From Ancin Cooley, Principal, Synergy Credit Union Consulting,Inc
Disrupting Credit Unions to Again Become a Movement
(Following are excerpts from exchanges between several CEO’s and a person, quoted below, interested in NCUA board openings)
Yesterday I was reminded about the fever of the small business entrepreneur to state their case in the wrong way that is, the market capitalization (valuation) of their firm.
Their need is to be seen as an initiative or startup with the vision of selling the firm. The goal of inflating the value not for the motivation of living the journey forward, but for being accepted by an audience handicapping their firm’s success and relevance to attract outside observers.
This is not a good look for cooperatives. Their “worth” was never meant as one ready to be traded, abandoned, or evaluated for observers who have no role building the firm.
The Market’s View
Once our industry started to be valued through the eyes of outsiders as a financial marketplace commodity, we were on the path to attracting all the trappings (inside and out) of those who think like commodity brokers. These market driven criteria have a hard time with the ideals of community ownership (virtual) where acting and living the purpose is far different from cashing in.
We sold out the magic of financial cooperatives not for the sake of being understood for our contribution and confidence in people acting together. Rather the goal became putting a number on who we are. Cash in, pay me, liquidation values, what was the other guy worth? We strived to be evaluated and on par with ideals that are not the drivers of our member-owners’ success.
This transformation in outcomes is overseen by an out of touch NCUA and professional agents using criteria and motivation that will distort cooperative advantage for decades to come.
We need to hone the collective lens through which we set our vision for a new generation of leaders and oversight which will inspire cooperative entrepreneurs and the vesting and enthusiasm of American citizen owners.
The Next Steps
- Call for the end of the NCUA – start a movement to highlight the fact that CU’s are not a government burden but an independent system wishing for autonomy.
1.a Separate the deposit insurance fund from government regulation and supervisory oversight.
- Take the newly separated cooperative insurance fund administration and refocus it on credit union success and nurturing innovation and leadership.
2 a. Support a public initiative to prioritize league/trade organizational formats to return to advocacy and away from prostituting for commissions!
- Start a movement for cooperative entrepreneurial skills and measures that support CU differentials – in accounting, human resource., asset management, and network infrastructure and execution. Surge collaborative business design initiatives.
Start something worth calling a MOVEMENT again.
On Mergers
- Reclassify merger into two transparent market types.
– rescues (with specific criteria)
– mergers for operational gain
- Announce a moratorium on mergers coming in 6 months.
- Publish an immediate effort for new rules in merger processes and due diligence by members and boards. Announce new guidelines for explicit tactics around cooperative entrepreneurial ship, consumer-owner engagement goals, and programs for professional compensation over asset enrichment and gains.
- Moratorium in place for 12 months.
- After 12 months – implement the new processes.
Your thoughts? Ideas that certainly fit the times, not the status quo.
Watch Today’s Texas Credit Union Commission’s Live Hearing: Starts at 10:00 EDT
Click on the link below to tune into the live hearing of the Texas Commission which oversees the Credit Union Department (CUD) and its approximately 160 state charters. Here’s why.
- This nine person oversight board sets policy for the CUD. Five members are “public” and four are credit union professionals. It is a vital contrast to the current one person NCUA board.
- The agenda has several topics relevant for all charters. One is a new merger rule following events such as the Space City-TDECU merger debacle: Recommendation for Proposed Amendments to 7 TAC, Part 6, Chapter 91, 192 Subchapter J, Section 91.1003 (Mergers/Consolidations)
- Texas’ Commission demonstrates the power of a strong dual chartering system with independent credit union oversight.
- The meeting’s agenda covers multiple topics such as an update on the state credit union system, the status of CUD’s 2025 budget and plan, FOIA requests and legal updates–to name just a few. The comprehensive agenda is an interesting comparison with NCUA board meetings which average three iopics.
