The Extraordinary Advantage of Local

IN 1973 a critic of mainstream economic thought was published in  Small is Beautiful: A Study  of Economics As If People Mattered by E. F. Schumacher.

The author espoused a principle that small, appropriate technologies, policies, and polities were a superior alternative to the accepted ethos of “bigger is better”.

His thesis is the exact opposite of the forces driving market capitalism   In a competitive economy firms strive for market  dominance to achieve  monopolistic-like power to better control  the organization’s financial outcomes.

Schumacher advocated for a  “persons-first” or humanistic economics as opposed to contemporary theories which emphasized institutional financial success over human well-being–sometimes caricatured as trickle-down economics.

In the same decade of the 1970’s, active credit union charters reached a peak of nearly 22,000.   Some saw credit unions as an example of the book’s relevance.

While the author’s critique may have been on point, I believe his alternative approach was insufficient.  For the antidote to overpowering corporate influence is not small, but local.

What Local Enables-Growing Big by Staying Small

Local does not necessarily mean small.  One of the geniuses of the business model developed by the $50 billion asset State Employees Credit Union North Carolina (SECU) was the ability to grow to become the second largest credit union by staying local, that is acting small.

This “local” strategy required providing authority and responsibility for the credit union’s operations all the way down to each branch.  Loan decisions, collections and business priorities were set at the branch level.  Each branch’s connections to their communities were enabled through dozens of local advisory boards, member loan reviews,  and  engaged local community relationships.

Each branch operated as a “small” credit union  enabled by central funding and resources including back office transaction and delivery system support, and an ATM network and call center.   The result was 85 years of continuous growth creating an employee culture based on “doing the right thing” for the members.

This approach continues in other credit unions.  In an article on economic empowerment in a new area,  Golden 1 Credit Union’s  Erica  Taylor, VP for Community  Relations, summarized  their approach in  a disadvantaged community  as  hyper-local and multipronged:

If all goes well — and the concentrated, hyperlocal investment works in Del Paso Heights — Golden 1 hopes to partner with other communities to replicate the initiative throughout the state.

“One of the biggest lessons learned is there is no one-size-fits-all solution,” Taylor says. “Each neighborhood, state, or municipality is going to have unique needs. It’s important to start by asking what those needs are and listening.”

Branch Expansions Continue

I believe this advantage is also reflected in the continuing expansion of credit union branches.   As reported yesterday in a review  of midyear data: ” A CU Times analysis of NCUA data released Sept. 7 shows the nation’s 4,780 credit unions . . .had 21,835 locations as of June 30, having added 53 since March.”

Another number from the article: The average credit union branch in June served 6,370 members, up from 6,335 in March and 5,828 in December 2019.

Presence matters.   Branches are still the major investment for demonstrating a credit union’s relevance for members in a community.

The  Decline of Local institutions

It is often difficult for small organizations to survive alone, without the support of external expertise.  Especially in a community or section of a city that is economically stagnant.

When one looks at long serving organizations that continue to thrive locally such as the Boy/Girl Scouts, college sororities/fraternities, the PTA, national food franchises, the Catholic church and many other successful institutions, the formula is local leadership and centralized common support.

The following  excerpt is from an interim pastor whose responsibility was to close a local church which could no longer sustain itself.  In this summary event, he laments the loss of this “local” presence:

It is hard to imagine another place where this particular group of people would have gathered together for a common purpose. Eugene Peterson reminds us in his book Subversive Spirituality:

“The work of salvation is always local. Geography is as much a part of the gospel as theology. The creation of land and water, star and planet, tree and mountain, grass and flower provides ground and environment for the blessings of providence and the mysteries of salvation … nothing spiritual in our scripture is served up apart from material … this street, these trees, this humidity, these houses. Without reverence for the locale, obedience floats on the clouds of abstraction.”

Imagine being told you can no longer go to a place that you returned to every day for decades, a place you returned to not because you had to, but because it was where you wanted to be. But now it is going to be closed, sold, and, depending on the buyer, it might be torn down and turned into an apartment complex or a storage facility.

This is the same loss that occurs when a credit union merges. Leadership and focus move away from long standing community ties.   It is an  economic, emotional and existential loss for members and their community.

A current interpretation of Schumacher’s “humanistic economics” is George Hofheimer.   He worked for Filene and CUES for decades and is now an industry consultant.   He wrote Banking on a Human Scale to describe how credit unions build relationships, implementing the advantage of local solutions.

His thesis:  “In a world dominated by scale and technology, smaller community based  credit unions and banks have the chance to serve more people and serve them better by making banking more human.”

SECU turned the widely practiced financial growth model in financial services of a centralized, top-down command and control  on its head.  It grew by staying local in focus, execution and relevance.

It implemented the oldest rule of political success which is “all politics is local.”  This reality is how people see the impact of their representative’s decisions on their lives, jobs and communities.  Are they in touch or a remote elite?

Credit unions, as democratically designed, have this same political capacity which when enabled, no competitor can match.  Have you ever tried to oppose a Capital One branch closing for example?

The founder and current CEO of Nvidia, the fastest growing technology stock this year, has a philosophy described by one employee: “He is big on staying as small as possible while still doing big things. “

For credit unions I would insert the word “local” for small.   Member-owners can see how their money is being used and feel their participation matters.  SECU’s experience shows how powerful it is to be large and local at the same time.  Scale, branding and technology cannot defeat the entrenched advantages of community pride and loyalty.


Going for the Green at USC

A source of federal funding in the Inflation Reduction Act will soon be making grants to accelerate solar energy investments.

The example of a credit union’s preparation to access these funds is from Next City an online reporting blog.

The case study by Bianca Gonzalez was posted this week and is  edited for brevity.

A More Equitable Approach to Financing Our Green Future 

The USC Credit Union, a certified CDCU and CDFI, recently developed several green lending products that make emission-reducing energy upgrades more equitable for communities near the University of Southern California campus in South Los Angeles and East Los Angeles.

