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A Credit Union Team’s Office Reunion

Michael F. Abernathy, Jr. became CEO of Buckeye State Credit union in 2018 following several years of losses and decline.  The credit turned a profit in 2017 and has not had a losing month since. Before COVID hit, capital peaked above 11%.  Even after the pandemic shutdown, capital remained at 10% and is building every month.

His report below is an example of a CEO’s leadership efforts after months of shut down and remote administration.  His account follows.

The First In-Person All-Staff Meeting Since Shutdown

“We felt it was important for everyone to get back together in person, but with the blessing of the staff. The previous year, we held a hybrid model meeting where branches and back office met at their individual locations while members of senior leadership were divided up and led the meeting from different locations. The meeting last year was pre-recorded, but each senior leader had the ability to bring a “live” perspective from where he or she was located.

For last year, the response was good for the event, but there was a craving to get back together. During the 2021 planning process, we anonymously polled the entire  staff to determine if the team was ready to come back in-person, or preferred another hybrid model. The polling was unanimous…they wanted to come back together for an in-person event.

It was important because we have several new employees who had never attended an in-person  with the Credit Union. We wanted to deliver an experience that felt big and bold. We wanted our team to feel like they were part of something important. Our 70 attendees were able to interact and learn from incredible guest speakers:

    1. John-Mark Young: Whitaker Myers Wealth Management.  He talked about the “Never Again” moments in people’s lives when a person makes the decision to start the journey toward financial freedom by creating a plan to save and grow their money
    2. Jamie Strayer: Credit Union Strategic Planning. She talked about how our CDFI grant affected not only Buckeye State Credit Union, but also changed lives (thru credit unions) across the country by providing resources to create innovative programs that improve low/moderate income communities.
    3. Carol Middaugh: Frost Financial Services.    She talked about how Buckeye State has saved its members over $265,000 over the last four years through gap claims. She also spoke to the hundreds of thousands we have saved members in extended warranty claims for mechanical breakdowns that were covered. Gap and warranties often have bad reputation, but we are proof that these services have consistently saved our members money and protected their credit scores.
    4. David Kettlehake: American Share Insurance. David made insurance talk fun. He talked about ASI’s history and how they stack up against NCUA and FDIC. Because ASI is owned by its member credit unions, the credit unions have a voice and a seat at the table. ASI knows what the day to day activity of a credit union is like, where federal insurance funds overlap as both regulator and insurer. This bureaucratic perspective removes them from the normal operations of a credit union. He demonstrated how ASI’s coverage stacks up against the federal insurance and how ASI actually provides broader coverage than NCUA.
  1. I wrapped up the meeting with a town hall format where I shared stories from my life and career that shape me into the leader I am today helping to guide the credit union.

The CEO’s Message

The message I wanted to relay is that our credit union is different from many others out there. We are developing products that meet the needs of everyone in the community. While banks focus on people with wealth and strong credit scores and the predatory lenders focus on the poor and weaker credit, we are creating an atmosphere where everyone is welcome. We will lend and do business with all income and credit levels. While the banks and predators are content to run down the sidelines of the football field, we seek to utilize the entire playing field and work with everyone.

With that, the messaging to our members and the community at large is that we want to empower them regardless of income or credit level. We have already rolled out our First Time Auto Buyer Loan (no co-signer needed), Youth Empowerment Account (designed for children starting at 8 years old) and our Empowerment Account (Second Chance Checking Alternative).  Moreover, we intend to roll out the following by Mid-October (Around International Credit Union Day):

    1. Credit Builder Loan- Build or Rebuild credit
    2. Advance Line- Payday loan alternative…lower rate, lower payment, longer repayment cycle
    3. Empowerment Loan- Consolidate your debt and take back control of your finances
    4. Furnish or Fix Loan- Own or Rent a Home? Does not matter, this loan will provide funding for smaller needs and projects around the home
    5. Anything Loan- Self Described, use it as you want!
    6. Youth Empowerment Card- First credit card with no co-signer needed
    7. Empowerment Card- A secured card used to build or rebuild credit

The Partnership with ASI

ASI spoke at the meeting so everyone could learn first-hand about their relationship with credit unions.

ASI covers $250,000 per account, so the member can have more coverage than provided by the NCUSIF.  The firm is cooperatively owned and governed by its member credit unions.  It understands what credit unions are doing right at ground level.  They are not government acting in the dual role of insurer and regulator.

Reversing losses of $3MM going back years was due to the approach of ASI.  The insurer worked with us to correct adverse trends by giving latitude not harsh restrictions or deadlines.

ASI does monitor capital ratios and financial performance. But because they understand what is happening at the local level, this gives them a close-in perspective to be patient and an ability to work together with struggling credit unions.”

 

 

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Heroes and the Fear of God: Words at the Start of the School Year

Glenn Arbery is President of Wyoming Catholic College.   He shared some thoughts with the incoming freshman class last week.   

While his hero references are from academic literature, all organizations tell stories about leaders who have played critical roles in their history.  These stories  are reminders of extraordinary success or sometimes tragic failure.

They are intended to help us be more aware of the choices we make in our “lived” roles.  His last words about the “Fear of God” are interesting.  It is not a religious statement he is making.