An Oath and Ethical Standards
The CUD’s website is filled with information about its policies, rules, employment as well as records of the Commission’s meetings. Several observations:
Contact Information for the Hearing
The Credit Union Department Commission Meeting is scheduled for Friday, July 18, 2025 at 9:00 AM (central time zone)
The Agenda (link)
Microsoft Teams Need help?
Meeting ID: 234 324 784 323 7
Passcode: Tr2qH72w
Dial in by phone
+1 936-213-5778 United States, Waller
Phone conference ID: 773 558 893#
I’m looking forward to see how this public policy and oversight meeting is conducted for a state that has been a leader of the credit union movement.
Not Your Typical Strategic Planning Question
Lots of talk about strategy is happening now. For 2026 and beyond.
This public dialogue asks a different question from those posed in traditional planning retreats.
How would you answer? It could make a difference in your firm’s priorities.
Question from a CEO: Have we become so changed that our shared purpose and collective action is no longer a movement, but instead an industry like so many other market driven and profit making organizations? Even our credit union leaders and advocates refer to us as an industry in the daily rags that I read each morning. What are we now? Are we no longer a movement, whose mission is socially driven?
Response: Ancin Cooley, Principal, Synergy Credit Union Consulting,Inc
To answer your heartfelt question directly:
We are no longer a movement.
What we now have is something far more compromised. What remains today is a quasi-cooperative system—held together by legacy language (”We stand for hashtag#mainstreet values”), but driven mainly by pure capitalists in cooperative costumes.
If you pay close attention, you’ll notice something strange: No one publicly defends these credit union mergers.
Not on video. Not on LinkedIn. Not at conferences.
Why? Because there’s an inherent contradiction between what’s happening and what a cooperative is.
But here’s the truth: this trajectory could shift swiftly if just 20 to 30 credit union CEOs joined their league boards and made their positions known.
Yes, it might cost some relationships. But if someone can’t respect your position, you were never friends in the first place. Your friendship was predicated on compliance. So what if you don’t get invited to DC to take your fourth picture with your local congressman?
If you’re doing right by your members, community, and credit union, those congresspeople will come to your office, not the other way around.
Impact draws attention. Service builds power.
Public Hearings to Correct the Merger Free-for-All
The credit union system faces a major challenge to its values and identity in the capitalist-inspired takeovers via merger of financially strong, long-serving credit unions.
The process has been distorted by leaders with member-owners having no meaningful role at any step. The so-called member vote is a charade. But regulators are scared, intimidated or just simply impotent to stop the self-dealing, self-enrichment and sometimes, outright corrupt practices. They hold a fig leaf, well the members voted for it, to hide their private unexamined approvals of the official disclosures required in the Member Notice.
What is to be done? There is one very simple step in the process that would both address the lack of transparency and the absence of any real member-owner say.
The Broken Merger Process
When the updated voluntary merger rule was passed in2017, disclosures of special payments was supposed to fix the outright self-dealing by senior managers used to induce combinations of strong charters. See The Art of the Steal.
But the process was fundamentally flawed. When implementing the rule, NCUA placed itself in the sole role of protecting the members’ “best interests.” It gives final approval to the required disclosure in the members’ official meeting Notice. This is before members have any input let alone facts about the reasons and plans for the transaction.
Today, two healthy credit union CEO’s announce their intent to combine for a brighter future, but then the process goes backstage. Occasionally there is a general update or two several months in, saying the credit unions are working on it. The IT in reality is getting regulatory sign off on what to tell the members when calling for their vote to approve.
The NCUA is acting as an in loco parentis position about what members should know to approve their charter transfer. The minimal mostly marketing information in the official Member Notice, will be the first and only time members learn any official details. But the CEO’s now have the OK to proceed with the vote knowing this content is all they have to p;rovide as the regulators have already signed-off on the transaction.
These Notice disclosures are proforma generalizations, a listing of locations and with merger reasons sometimes copied from a previous application. There is no meaningful financial or business content that a concerned owner might need to have for an informed decision.