In the 2021 Inflation Reduction Act (IRA), the Greenhouse Gas Reduction Fund creates the opportunity for CDCUs and CDFIs to take on more risk and bring emission-reducing and cost-effective energy products to communities that need them most.

The Act provided the Environmental Protection Agency with $27 billion for the Greenhouse Gas Reduction Fund. Through competitive grants, the fund will support financing clean energy and climate projects that reduce greenhouse gas emissions. This program will also meet the requirements of the Justice40 Initiative that 40% of the benefits are for federal investments to disadvantaged communities.

For example a 2021 study on US solar adopter patterns  shows that solar adopters tend to be higher income. In 2019, the annual median solar adopter income was about $113,000, while the overall U.S. median income was $64,000. The difference in annual income between solar adopters and the general population demonstrate that lower-income communities need equitable solar upgrade solutions.

Many USC Credit Union members have been left behind by traditional financial institutions, disproportionately impacted by climate change, and underserved due to a lack of accessibility for Hispanic and immigrant populations. These  factors highlight the need for green lending in low-income Hispanic communities.

USC Credit Union’s Preparation

“South Los Angeles in East Los Angeles are now primarily Latino communities,” says Gary Perez, CEO of USC Credit Union. “Several decades ago, the South Los Angeles area was primarily African American. So as the racial makeup changed, we had to understand more about the needs of the Latino community. We turned to Juntos Avanzamos for counsel.”

Juntos Avanzamos is a designation for credit unions committed to serving Hispanic and immigrant consumers. USC Credit Union became a designated Juntos Avanzamos CDCU  by Inclusiv, a CDCU membership organization and CDFI intermediary.

“We had to understand more about the first and second Latino generation members,” Perez says. Despite how convenient remote banking tools are, “the consensus is that these individuals prefer to bank in person. Why would these people prefer to commute to a bank? One hurdle is that they can’t access the same tools that English preferred or English native people can. So we’ve developed a new bilingual mobile banking system.”

With accessibility tailored to the Latino community and grants from the Greenhouse Gas Reduction Fund, USC Credit Union could  take more risk and loan to  members with a wider variety of financial circumstances.

The grant funding “will be used as loan loss reserves and allow us to lend to credit-challenged or income-challenged individuals who may have nontraditional sources of revenue,” Perez says. “We believe this use of IRA funds will do more for the inner city community.”

 Neda Arabshahi, Vice President of Inclusiv observed that more than financial products are necessary. “They need to be paired with technical assistance, training in how to vet contractors, build partnerships with  clean energy services and education of consumers,” Arabshahi says.

Perez and his USC Credit Union team completed the Virtual Solar Lending Professional Training and Certificate Program.  The course was developed by Inclusiv and the University of New Hampshire (UNH) Carsey School of Public Policy.

“Those who benefit most from lowering their cost of energy are those  struggling with the high cost of housing here in Southern California,” Perez says. “By providing accessible solar financing, we can  lower the energy costs for those individuals and allow them to maintain households in this expensive L.A. market.”

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

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

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

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

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

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

Three Lessons

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

First Lessons from a Credit Union’s CUSO’s Public Offering

Within 90 days of Safe Harbor, Colorado Partner Credit Union’s CUSO subsidiary becoming a public company, the December 2022 financial result showed a negative retained earnings of $39.7 million.

The company’s stock has fallen from a peak of over $10 per share in October 2022 to close at $.39 yesterday.  Auditors have raised a going concern footnote as a result of its December 2020 financial position.

Partner Colorado Credit Union the CUSO’s founder and owner, has restructured  its initial sale terms of $185 million in cash and stock.  This resulted in PCCU recording a $44 million dollar loss in the March quarter, to offset the gains from the sale recognized in the 4th quarter of 2022.

Except for ongoing revenue from its operating service agreements with SHFS, the credit union has yet to receive any payments from this sale closed in September 2022.

How could such an initial optimistic announcement turn south so quickly?

No one knows how this start up effort to transform a private, relatively small Fintech front-end platform for introducing cannabis related businesses (CRB’s) to financial partners will turn out.

However, CPCU’s effort to tap into the public market’s fervor for “Fin Tech-Cannabis” related startups has  multiple lessons for credit unions. One can see possible parallels in the continued interest and fund raising today in credit union for FinTech labeled businesses.

Is the Startup Scalable?

One topic is  scalability. Safe Harbor was started in 2015 with the full support of all of CPCU’s operational capabilities, especially branches.

The credit union offices were able to open accounts, receive cash deposits, make loans and provide transaction services.   Is this geographically based start up model scalable outside the jointly operated locally-incubated context?

Is the compliance process and technology support so unique, that other local financial institutions and FinTechs would be unable to develop their own capabilities?

“At the end of last year, there were 168 credit unions, 479 banks and 126 non-depository institutions that were serving marijuana-related businesses, according to FinCEN.”  (CU Times)

No Free Market

One observation at this stage is that there is no “free” market.  The credit union is learning that a private firm using the SPAC process has to “pay to play” to become publicly traded.

Reviewing some disclosures form the May 2023, 10-Q SEC filing suggest why this is the situation.

The first is to note that this sale was structured as Safe Harbor buying out the NLIT SPAC, not the reverse as suggested in the $185 million announcement.

Secondly it is impossible to tell which investors got paid what in this transaction.  Certainly the brokers, accountants, lawyers and other facilitators were paid fees.  But which SPAC shareholders were paid what return?

What is known is that the seller, CPCU, has not received anything from the sale.  Moreover It has converted a significant amount of the debt portion to stock and extended the much reduced debt payments further out.

The new entity’s first major transaction was to acquire in November 2022 another cannabis business for $30 million in  stock and cash.  The tangible assets in this acquisition were minimal.  The contribution to immediate earnings, unstated. It would seem to be a transaction negotiated  before the full financial impact of the CPCU sale was known.