Rather he is stating  that most of us know what are better angels require.  But as one CEO wrote me in a request for counsel, sometimes right gets a little blurry.  Here is an excerpt from his talk.

When you enter the classroom this week, you will encounter in a new way those figures that the tradition of the West has always honored and whose names you have known since childhood: in Genesis, the patriarchs specially called by God; in the Iliad and the Odyssey, the heroes who explore the boundaries between the mortal and the immortal.

These are men and women who step outside the common order into a uniquely charged sphere of unfolding meaning. They extend the expectations of mankind.

Heroes and saints are not necessarily easy to get along with, since they answer a higher call that puts them at odds with the world around them, even those closest by. It is not easy to fit the hero into ordinary life, but without these primordial figures, we would not hope for more in human life than good internet service and enough coffee. 

We are not engaged in tearing down or demeaning what is great, but in honoring whatever is noble and good, wherever it might be found. . .

Fear of God, in the sense that I mean it, is awareness of another choice when there is a temptation to belittle others or indulge yourself. Moment to moment, there is a better way, a best way.

Fear of God means a dread of choosing what you know to be wrong or of letting something harmful happen through weakness, indifference, or inattention. It is wholesome and cleansing, like cold mountain air. It is the kind of fear that makes you alert and urges you to pay attention and watch where you are going.

Good advice to start the school year for everyone. The full speech and essay can be found here.

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Work or Play on Labor Day

I asked a friend who used to work 12-16 hours straight on projects what he did for play.

His response: “My work is my play.”

Why I blog?

One response is from Flannery O’Conner: “I write because I don’t know what I think until I read what I say.”

The intent is that my words will bring perspective, interpretation and debate to the ever-evolving credit union movement.

I would hope to ensure credit unions are making some meaningful progress towards a more sustainable, healthier, democratic, and economically fair American experience.

This hope is not about individual achievement, but to inspire collective effort by analyzing and reframing credit union events from the context of their unique purpose.

Writing as a Moral Act

David Hein, a Senior Fellow at the George C. Marshall Foundation has written an insightful essay called Writing as a Moral Act.   Some of his thoughts follow:

Writing is a moral act, I often tell my undergraduate students. At first, naturally enough, they are puzzled by this claim. Not only are they prone to compartmentalizing—discuss ethics in a philosophy class, learn writing in an English class; they are unused to thinking ethically about ordinary, apparently nonmoral, activities. For them, morality is limited to (1) rules, such as the honor code’s prohibitions against lying, cheating, and stealing; (2) social-justice issues, such as the sins of the patriarchy and the faults of free enterprise; and (3) their informal sense of peer norms, such as having a friend’s back during a crisis.

To expand their horizons, I prompt them to think about moral aspects of everyday life and to consider the first steps of forming an ethical position and of acting morally. Sound ethical judgment begins not with prescription but with description: characterizing the situation accurately and fairly. Not “what ought we to do?” but “what is going on here?”

Limning the essential elements of a case requires vision sharp and sensitive and comprehensive; and we won’t see clearly if we do not, so far as possible, accomplish a temporary “unselfing of the self,” in Evelyn Underhill’s phrase, attempting to perceive with others’ eyes, according to perspectives different from our own. This entire effort lies at the heart of the ethical life; it is a work of the moral imagination.

Expectations

This approach is also fundamental to the task of essay writing, a practice with which students in higher education are largely familiar. . .

Your paper, I advise them, should be the most intellectually alert and stylistically engaging commentary on your assigned section of the reading which you can produce. . .incorporate evidence from the text in support of the main event, which is the unfolding of your thesis. In other words, maintain command of your paper as a rider keeps control of his or her horse: subordinate summary and quotations to the development of your position.

And some opinion, yes—opinion in the sense of your carefully considered view: argue for the best construal of the material you can manage. When you present your paper, your listeners will be interested not in your isolated, undefended opinion but in your rational analysis and informed judgment; and, along the way, your fellow students will be grateful for whatever elements of wit and elegance you can deploy in your phrasing.

Most of all, keep in mind your audience, which consists of the other students in this course. Anticipate objections to your case. In your paper, respond to this imagined challenger. As you dig into your subject as deeply as you can, have your readers’ likely understanding and potential appreciation in mind.

Indeed, writers cannot achieve their objectives without taking into account their readers’ backgrounds. As Steven Pinker has pointed out in the Wall Street Journal (September 27, 2014), “The form in which thoughts occur to a writer is rarely the same as the form in which they can be absorbed by the reader.”

The writer’s test

Learning to explain complex matters well is one of writing’s supreme challenges. But writing for the reader rather than for himself alone is good for an author’s character; it can relax his relentless self-regard.

So ends my work, or was it play, this Labor Day.

 

 

 

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Another Banana Story

After yesterday’s post about NCUA’s banana- like strategy to impose  rbcapitalus fungus on credit unions, I was reminded of Jim Blaine’s blog from April 2015.

It is the story of a banana, a swimming pool, a librarian and “uncommon organizations serving uncommon people.”

Future Leaders Should Go Bananas!