If members are upset when the required self-dealing information is presented, they are effectively powerless to do anything about it. They are just individuals fighting an entrenched leadership with all the resources needing only a margin of one vote and the deed is done. 99% of mergers that go to a vote are approved.
These are not votes about a choice. Rather they are presented as a mere administrative act to ratify decisions already made and approved by those in authority. Decisions made without any owner input or options in the matter.
There is no secret about the lack of any member role or benefit in the majority of these ;privately negotiated deals. The credit union merger arena has become a Roman amphitheater where lions and beasts prey on unarmed Christians.
But there is one simple event that if added to the merger steps could change the entire process, restore opportunity for member participation, and make the member voting process more informed and democratic.
Resolving the Merger Madness with Public Hearings
The solution: require that within 10 days of mailing the Member Notice, the credit union must hold a public hearing open to all members in person and online. The CEO and board initiating the merger could present their plan and attendees could ask questions. Members, the press, community organizations, sponsors and other interested parties would have a right to participate.
The hearing would be led by a hearing officer appointed by the regulator who would moderate the agenda and make a record of the meeting, to be available for all. This public step would be required for all credit unions that have at least 7% net worth.
Whose idea is this? It’s NCUA’s. On July 3rd the agency posted a notice of a public hearing for an FOM request. The notice outlines very elaborate procedures, registrations, deadlines etc. However a merger hearing need not be this bureaucratic. Credit unions are used to holding member meetings as a standard bylaw annual requirement. The only difference is that this event would have a neutral moderator and be open to all members and the public.
Public meetings with those in positions of leadership is part of America’s democratic tradition.
NCUA’s Pioneering Example
NCUA initiated the practice of open meetings, not just in DC, but across the country.
On May 20, 1982 the NCUA broad met in Boston’s Faneuil Hall marking the first NCUA meeting held outside DC. This was part of Chairman Callahan’s grass roots effort to bring the agency closer to the credit unions and members it supervises.
Left to right at board table: Chip Filson, Director Office of Programs, Rosemary Hardiman, Board Secretary, Chairman Callahan, Vice Chair P.A. Mack, and John Otsby, General Counsel
These on the road meetings continued throughout Callahan’s tenure. The second meeting was in July 1982 in conjunction with NAFCU’s Annual Members Meeting in Chicago, Ill. It also was the week after the largest bank failure, Penn Square, to that point in FDIC history.
NCUA staff not only participated in this monthly board meeting but also held an open press conference following to answer questions on credit union’s exposure to uninsured CD’s placed with the bank.
I can still remember the first press question: Does the Penn Square failure mean NCUA will propose a rule to limited credit union investments to the $100,000 insured limit? It was a directed at the deregulation policy of the NCUA. The answer was no. But we also outlined the help that would be provided by the CLF and NCUSIF 208 assistance if necessary.
These public board meetings were held in each of the six regions on a rotating basis. They often coincided with League Annual Meetings or other national industry conferences. Regional senior staff were part of the presentations. The local press was notified. Sometimes a new charter would be presented by NCUA in person to the organizers.
The effort was to promote the democratic, member owned system in all of its multiple capacities. It introduced NCUA and the credit union option to the public press in cities across America. For many members, it was their only chance to meet and chat with NCUA senior staff in open dialogue.
Credit Unions: Made in America
Public meetings are part of America’s democratic character and practice. Norman Rockwell captured this town hall spirit in his Freedom of Speech, a part of the Four Freedom’s WW II poster.
Public hearings enable public accountability. The “member special meeting” that wraps up the merger process on the last day of voting is anything but a public event. The votes are mostly by mail ballot sent along with the initial Meeting Notice—urging a Yes vote. There is no way for persons to learn or hear the details that would make the process meaningful with different points of view.
Public hearings are the easiest, most immediate and democratic way for members-owners have a say about whether their charter and relationships should be sold to a third party. The hearings require no NCUA board approval.