SHFS continues to compare in its filings the current financials with its pre-public  quarterly results. This previous financial performance, under the credit union’s auspices, reveals a very modest business, albeit, with a positive financial bottom line.

The Impact on CPCU

The credit union appears well capitalized.  The cannabis business relationships from SHFS are important. About $35-40% of its deposit base appears to be from CRB’s-much probably  held in share draft accounts.

Prior to the public sale, CPCU recorded its CUSO investment at $8.0 million.  To date the credit union has not received any of payments, including the $3,143,388 in cash and equivalents held by Safe Harbor prior to the sale.

As stated throughout the SEC filings, CPCU is the SHFS’s primary banking partner.. “Currently the Company substantially relies on PCCU to hold customer deposits and fund its originated loans. As of this time, substantially all of the Company’s revenue is generated by deposits and loans hosted by its PCCU pursuant to various services agreements.

Concentration limits for the deployment of loans are further categorized as i) real estate secured, ii) construction, iii) unsecured and iv) mixed collateral with each category limited to a percentage of PCCU’s net worth. In addition, loans to any one borrower or group of associated borrowers are limited by applicable National Credit Union Association regulations to the greater of $100,000 or 15% of PCCU’s net worth.  Page 27

Further disclosures show that the credit union has limits on the amounts of total CRB related loans it will hold as part of its service agreements:  PCCU’s Board of Directors has approved aggregate lending limits at the lessor of 1.3125 times PCCU’s net worth or 60% of total CRB deposits.

CRB deposit limits: (page 27) Under the Support Services Agreement PCCU will continue to allow its ratio of CRB-related deposits to total assets up to 65% unless otherwise dictated by regulatory, regulator or policy requirements. Actual CRB deposits  at March 31, 2023  $214 million and $161 at December 31, 2022.

CPCU’s CEO and CFO are members of SHFS board; the credit union owns 55% of the voting stock from the restructuring.  The credit union’s current operations certainly benefit from SHFS’s clients apart from what may be received from the sale of the CUSO.

The Transparency Opportunity

SHFS’s SEC filings provide many details of its business history and financial twists and turns. The latest 10-Q filed May 15, 2023 can be found here; and the definitive proxy statement  Schedule 14 A, filed April 23, 2023 for the firm’s annual meeting is here.

Two financial questions are partially answered in these documents.  If the SPAC held $100 million in cash, how did the working capital become so depleted by yearend?   How did the SHFS end up with  over $39.7  million  in negative retained earnings at December 2022  requiring the complete restructuring of the transaction with CPCU?

Below are some excerpts from these documents.   The story is complex.  There is  not a single narrative point of view as the filings show different elements of the financials in various footnotes.

I have selected some to illustrate  the information available.  There is both quantitative and qualitative (business risk factors) information provided.

One positive note that may bode well for the future is that Safe Harbor’s web site and links are one of the most comprehensive examples of transparency I have reviewed.  The stock valuation information is detailed both currently and historically.  All of the required SEC and financial reports can be accessed on line at SHFS website.

On its investor relations page the firm makes this commitment: Safe Harbor Financial (Nasdaq: SHFS) seeks to enhance shareholder value not only through exceptional business performance and practices, but also through responsible and effective communication with its shareholders. The latest company information relevant to the individual and institutional investor includes stock price and history, upcoming events and presentations and financial documents. Safe Harbor Financial trades on the Nasdaq under the ticker symbol SHFS.

That is an example credit unions should totally embrace as well.

Selected Excerpts from SEC 10-Q filings

(emphasis added)

From Note 3, the Business Combination detailed in Note 1 above was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, NLIT  (the SPAC) was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of SHF issuing shares for the net assets of NLIT, accompanied by a recapitalization.

For tax purposes, the transaction is treated as a taxable asset acquisition, resulting in an estimated tax basis Goodwill balance of $44,102,572, creating a deferred tax asset reported as Additional Paid-in Capital in the equity section of the balance sheet as of the date of the business combination.

In November, 2022 SHFS acquired Abaca together with its proprietary financial technology platform in exchange for $30,000,000, paid in a combination of cash and shares of the Company.

The November press release stated:  the acquisition increases Safe Harbor’s customer base to include more than 11,000 unique depository accounts across 40 states and U.S. territories; adds Abaca’s fintech platform to Safe Harbor’s existing technology; increases Safe Harbor’s financial institution client relationships and access to balance sheet capacity to five unique financial institutions strategically located across the United States ; increases Safe Harbor’s projected monthly revenue by approximately 40%; increases Safe Harbor’s lending capacity; and nearly doubles Safe Harbor’s team, adding to the existing talent pool of the cannabis industry’s foremost financial services and financial technology experts.  (note 4 10-Q provides the fair value presentation for the transaction page 20)

Page 20 in the 10-Q shows what NLIT’s fair value assets it offered to support the $185 million CPCU purchase valuation.  The key point is that $80 million was held in shares subject to possible redemption and the remaining cash of $19 million was held in trust.

It is not clear how many common A shares were redeemed, or how the money in trust was used.  The result is that at December 2022 SHFS had only $8 million in cash and negative working capital (current assets less current liabilities)  of  $39 million.

The details of the restructure of the $185 million for CPCU was reported  on March 23, 2023.  Page 26 shows that exchange of debt for common stock resulted in $38.4 million for issuance of common shares.  These are subject to a Lockup agreement restricting their sale.

Also CPCU acquired a first lien on all of the company’s assets as a result of the restructure. SHFS issued a five-year Senior Secured Promissory Note (the “Note”) in the principal amount of $14,500,000 bearing interest at the rate of 4.25% and a Security Agreement pursuant to which the Company will grant, as collateral for the Note, a first priority security interest in substantially all of the assets of the Company.

