU, which took place in the first quarter.

The failure of this long-time, financially well-off and large institution illustrates a second aspect of the industry’s self-inflicted errors.  There was no compelling financial, business or other shortcoming motivating this charter closure.  The CEO Joseph Thomas had served as President/CEO since October 1994 a period of 30years and 4 months before becoming Executive Vice President at Apple via the merger he orchestrated.

During his thirty years as CEO Thomas also served on many industry organizations. These positions include: a CUNA board member for 8 years; a board member of CUMA a DC mortgage CUSO for 22 years; Board member and immediate past chairman of the Virginia Credit Union League for 12 years; board member Worldwide Foundation for Credit Unions 7 years to the present; and board member for the World Council of Credit Unions, 5 years. also continuing.

NextMark gave Thomas a platform and standing to aspire to these positions  of wide spread credit union national and worldwide  responsibility. But now this opportunity and potential service paths are closed.  There is no successor CEO asThomas pulled up the ladder he climbed to participate in these other opportunities.  The independent charter ceased operations.

Mergers such as this destroy cooperative professional and volunteer leadership roles in communities, within the credit union system, across the country and, in this case, worldwide.  Fewer coop leader positions mean fewer voices and examples of professional excellence representing credit unions.

It is at best ironic that those who seemed to have benefited significantly from their CEO leadership role, would close this path that was opened for them.  What kind of leadership perspective did he bring to these other system responsibilities?

But this tragedy goes further than the  opportunities for credit union volunteers and professionals in their communities and beyond.  The following public comment is one member’s response to the merger proposal. It clearly shows that members know this kind of ending is not why credit unions were founded.

Her description is one of betrayal, not just of the cooperative principles, but moral failings by those with fiduciary responsibility to the member-owners.  Here is her perceptive  description of why this merger is so tragic and wrong not only for these members, but also for America’s coop system (subheads added).

I recognize that the merger is likely a foregone conclusion, and the number of votes cast by members will be minimal.

My experience with the NextMark Federal Credit Union dates back to 1977 when it was known as the “Fairfax County Employees Credit Union.” Over the following 20 years of membership in the Credit Union and employment with the Fairfax County Government, I served several years as a member of the Credit Committee and the Supervisory Committee.

The general concept of a credit union, combined with a defined field of membership, the value of working toward the common good of the members, and loans based on character, were central to the success and satisfaction of the credit union members. The credit union grew, as did the Fairfax County employee base.

A Change of Focus

At some point in the late 90’s or early 2000’s, the field of membership expanded in scope, the name changed to the commercial generic “NextMark” and our credit union began to resemble a commercial bank, with limited on-line offerings and variable customer service. Nothing terrible, just a move far from the underlying values of the credit union movement.

The specific observations that I believe should merit regulatory review, are the substantial financial incentives offered to several key staff members, contingent on completion of the merger. The amounts seem very high, but of greater significance is that these payments are contingent on the merger, which these key staff members are urging members to approve. I am aware of nothing that casts any doubt on these key staff members’ sound character or integrity.

Gross Conflicts

The issue is a gross conflict of interest created through this incentive process. These senior staff and volunteer members have a fiduciary responsibility to the credit union members, including advising on significant business decisions and implementing structural changes, such as mergers. The existence of contingent incentive payments for completion of the merger would seem to conflict with the fiduciary responsibility to the members. It would seem that a more sound approach might be to delay the negotiation of pay and benefit incentives until after the membership vote.  

Old Fashioned Thinking

Maybe everything is fine just as it is, and such incentives are likely commonly accepted in the commercial banking and business arena. Credit Unions are supposed to be a little different – although that may just be old-fashioned thinking.  

End comment.

A final note on this merger:  Senior staff and the CEO received according to the Member Notice “pay adjustment distributions to meet the continuing credit union’s salary bands, long term retention bonus, incentives already established, deferred compensation benefits, or severance opportunities” totaling almost $900,000.

The members received a $12 million bonus dividend for approving this combination and free transfer of their $409 million in loans and remaining equity to another firm.  How might these resources been re-invested in the credit union for members’ future or even seeding a dozen or more new coops?

The credit union cancelled its future and distributed a token portion of its value that members created  to be paid forward to benefit future generations.

Can a coop system with such behaviors routinely approved at all levels, ever hope to survive in the future?  Should it?

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A CEO on Leadership and Legacy

I received the following from a credit union CEO  reacting to recent examples of mega-mergers.  The credit union’s market approach is clear:

From the Credit Union’s Website 

Why eat at a local restaurant? Why support your local non-profit? Why help out a neighbor? Simple: you care about your community, get better service from people you know, and want to feel good about the way you spend money. At our credit union, you’re a member, an owner, and a participant in a local, not-for-profit financial cooperative. Our cards look pretty awesome, too.

His Comments On Mergers

While I’m saddened by the loss of credit unions in number, I also believe each CU must do what’s right for them.  However, because the reasons given for these recent mega-mergers are fairly boilerplate no matter the size, I suspect that $20b won’t be “enough.”

As a CEO of a smaller shop, the thing I find scratchy is the tendency of some larger shops to take an imperialist posture combined with hubris. As they say in parts of the south: You ain’t all that.

During a multi credit union event hosted locally,  a rep from a larger shop told one of my star employees, “you know, credit unions your size are going away.”

Size Is Not What Members Seek

The thing is, a credit union at $20b is still a smallish bank. In my market, I have BOA, Wells, Chase, etc… Who cares what size you are – just don’t be a jerk.

I think the big shops need to get over themselves and, quite frankly, some little guys need to quit complaining about how hard things are.

My immigrant grandfather opened a restaurant 75 years ago and it’s still going strong. Business has always been tough! When people use that excuse, I always think that the real problem is a leader who can’t rise to the challenge rather than the challenge is too great. Ego won’t allow a leader to admit they might be the problem.

A Legacy, Not a Payday

Obviously, merger has also become a retirement plan for many…and that stinks. My goal: when I retire, pass the baton to the next gen…I’d rather have a legacy than a fat payday.