Members should have the chance to play a real role in mergers and not merely be passive ratifiers of decisions by those in authority.
Whether a credit union believes that mergers are inevitable or harmful to the future because of the shenanigans now occurring, everyone should be in favor of giving the owners a real voice in this live or die decision. Let the Regions get on with it.
The Rest of the Story: How State and Federal Regulators Failed to Protect Space City Members in the TDECU Merger
This past weekend a Houston Business Journal article noted a 30-day gap in TDECU’s disclosure of its failure to receive regulatory approval for its Sabine Bank purchase versus the date of the Bank’s online post. During this period TDECU finalized the merger of Space City CU. During the public controversy, regulators feigned impotence to do anything about this deeply flawed transaction.
To understand the significance of this regulatory inaction, it is helpful to recall some circumstances of this merger travesty.
On May 25th, I posted a two part analysis of the proposed merger of the $147 million Space City Credit Union with the $4.8 billion TEDCU.
The Member Notice was mailed on March 28th, providing the public for the first time the details of payments to senior staff. All member voting ended May 14th. The result was 862 of the 12,000 eligible members voted with 82% for and 18% against. End of story?
A Cooperative Merger Tragedy
I summarized this sleazy event as follows: This self-dealing transaction marked by conflicts of interest, lax board oversight and member manipulation is the latest example of internal corruption in the $2.3 trillion cooperative system. . . State and federal regulators seem oblivious or powerless to stop this internal pillaging.
Here were some of the merger specifics. In distributing the surplus from Space City’s 14.6% net worth, the top three employees received $6.750 million of which $4.0 million went to the CEO. He already had a cu paid retirement plan and a $3.250 split dollar life insurance plan. This $4.0 million total was equal to 53% of the entire retained earnings of the credit union in its 60-year history!
Two components of the total payments to the CEO and COO came directly from TDECU, not Space City’s reserves. This total of $850,000, approved byTDECU’s CEO and board, was an outright “gratuity.” What was the fiduciary responsibility of these two persons with direct responsibility for arranging the merger and its approval by members when receiving direct payments by both parties?
To top off these senior staff incentives, members were given a “bonus” dividend from their collective savings. However, it was designed so that members with the least amounts of shares received the greatest percent return. Those who had the most to lose received the lowest percentage. Specifically all members with $289 in savings or less, would receive $100 bonus. If the vote were NO, you get nothing.
In addition to this blatant self-dealing, the basic concern with this merger was that the financial performance of TDECU, the continuing credit union. For the prior 15 months its financial performance had deteriorated. It reported a loss in the first quarter of 2025, and a troubled loan portfolio with 2.01% delinquency (up from 1.13% prior year) and an allowance coverage ratio one third of the peer average. Its balance sheet loan and share growth had flatlined under the new CEO.
Most importantly to TDECU’s future ambitions, it had announced in April 2024 the purchase of the Many, LA based $1.2 billion Sabine Bank. A “definitive acquisition agreement” was in place with the transaction to be completed in early 2025.
“TDECU is on a growth journey to expand across the state of Texas and beyond,” the credit union’s CEO, Isaac Johnson stated.
The Outcome and Regulatory Silence
When askng the state and federal credit union regulators, when and who had approved the merger, these were the replies:
From the Texas Commission: preliminary approval was given by Department (Commissioner) on February 6, 2025. . .
From the NCUA: The merger was approved by Southern Regional Director Keith Morton on March 6. . .
So long before the Space City members knew any details of the merger (Member Notice dated March 28), both credit union CEO’s knew their two regulators had approved their self-serving actions. The financial statements with the Notice were also six months old, September 2024, not even for the full 2024 yearend.
The members knew nothing until receiving the March 28 Notice, but the credit union leaders who privately put it together, knew they had the deal approved.
All the controversy after the members and public learned of these details went for naught. The regulators had said OK. It was all over but the shouting, which occurred in June when the merger was completed.