Contributing to the loss in 2022 from note 17 Forward Purchase Agreement page 35:

The trading value of the common stock combined with preferred shareholders electing to convert their preferred shares to common stock triggered a lower reset price embedded in the forward purchase agreement, or FPA. As of December 31, 2022, the Company had already called a special meeting to lower the make-whole price under the preferred share purchase agreement to $1.25/share. . . These events significantly reduced the FPA receivable to approximately $4.6 million, from approximately $37.9 million reported at the end of the September 2022 quarter. The loss in value resulted not only in a compression of the balance sheet, but also $42.3 million charge to other expense on the statement of operations in the fourth quarter of 2022.

At March 30, 2023, SHFS’s balance sheet shows negative retained earnings of $47 million offset by $91 million of additional paid in capital from the restructure of the $180 million initial terms and other stock transactions.

81% of SHFS’s March 2023, $89 million  assets are $19 million in goodwill, $10.2 intangible and a deferred tax asset of $42.6 million. 


The Legacy Effect of Credit Unions

I’m 78 years old.  Many  requests for donations to support various organizations from prior years now come with a special option: Become a legacy member.

These institutions cover the entire spectrum of public and civic service: hospitals, colleges and universities, churches, choral groups, and local theaters.  The appeal here in D.C. even includes the many public museums, National Archives, Smithsonian institutions, Library of Congress et. al.  that are part of the Washington community.

A legacy commitment means that an individual will make a bequest to the organization in their will or via an estate planning vehicle such as a trust.   It is not an immediate contribution, but rather a commitment made upon passing to support an endowment-like fund for the organization’s continued operations.

These legacy commitments are shown separately in donor listings to recognize this future intention.  Last Sunday was Legacy Sunday at our local church.  The bulletin insert asked Are You a Member of CCPC’s Legacy Society, listed the names of both living and deceased members who had made a commitment along with statements of support by individuals such as:

“I pledge every year.  None of us know when we will pass away, but I feel like this is a last commitment to the church.  Think of it as my last pledge.”

Credit Unions’ Legacy Commitment

A credit union recently sent me their founding story from 74 years ago.  It reads:

On April 29, 1949 ten tire factory floor workers set their names together in a bond of common trust that lives today as the cornerstone of the credit union.  

Long on hope, but short on cash, the credit union charter members carried a few dollars around between work shifts in a lunch box distributing $5 and $10 loans for the small essentials of life.

On a factory floor or at a cafeteria table, in a quick exchange of papers and promises between shifts, the hushed request for a $10 loan for groceries, the nod of a head in answer, a review meeting after hours, a handshake-this was Local 310 Credit Union in action in the founders’ first days.

A plink of quarters in a metal lunch box carried from shift to shift sounded the word: here is a resource created by workers for workers, that feeds families, futures and trust.

That credit union still thrives today.   Those founders met not just current needs, but created a legacy that continues to serve members and communities generations later.

The Legacy Impact from a Lunchbox

Like all founders, these credit union incorporators created a perpetual legacy not just a financial intermediary for the present.  Today this credit union’s  board and members carry on the founders’ belief in serving their community through an organization “where they know your name.”

Some current members are the grandchildren of the first organizers.   Their legacy is to continue to “pay forward” what they inherited to their children’s children.

These members will soon celebrate their 74th Annual Meeting.  Almost 300 have signed up for the event with dinner. They are witnessing to the power of service, hope and trust that a cooperative brings to  members. Far beyond the current economic uncertainties or the latest fiscal year outcome.

These individuals both continue and increase the legacy they now celebrate, so the credit union can continue to be there for future members.

As stated in the credit union’s founding story:  we stand on the shoulders of legends who carried a crumpled dollar bills from lockers, to cafeteria, to work stations in a steel lunch box-symbol of a special bond between people who care about people.

That is a Living Legacy we should all want to support.  A unique benefit of cooperative design.



A Priest, a Barrio and a “Credit Union that Should Have Continued”

The story below is by a local El Paso reporter. It portrays a special credit union that served its community for four decades.  Its work mattered.

The coop system is more than current assets and member numbers. We are also the experiences and memories that we pass down.  This example raises the challenge today, who will remember our story?

The Forgotten Credit Union that Served Thousands of Unbanked El Pasoans

By Christian Bentancourt.  Published April 9, 2023 by El Paso Matters and  Next City


If you walk around El Paso’s Segundo Barrio neighborhood, it’s hard to avoid the legacy of the city’s beloved bicycle priest. Father Harold Joseph Rahm came to the city in 1952 and served as an assistant pastor at the historic Sacred Heart Church for 12 years.

In that short time, Rahm created a legacy that is still celebrated by residents: founding the Our Lady’s Youth Center to serve impoverished locals, creating outreach programs for low-income youth, working with gang members to clear their differences in the ring instead of the streets, riding his red bicycle around to reach community members in need.

Today, his efforts are memorialized in this Mexican and Mexican American barrio through several iconic murals, as well as a street that’s been named after him.

But one of Rahm’s most critical contributions to the neighborhood has been largely forgotten: Creating the Tepeyac Credit Union, a pioneering financial institution to serve Segundo Barrio’s unbanked residents and protect them from loan sharks.

A Forgotten Legacy

It’s a legacy that has largely been forgotten by El Pasoans. . . But through archival research and an interview with one of the credit union’s early board members, El Paso Matters and Next City have begun to unravel that history.

It’s a history that illustrates community-based financial institutions’ power to support unbanked and impoverished people – and shows how such economic initiatives were a core part of major movements for social justice in the city.

The historic neighborhood in which Rahm served was known as South El Paso until several pockets were designated as Segundo Barrio, Chihuahuita and Duranguito in the 1970s. Banks redlined the community, making it challenging for residents to obtain financial services.

“People needed loans, and the banks at that time discriminated against South El Paso,” local historian David Dorado Romo says. “There were redlining maps in the 1940s that deliberately neglected areas marked in red. Since people couldn’t qualify for any kind of loans, especially not for home improvement…the community had to create its own credit union.”

The 1961 Founding with a Chicano Cheerleader

In 1961, Father Rahm banded together with a group of local residents and activists to create the Tepeyac Credit Union. According to historian Romo, one of these collaborators was Abelardo “Lalo” Delgado, the prominent Chicano poet from El Paso, who served as one of the credit union’s first presidents.