So at this point the merger just seemed another example of regulatory ineptitude, indifference or perhaps other factors such as legal or poltical intimidation preventing any relook. The members were unprotected, fleeced and alone. Those charged with protecting members’ best interests feigned impotence, or would assert, It’s just up to the members.
The Regulators’ Double Speak
But on July 3rd an article appeared in the Houston Business Journal: TDECU delays rebrand as it closes Space City Credit Union merger, terminates bank acquisition
The article’s main points are that the Sabine Bank acquisition is off, the Space City merger is done, and that the rebrand using Space City is on hold.
The most interesting line however is the reporter’s final comment when reacting to this post on the Sabine Bank website about the failed purchase which reads in part:
“On June 4, TDECU and Sabine State Bank and Trust Company (Sabine) announced their mutual decision to not move forward with the planned acquisition and to terminate their agreement . . . to which the reporter added:
The termination was also not disclosed directly by TDECU via a press release or to the HBJ until July 2.
This is the example of regulatory double speak. This “definitive acquisition agreement” of Sabine needed only regulatory approval. This means NCUA and the Texas Commission would make the decision because this is where the oversight of the outcome would reside.
The deal got stopped, but was not disclosed by TDECU until July 2, Sabine’s post is dated June 4. Why?
The obvious answer is so the Space City merger can proceed unimpeded. The credit union regulators refused approval of the bank acquisition because they didn’t believe TDECU was up to the task. But go ahead and take over these 12,000 members and their future for this is an event too minor to concern us.
The TDECU regulatory hold up did not begin on June 4. The potential problems with this purchase and TDECU’s declining performance were obvious for at least six months from call reports. But proceed with the credit union takeover.
This regulatory double speak, two TDECU transaction and two opposite outcomes, is the most concerning aspect of regulatory oversight. The Texas Commission and NCUA did not respond to the deeply concerned members who spoke out only after they first learned how disgusting this deal would be. They were “nobodies.”
Besides the regulators already told the credit unions it was OK. They couldn’t go back now and change their decisions made in private because of members’ concerns.
By all the standards most members care about, the Space City merger heist was abundantly clear. The regulators ignored their own words such as the members’ best interest and fiduciary responsibility. The members are sheep left to the care of wolves. In this case both state and federal regulators aided and abetted their exploitation.
The Sabine Bank purchase was stopped by credit union regulators while they stood still during the acquisition of Space City at the very same time. TDECU’s capabilities were fine for credit union members but not a bank’s customers. TDECU is now backing away from even converting to the Space City brand—a selling point in the merger.
Today we live in a political debate where regulatory oversight is presented as one of two extremes: laissez-faire, that is let the market decide or, regulation protecting those powerless against market exploitation.
But there is a third possibility, worse than these two political extremes. This is fake regulation deceiving the public that regulators really are on the job and have rules and processes in place to ensure compliance. But the regulators do not enforce their own rules.
The credit union market sees this regulatory GAP clearly and the zealous and ambitions are rushing to take advantage. The result will be that the credit union members may lose their cooperative system because of regulatory neglect.
Board Meetings and the Responsibility of Leadership
The public facing role of leaders is especially vital during two important circumstances–when there is a transition at the top and during a crisis or moments of great uncertainty.
NCUA’s current situation meets both tests. There is the unprecented removal of two of the three board members by President Trump. This was followed by the immediate departure of up to 250 agency personnel as a cost savings ploy. And as noted below, there has been a sudden increase in credit union regulatory closings.
NCUA’s public responsibility includes timely and informed transparency about events under the agency’s control. There is uncertainty about who is on the leadership team. Who is making critical decisions? How can we trust that NCUA’s actions or inactions are being properly considered or just carried on by rote?
Four FCU Closures in 60 Days
Since April 30, NCUA has taken possession of four FCU credit unions. Two were liquidated outright, one conserved and the other merged. This is a very high number in just two months in a relatively stable operational environment.
The four with summary data from the March 30 call reports are:
Name Date NCUA Action 1Q ‘25 Assets 1Q Net Worth
Unilever April 30 liquidated $ 47 million 9%
Aldersgate June 18 conserved $ 10.6 million 10.2%
Soul Community June 20 liquidated $308K 100%
Butler Heritage June 30 merged $9.6 million 4.92%
Some notes on each case.
For Unilever this immediate liquidation without a conservatorship, suggests a major financial loss similar to the Creighton FCU $13 million shortage in June 2024. NCUA has provided no explanation for the sudden insolvencies in either case.
Aldersgate with 10% capital, was chartered in 1956 to serve the Methodist church employees. It was conserved without explanation or even notice of who is now running the operations. NOTE: this morning NCUA stated it liquidated the credit union.
Soul Community was chartered on December 9, 2024. At March, it reported 21 members with $308K in assets, but no loans or expenses. All capital. How can a new charter which naviagates NCUA’s arduous charter steps including both credit union mentors and examiner oversight, end up stillborn?
Butler Heritage is the one example of financial underperformance, but still with 5% net worth. An ironical message on the credit union’s website assures members they are in good hands with NCUA oversight:
BHFCU is charted and supervised by the National Credit Union Administration. NCUA performs annual examinations of the credit union’s records, policies, and procedures. This ensures the credit union’s financial soundness and verifies operations are conducted in compliance with applicable laws and regulations.
This number of regulatory closings in two months is highly unusual. The lack of any factual information about these FCU’s circumstances is unsettling.
This failure to inform the public undermines trust in NCUA’s supervision, not to mention a credit union’s reputation with sponsors like Unilever. These are, or should be, unusual events. No one is explaining them.
The silence raises the question whether NCUA is using their authority to coverup supervisory or examination shortcomings with NCUSIF funding. Were there annual exams? Supervisory contacts?Especially troubling are the similarities between Creigton and Unilever’s sudden dramatic losses of published net worth.
The Importance of NCUA Board Meetings
In this time of leadership transition and growing uncertainty, public board meetings are critical to understand what the agency’s leadership is focused on.
For the past 18 months, NCUA’s board meeting schedule has been at best erratic. In 2024 Chairman Harper was on medical leave for several months and Ostka on maternity leave.
Even when a full board was present, the substance was limited and hard topics or discussions avoided.
In the first six months of 2025 only two public meetings have occurred. One was with the full board in February and Hauptman’s solo meeting in May.
The NCUA has said the schedule of future board meetings is “tentative.” In a June 6th press announcement the Agency stated: dates of NCUA Board meetings should be considered tentative until the issuance of a formal meeting notice. All future meetings’ agendas and schedules are subject to change at any time.
Some have gone further to assert there is no requirement to hold a monthly meeting period. Rather board meetings need occur only when the need arises.
Public NCUA board meetings are both a responsibility and a recognition that the Agency’s leadership is accountable to credit unions and the public.
Some credit unions have asked to end their mandatory monthly board meeting. At this point I yield my pen to Ancin Cooley.
His response to the suggestion that board meetings should be optional applies to both credit unions and NCUA. They are an inherent responsibility of what it means to be a board member as he explains below:
Monthly Board meetings are not the problem.
They serve one critical purpose: cadence.
That cadence builds a culture of reporting, transparency, and member-focused accountability. It keeps the board engaged—not just symbolically but structurally. It’s a space to learn, ask, challenge, and listen. It’s where the member’s voice is supposed to show up.
And if your board meetings are dragging or bloated? There are better ways to fix that than eliminating the meeting altogether. . .
There is a free-market capitalism running its playbook inside the cooperative movement. . .
We are watching it unfold in full view:
- Opposition to mandatory succession planning.
- “Fiduciary duties of Credit Union Directors” 12 C.F.R. § 701.4? Routinely unenforced—more decorative than functional.