“He was one of the people that would go throughout the community and let them know that these kinds of services were available,” says Romo. . .  “Lalo, he was a great activist and also a very well-known poet.”

Delgado, who died in 2004, is considered the “abuelito” (grandfather) of the Chicano literature movement, pioneering writing that reflected a commitment to social justice and illuminated Mexican American heritage and struggles.

“He was our cheerleader,” says Felipe Peralta, an early board member of Tepeyac.  Peralta had been a youth worker at the Our Lady Youth Center when he was invited to serve on the credit union’s board. “He was always motivating us to do more things.”

Father Rahm and Delgado collaborated at the Our Lady Youth Center. The center, created in 1953 and located at 515 S. Kansas, served as a home to programs for Segundo Barrio residents, including an employment center and the Tepeyac Credit Union.

“That was a place that generated a lot of social movement,” Romo says. “They had a lot of outreach projects for youths, they had the employment center — they would find jobs for people at Segundo Barrio — and they created the Tepeyac Credit Union. It was a religious, social work project in South El Paso.”

An Unusual Creation

Today, the notion of creating a credit union is unusual. In the past decade, only 25 credit unions have been chartered in the United States. . .Before 1970, it was common to see 500 or 600 new credit unions chartered every year.

Tepeyac only had two employees, according to former director Peralta: office manager Teresa Cordero and Mr. Flores, who was in charge of debt collection.“(Cordero) did a lot of work for the credit union,” Peralta says. “Mr. Flores, whenever he was around the neighborhood … you would not see anybody else because his job was to collect delinquent accounts. I can’t remember too many people defaulting on their loans.” Indeed, a 1971 El Paso Times article records that only 18 of 1,448 loans had gone uncollected.

“I remember even borrowing money for my second car,” Peralta says. “If I remember correctly, at one point, we had over a million dollars. It helped a lot of people to generate their credit. Once they establish credit with us, we will trust them with a little more money. It really helped a lot of people.”

 Making the News

A March 1961 newspaper article from the El Paso Herald-Post showed the Tepeyac Credit Union had potentially 30,000 members, between congregants in the parish at the Sacred Heart Catholic Church and employees and staff of Our Lady’s Youth Center.

“Much time, effort, and sacrifice went into the organization of this unique credit union,” the article reads. “Realizing the problems involved in setting up a credit union which serves a large low-income group, volunteer workers, El Paso Chapter of Credit Unions personnel and many others devoting themselves to the task of solving those problems.”

”Father Rahm and a man named Ed Morrisey raised interest amongst the potential members,” the El Paso Herald-Post article reads, “while others held workshops to explain the idea and principles of operation of a credit union.”

“Tepeyac Federal is considered a pioneer type credit union,” the news clipping says. “Prior to organization, its potential members had no access to credit union benefits and services. Experienced credit union workers now believe Tepeyac Federal Credit Union will not only succeed but will serve as a model … for the organization of similar credit unions elsewhere.”

The efforts of these activists helped create El Paso’s Chicano Movement for Mexican American civil rights, Romo explains: “They were serving the needs directly of the community that this local city government or state or federal governments were not meeting.”

“In 1972, when the La Raza Unida Party was organized, (Delgado) stood up and read his poetry to begin the whole conference.”

Building on a Legacy

In El Paso, the credit union built upon the legacy of Mexican American sociedades mutualistas. These mutual aid societies focused on economic cooperation and community service, flourishing from the 1890s onward.

“It worked a little bit like credit unions,” Romo says. “Whenever people had an emergency sickness in the family, definitely for funerals. They were almost like community insurance groups. There’s a long tradition that goes back to the late 19th century, here on the border of Mexican American communities looking out for each other.”

Information on key figures within the credit union is difficult to come by, but a few names stand out . . .Former director Peralta remembers John Falke – the credit union president in a 1967 . . . as a vital part of Tepeyac.“He was a veteran or involved in the military and did a lot of the groundwork. He would go out of his way to set up the whole thing.”

Another leader of Tepeyac was Henry Rayas, who served as president and is showcased in newspaper clippings from the early ‘60s . . .“He and his wife had 18 children,” Peralta recalls. “Once the children grew up and were a little bit more responsible, they would come and volunteer there.”

No Longer Operating

Today, the credit union is no longer operating. Tepeyac’s last statement of financial condition filed with the National Credit Union Administration was dated Dec. 31, 2003, showing $194,730 in total assets, 220 members and one part-time employee.

In December 2003, the Texas Credit Union Department received an application for Tepeyac to be absorbed into El Paso’s West Texas Credit Union, which had been chartered in 1964 to serve state employees in the area.

The state-chartered credit union “made a special effort to reach out to minority populations by offering a range of products that meet their particular needs,” according to a May 2002 hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs. . .”These products including low-cost remittances back to Mexico, an affordable housing program and Individual Development Accounts, a form of savings account aimed at helping low-income individuals save toward assets and build long-term financial stability through matching funds.”

The CEO said that “credit unions like West Texas recognize that consumers and their members must give viable options to avoid the traps of predatory lenders. Credit unions have stepped up their efforts to combat predatory lenders in neighborhoods by offering affordable alternatives for both payday loans and mortgage loans.”

West Texas CU Liquidated

But after the credit union was “hammered by bad indirect loans,” per a Credit Union Times report, the National Credit Union Administration announced in 2009 that West Texas Credit Union had been liquidated “after determining the credit union was insolvent and [had] no prospects for restoring viable operations.”

San Antonio’s Security Service Federal Credit Union purchased the assets that year and assumed the member shares of West Texas, which had had $78 million in assets and was serving 25,000 members at that point.

“We Should Have Continued”

Peralta himself continues to be active in the community. . . “Everything that I have been fortunate to do, it has been because of El Segundo Barrio.”

After moving on from the credit union, he was involved with the Chicano movement. “My degree was in education. My goal was to teach at the public schools in South El Paso. But when I did my student teaching, I realized I was in over my head. Those kids were doing so badly that I knew that I couldn’t help them. So I went to try to help them with other stuff like housing.”

He looks back at Tepeyac’s board meetings, which also served as the credit union’s committee to approve loans, with nostalgia. “It was a really effective operation. It was one of the best things that we had going.”

“Now that I look back, it’s something that I feel we should have continued with.”

D. Michael Riley’s Observations on “Creative Destruction”

In response to last week’s post on the impact of mergers on the future of the cooperative system, this former NCUA senior executive sent the following comment.

Mike Riley, December 1984

“Creative destruction” is uncomfortable to see in print. But it existed before Adam Smith, Malthus, Marx. Keynes, Schumpeter, and others began to try to explain the economic drivers and motivations that shape our world.

Cultural changes seem to be the main driver today. The personal seems to have switched to the impersonal, i.e. give me what I want on my terms with not  much regard to others. Fast and low cost are the motivators. (disclaimer: I love Amazon.)

We have to deal with what we have.  I am concerned about sound credit unions merging.  When I was a new examiner, I had 30 -40 credit unions who were below $100,000 and none of the rest I had were over a million. And no, I did not start in 1934.

This was in the seventies. They were basically in small towns or in rural areas where there was a factory of some sort. As I visited them (most were happy to see me, albeit a regulator, to hear about the outside world), it was obvious that the Board and Committees were involved in the credit union. Their members and the Treasurer were most involved of all. They were making loans on washers, dryers, refrigerators. Most of their members had no real access to credit except at an exorbitant rate. No savings accounts available to the members.

The credit unions really cared about their members. I remember one credit union was trying to decide on whether to make used car loans. They wanted some advice from me.  About 8 months later I came back and before I could start the exam they wanted me to go out and look at this used car and meet the borrower.

They were so proud of this accomplishment. (As a good regulator, I did check to see if the loan was to a Board member or family member.)  It seemed to be a good loan. Not to get maudlin, but this shaped my views of what credit unions are. And fortunately, the larger credit unions were much the same.

After I moved on, I tried to keep track of these credit unions. Around 1990 I put together a list of where these credit union were. I couldn’t find a few; but a little other 20 had liquidated because the factory closed down or the key people left or retired. Another 30 or so had merged either voluntarily or involuntarily. About 6 were still alive and functioning. To be fair, at the same time the American economy was undergoing a major transformation and jobs and manufacturing were moving overseas.

Ongoing Mergers

This ongoing march continues. The merger of two sound credit unions without some legitimate reason doesn’t seem to be member oriented. I still think of the members of those small credit unions who received services such as buying a washer that no one else would do.

Bigger is not better if the member does not benefit.  How many of these mergers produce lower loan rates , higher dividends, or distinctly better products at a lower price? Carried to the extreme we will be left with 20 credit unions that are no different than large banks.

NCUA’s Role

Schumpeter opined “If someone wants to commit suicide, it is a good thing if a doctor is present.”

A Return of $250 for Each $1 Invested

I recently received the best return ever on an investment: $250 in value for each $1 sent.

Late last year I read about a 501 C3 nonprofit (RPI Medical Debt) that bought unpayable medical debt using  donations and then retiring all the acquired debt for consumers.  Several news articles gave details about churches and local governments using this method to help members of their communities.

A December 20, 2022 New York Times’ article Erasing Medical Debt described how the program had extended to major cities such as Chicago and Pittsburgh.  The story stated that 18% of Americans have medical debt turned over to a collection agency.

I decided to test the RPI Medical Debt’s concept.   Was the payoff “leverage” as great as claimed? The 100 to 1 debt abolishment standard sounded too good to be true.

I also wanted to learn how targeted the program could be as a potential initiative for credit unions. Credit unions are significant originators of consumer debt.  They know how past due delinquencies on a credit report can undermine anyone’s financial options.

Contacting RPI Medical Debt, I asked to purchase and cancel all debt from Jasper County IN, whose county seat is Rensselaer.   Our family lived there for over five years while I was in high school.  The town is primarily a farming community, neither wealthy nor poor, but one where the population today is the same as when we were there 60 years earlier.

The Debt Fulfillment Report

Based on my pledge commitment, RPI retired all the available outstanding delinquent medical debt for 423 residents of Jasper Country totaling $264,878.  They had no more access to debt available in the country right then, although more debt certainly exists.

However, with the funds remaining the non-;profit acquired debt from at least one resident in every Indiana county.   The total consumers helped were 2,291 with over $2.532 millions of their debt erased.

RPI had acquired the debt for less than a penny on the dollar.  The total accounts closed (not individuals served) was 4,396.  Of these 9.3% (409) were bought directly from hospitals.  The balance was from the secondary debt market.

Much of the debt (86%) was 5 to 10 years old– specifically 1,812 accounts with balances of $1.9 million.  Only 1.8% of the debt was less than five years;  1.2% of the debt had originated over 20 or more years earlier.

The average debt extinguished had a face value of $846. For me, an overwhelming proof of concept!  A financial “loaves and fishes” story.

The Consumer ‘s Experience

Consumers cannot apply to RPI for relief.  Rather the non-profit seeks to buy debt in the open market on behalf of funders who donate or make pledges to support their goal of abolishing medical debt for individuals and families burdened by the payments.

To qualify a “soft credit report” is run to determine each individual’s eligibility for relief.  Potential  portfolios are  prescreened by holders to identify those who qualify for  abolishment of debt.    A person must earn less than four times the local poverty level  (nationally an amount of  $111,000 for a family of four) or have debt that exceeds 5% of annual income determined by pulling a soft credit report.

With these qualifications, the debt is excluded from income and not subject to IRS taxation.  The transaction is considered an act of charity by donors who support RIP’s mission.

Each consumer is sent a letter announcing the relief.  The total debt abolished, number of accounts and  creditor are identified.