- Supervisory committees? Once a critical layer of oversight, now neutered and marginalized—weakened to the point of impotence
Each move—on its own—can be rationalized.
But taken together? It’s a pattern. A roadmap. Its “open season” on credit unions. . .
Let me get ahead of the most common rebuttal:
“It’s just removing the requirement to meet monthly. A credit union can still choose to meet every month if it wants to.”
Yes, technically, they could.
But that’s not the point.
This isn’t about convenience or choice. This is about institutional welfare.
There are some safeguards you don’t leave to chance, because they protect the collective health of the system.
That’s why we don’t suggest seatbelt use. We don’t recommend elder abuse protections. We mandate them—because of the public trust at stake. . .
This is the cooperative movement. And with that comes a higher standard of care—because the people advocating for these changes did not build these institutions with their own money. They inherited them. And now they’re chipping away at the very frameworks that make them trustworthy.
I would hope all NCUA staff would read his words. Public duty is a public trust. Regular public board meetings are an essential aspect of an NCUA board member’s obligation to well and faithfully discharge the duties of the office.
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?
A Conversation About the Times
Had a two-hour conversation with a retired CEO yesterday. His observations about the state of the industry are almost like parables, sometimes dense but pointing in the right direction. I paraphrase his thoughts.
An Era of Untruths
Today we are living in an era of irresponsible lies. For example the law is not what common sense says it is; rather it is just a continuous nuance of interpretations for self-interest.
Coops were designed to be an alternative to banking based on intense motivation-a passion to change things. The goal was not to become a tax-exempt back door entry to banking.
We assumed credit unions would be focused on the member, the man in the street, rather than just another financial institution. Today we have credit unions whose business is brokering and buying other credit union and/or financial institution assets. It is a corporate strategy, not a retail, member-centric one.
Corporate Vs Member Focus
These corporate business variations are not based on citizens as owners. It is not the traditional credit union model. Rather these are financial variants built on the tax-exemption, versus cooperative principles.
It is like someone saying they are farmers because they own land. Farming is both owning the land and working on it, not merely buying an asset. These corporate driven business models want to use the coop model, but not the responsibility of member-ownership.
One or Two CEO Transitions from Failure
The outcome is that many very successful credit unions are only one or two CEO transitions away from losing their earned market success from building on core principles.
When the new leader arrives whether from a credit union or other professional background, it is almost inevitable that the unique coop legacy (and member focus) will be set aside reaching for some new business initiative.
This will not be motivated by member-owners’ needs but rather corporate ambitions for growth or an entirely different strategic focus or even personal ambition.
If one looks at the growth of mergers of sound, long serving credit unions, the motivation seems either a retirement windfall or, a growth strategy by the new CEO to enhance their personal goals.
Building Vs Running a Business
These efforts confuse the distinction that makes the coop model so promising. Coops offer a unique way to build a business. However newcomers often believe they have been chosen to run a business versus building on a legacy of passion and purpose.
The key to sustaining the unique credit union model is twofold. First citizens as owners will need to be at the center of efforts to build on coop principles. This requires leaders who are committed to a mission that others may not see as attractive. It may even require cultures that we see in NGO’s, entrepreneurial and driven by purpose. That’s how cooperatives become leaders in serving their members as their reason for being.
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.
Credit unions have never been a monolith—states differ, people differ, and the movement was built on distinct missions and visions coalescing under a cooperative umbrella. Yet today we’re presented with a veneer of homogeneity, as if there’s only one “right” path forward.
There’s nothing wrong with believing scale is the answer. But the bigger issue is the lack of open, rigorous debate. Too often, positions are communicated by proxy rather than by leaders stepping up to the mic, standing on a stage, or going on camera to assert their view—and defend it against alternatives with factual evidence.
Consolidation, mergers, acquisitions—if these are the strategies, say it plainly. And let’s create space for others who see the model differently to test those ideas in the open. That’s how cooperative strength was built and how it should evolve.