The “good news” letter says there are no strings attached and  encloses a  page of FAQs  to answer  questions.   Recipients may, but are not required, to share their story about what this relief means to their circumstances.

The RIP Organization: People helping People

This nonprofit was founded in 2014 with a threefold mission:

  • Initiate a high volume of debt relief to reduce financial and mental stress for individuals;
  • Offer health care providers a way to strengthen their communities;
  • Highlight the problems of medical debt to seek a more affordable and transparent health care system.

Since inception the firm has provided $8.5 billion of debt relief helping 5,493,000 individuals and families.

The Credit Union Opportunity

The immediate possibility is straight forward: strengthen members of their primary communities by offering to retire consumers medical debt. When fulfillment data are known, celebrate the relief impact.  Invite  consumers to learn more about another people-helping-people organization, the credit union.

Such an effort is a “win” on many levels:  for the consumer, the credit union, the community and even medical providers with outstanding debt.

If interested  contact RIP Medical Debt and make a pledge for a test project.    I would be glad to share my contact and the reports and information I received.  My project was completed in under 45 days from initial contact  to finish.

Credit Unions Ringside

As vital consumer lenders credit unions are at ringside knowing the debt burdens members carry.

Three days ago a Washington Post article reported the story of a 72year old still struggling to pay off his $5,000 student debt from the 1970’s.  This is just one area where a similar approach for  relief may be prudent and desirable.  An example from the article reported:

Years of administrative failures and poorly designed programs have denied many borrowers an off-ramp from a perpetual cycle of debt.

There are nearly 47,000 people like Hamilton who have been in repayment on their federal student loans for at least 40 years, according to data obtained from the Education Department. . . About 82 percent of them are in default on their loans, meaning they haven’t made a voluntary payment in at least 270 days. . . 

The Supreme Court will shortly hear a challenge to the Biden administration’s efforts to forgive up to $20,000 per borrower in federal student loans. The Court many not allow the initiative to proceed.

Why not design a program similar to RIP Medical Debt and approach the Department of Education about purchasing the loans with the intent of  extinguishing them?

Credit unions would  be helping resolve the financial and mental stress of longstanding student debt for eligible borrowers (to be defined).   Even at a penny or two on the dollar, the government would be receiving more versus 100% forgiveness.

The program could be targeted where relief is most needed.   It could happen fast.  A  “scholarship-in-reverse” plan  where college debt continues to burden individual’s lives.

Can the cooperative movement demonstrate their collaborative entrepreneurial capacity and address a critical public need?

Two final data points from the Post article on student debt:

From the time student loan borrowers’ first loans enter repayment, the median length of time it takes to pay in full is 15½ years. .  . Federal student loans are discharged upon death.  

Must individuals wait till death for common sense relief?




Two Positive Updates & a Disheartening Decision

Callahan’s Trend Watch industry analysis on February 15 was a very informative event. It was timely and comprehensive.

Here is the industry summary slide:

The numbers I believe most important in the presentation are the 3.4% share growth, the 20% on balance sheet loan growth and the ROA of .89.

The full 66 slide deck with the opening economic assessment and credit union case study can be found here.

The Theme of Tighter Liquidity

A theme woven throughout the five-part financial analysis was tighter liquidity and the increased competition for savings.   Slides documented the rising loan-to-share ratio, the drawdown of investments and cash, the increase of FHLB borrowings, and the continuing high level of loan originations, but lower secondary market sales.

These are all valid points.   However liquidity constraints are rarely fatal.  It most often just means slower than normal balance sheet growth. That is the intent of the Federal Reserve’s policy of raising  rates.

Credit Unions’ Advantage

I think the most important response to this tightening liquidity is slide no. 24 which shows the share composition of the industry.  Core deposits of regular shares and share drafts are 58.3% of funding.  When money market savings are added the total is 80%.

This local, consumer-based funding strategy is credit unions’ most important strategic advantage versus larger institutions.  Those firms rely on wholesale funds, large commercial or municipal deposits and regularly  move between funding options to maintain net interest margins.  These firms are at the mercy of market rates because they lack local franchises.

In contrast, most credit unions have average core deposit lives from ALM modeling of over ten years. The rates paid on these relationship based deposits rise more slowly and shield institutions from the extreme impacts of rapid rate increases.   In fact the industry’s net interest margin rose in the final quarter to 2.86% (slide 56) and is now higher than the average operating expense ratio.

Rates are likely to continue to rise.  There will be competition at the margin for large balances especially as money market mutual funds are now paying 4.5% or more.  If credit unions take care of their core members, they will take care of the credit union.

The February NCUA Board Meeting

The NCUA Board had three topics:  NCUSIF update, a proposed FOM rule change, and a new rule for reporting certain cyber incidents to NCUA within 72 hours of the event.  The NCUSIF’s status affects every credit union so I will focus on that briefing.

We learned the fund set a new goal of holding at least $4.0 billion in overnights which it is projected to reach by summer.  Currently that treasury account pays 4.6%.  With several more Fed increases on the way the earnings on this $4.0 billion amount alone (20% of total investments) would potentially cover almost all of the fund’s 2023 operating expenses.

Hopefully this change presages a different  approach to  managing NCUSIF.  Managing  investments using weighted average maturity (WAM, currently 3.25 years) to meet all revenue needs, versus a static ladder approach, means results are not dependent on the vagaries of the market.

At the moment the NCUSIF portfolio shows a decline from book value of $1.7 billion.  This will reduce future earnings versus current market rates until the fund’s investments mature, a process that could take over three years at current rate levels.

Other information that came out in the board’s dialogue with staff:

  • Nine of the past thirteen liquidations are due to fraud. Fraud is a factor in about 75% of failures;
  • More corporate AME recoveries are on the way. Credit unions have been individually notified. The total will be near $220 million;
  • If the NOL 1% deposit true up were aligned with the insured deposit total, yearend NOL would be about .003 of lower at 1.297% versus the reported 1.3%. Share declines in the second half of the year will result in net refunds of the 1% deposits of $63 million from the total held as of June;
  • Staff will present an analysis next month of how to better align the NOL ratio with actual events;
  • The E&I director presented multiple reasons for NCUSIF’s not relying on borrowings during a crisis, but instead keeping its funds liquid;
  • The E&I director also commented that the increase in CAMELS codes 3, 4, 5 was only partly due to liquidity; rather the downgrades reflected credit and broader risk management shortfalls;
  • NCUSIF’s 2022 $208 million in operating expenses were $18 million below authorized amounts;
  • The funds allowance account ($185 million) equals 1.1 basis points of insured shares. The actual insured loss for the past five years has been less the .4 of a basis point.

Both the Callahans Trend Watch industry report and NCUA’s  insured fund update with the latest CAMELS distributions suggest a very stable, sound and well performing cooperative system.

A Disappointing NCUA Response

Against this positive news, is a February 15  release from the Dakota Credit Union Association.   It stated NCUA had denied claims of 28 North Dakota credit unions for their $13.8 million of US Central recoveries from their corporate’s  PIC and MCA capital accounts.

These credit unions were the owners of Midwest  Corporate which placed these member funds in the US Central’s equity accounts, a legal requirement for membership.   The NCUA claimed that the owners of Midwest Corporate had no rightful claim, even though a claim certificate for these assets was provided by NCUA.

Nothing in this certificate says that the claim is no longer valid if a corporate voluntarily liquidates.

Under the corporate stabilization program corporate owners were forced to choose between recapitalizing after writing off millions in capital losses in 2009, merge with another corporate, or voluntarily liquidate.

Both the Iowa  and Dakota corporates chose to voluntarily liquidate versus facing the prospect of further corporate capital calls.

The NCUA oversaw the liquidation of both Corporates in 2011. The NCUA’s liquidating agent knew  that claim certificates were issued, that there was no wording that voluntary liquidation would negate future recoveries for the corporates’ owners and that NCUA’s legal obligation is to return recoveries to the credit union’s owners, whether in voluntary or involuntary liquidation.

The claim receipt specifically states: “No further action is required on your part to file or activate a liquidation claim.”  Yet that is just the opposite of what NCUA is now saying the credit unions must do.

For example NCUA continues to pay recoveries to the owners of the four corporates who were conserved and involuntarily liquidated by the agency.

According to Dakota League President Olson, NCUA has failed even to inform the league  in what accounts these funds are now held.  Are they being distributed to all other US Central owners? To the NCUSIF? Or held in escrow?

“This is a clear case of obstruction through bureaucratic hurdles and complicated language where the process is the punishment, and does not provide justice,” stated Olson.

These funds  ultimately belong to the member-owners of these credit unions  The NCUSIF is in good shape.  This is not a legal issue.  It is common sense.

NCUA controlled all the options for every corporate through through its stabilization plan. It took total responsibility for returning funds-no further action required. No one will critique returning members’ money.  But failure to do so undermines trust in the Board ‘s judgment, its leadership of staff, and its fiduciary responsibility for credit union member funds.

The NCUA board should do the “right thing” for these credit unions and their members.


A CEO’s Outlook at mid-October

On a recent trip I talked with a CEO to find out how the credit union was responding to four events:  Covid, interest rate hikes, liquidity and the regulatory environment.  Here are my notes.

On Covid

CU still on hybrid work model.  Employer sponsor went all remote, but is now back in person, with little remote.  The community around the head office, especially retail shops, became a ghost town.  Kept all branches open, but  back office staff is still mostly remote.

Expect hybrid work to continue. Commute for head office is a minimum of 30-60 minutes. Labor market extremely tight especially for retail.

Have re-evaluated every customer facing position including  salaries, variable incentives, paid lunches and increased job tiers.

Interest Rates

The 30-year fixed rate mortgage is now at 7.5%.  Member interest has evaporated and don’t see it coming back until late 2023.  Increase in second mortgage demand.

Member spending is still strong and credit card volume has surpassed pre-pandemic levels.  Will recession hurt consumer spending?   Labor market great for employee, but creates inequities with current staff.

Biggest concern is inflation’s impact on costs and operating expense structure.   Large increases in vendor contracts which have the ability to pass through costs based on  a CPI index.   In some cases this will be 8.5% to as high as 15%.  Fortunately, we have caps in our contracts but many credit unions do not.

We are a unionized shop with approximately 70% of employees covered under a labor contract.  Sponsor negotiates contract and we will have to see what happens to those costs.


Have difficulty selling to secondary market.  Rates are extremely volatile day to day.  Our mortgage pipeline is down 60%.  Refinancing has all but stopped.

In ’20 and ’21 had share growth of 20% and 13%.  Money stayed with us.  This year members feel it’s time to spend.  Grown only 2% in shares so far, but may end up flat at the end of the year.

Even though originations are lower, loans are staying on the balance sheet because there is no refinancing.

Paying up for CD’s:  11 month at 3.25% and 15 month at 3.5% with a minimum of $5,000.

Actively monitoring our wholesale funding sources.  FHLB is about 100 basis points more expensive than CD’s.  Also have brokered CD’s with SimpliCD.

So far this year ROA is at 80 basis points down from 92 bps in 2021.   But for our 28 state peers over $500 million, the average is closer to 50 basis points.

Our top operational priority will  be managing expenses.

Regulatory Environment

State chartered.  All exams remote.  The beginning of the year I was really concerned about the NEV test that would put us in the extreme risk category.  But they have backed off with just a “high” rating.

Definitely a different level of NEV risk now and more pressure on liquidity.

Looking past current events there are two items.   Should we move beyond our sponsor’s brand and FOM to open up markets for further growth?   We have several special loan programs, credit card  and provide financial literacy events.  Sponsor brand is ours as well. So not a simple issue.

Secondly, we have always been a state charter; would a federal charter be an option for the future?

However our biggest challenge going forward is to control operating costs.