The sun was simply sweltering and I was sitting poolside at one of those golf-prison hotels, trapped between lost and found and nowhere.

That’s when the question first came to mind. It wasn’t the result of any great thinking to be sure. And, the thought probably had no source other than the impatient infection of boredom, which arises from waiting on a “next-a.m.” flight to someplace you’d rather be now. Comprendez? Done there, been that?

The cosmic question was “Does a banana float?” Not just any banana either. One of those large 16-ouncers which usually only come three to a bunch and end up being much more than your appetite. Well, let’s stop right here for the quiz. What do you think? Does it or doesn’t it?

“Does a banana float?”
Check the appropriate box:

☐ Yes  ☐No  ☐Maybe
☐ This is insane.
☐ None of the above.
☐ All of the above.
☐ Only in ice cream.

I will give you three bits of information which may help you with your answer: 1) you have no clue to the correct answer to that question, because this bizarre thought has never crossed your mind; 2) this is not a trick question; so don’t over-analyze it; and 3) there are two important, related questions you must also consider in addition to the first one. 

Those two questions are:
1). “If you peel the banana does the peel float?”

☐ Yes ☐ No ☐ Maybe
☐ This is really weird.
☐ Need NCUA ruling.
☐ A and B.
☐ Only in salt water.

2). “Does the fruit core float?”

☐ Yes ☐No ☐ Maybe.
☐  I’m telling!
☐ Yes, then no.
☐ No, then yes.
☐ Only in California.

Give those questions some serious thought. Mark your answers. Don’t give up on me just yet; we are heading somewhere with all this! But first, let me finish telling you about that poolside experience….

To finish this story with Jim’s moral  click here.
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Are Credit Unions Being Treated Like Bananas?

What does the fate of bananas have to do with credit unions?

In 2016 BBC news reported on the potential death of the world’s favorite fruit:

For decades the most-exported and therefore most important banana in the world was the Gros Michel, but in the 1950s it was practically wiped out by the fungus known as Panama disease or banana wilt.

Banana growers turned to another breed that was immune to the fungus – the Cavendish, a smaller and by all accounts less tasty fruit but one capable of surviving global travel and, most importantly, able to grow in infected soils.

Do we need to worry about banana blight?

The story was updated in 2019 when the Cavendish itself became subject to blight:

While there are more than 1,000 varieties of bananas, which come in different colours, shapes and sizes, just under half of global production is the Cavendish type. While the fungus is not harmful to humans, it has the potential to eventually wipe out Cavendish bananas, according to experts.

Millions of people around the world rely on bananas and plantains as a staple food and as a cash crop.”The potential for devastation if it does reach them is almost total.”

“The world would carry on if we lost bananas but it would be devastating for those who rely on it economically and very sad for those of us who enjoy eating them.”

The Fungus Problem

The disease is “a serious threat to banana production” because once it is established, it can’t be eradicated, the UN says. And fusarium fungus can remain in the soil for 30 years.

It has been spreading for decades through Asia, Australia and Africa. It has now been detected in Latin America, which supplies the bulk of the world’s bananas grown for export. No other types of banana are yet ready for cultivation on a commercial scale.

If one plant is susceptible to a disease, all of its offspring will also be susceptible.

Monocultural crop

The Cavendish was brought in as a monoculture crop after “banana wilt” all but wiped out the world’s previous favourite dessert banana, the Gros Michel, in the 1950s.

According to Prof Kema, the main problem stems from the over reliance on Cavendish varieties for export, which he describes as a “monoculture”.

“We have to diversify banana production,” he said. If there is only one type of banana plant being grown, resistance to infection is lower.

There are trade-offs between the costs of containing it and the profits from growing bananas, he said.

Small producers may not be able to afford the mitigation measures, he added.

People in the UK eat 10 kilos of bananas per year, on average, or about 100 bananas.

So the market is there, but will Cavendish bananas be in the future?

The Credit Union Lesson

The critical issues in the potential extinction of this popular banana product include:

  • The need to diversify the varieties of bananas grown;
  • The tradeoffs between costs and benefits when fighting the fungus;
  • The disadvantage of smaller producers when using mitigation efforts;
  • The monocultural approach to new varieties;
  • The time needed to cultivate new strains;
  • The consumer need remains, but will there be an option?

In just 120 days NCUA’s oft-deferred RBC rule takes effect, unless the board acts.

The agency’s Risk Based Capital rule has every issue associated with the banana example. A single risk assessment applies to all firms; the lack of cost- benefit analysis; new approaches are discouraged; and credit union are encouraged to follow a “monocultural approach” to business practice.  Buy a bank here, merge a credit union there, and embrace the isomorphic actions of one’s peers to hide in the crowd.

If you question the banana parallel, the Financial Times printed the following assessment about how the US banking problems had been “resolved” during the Great Recession:

Will credit unions following NCUA’s RBC rule become another example of a banana plan?  Or will common sense prevail before the January 1, 2022 deadline?

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Words for the Beginning of School

I received a copy of an email sent to the parents of their son just entering college.  He hopes to compete in rowing at a high level.  The “coach” sent all team members’ parents  a message about his philosophy.

The college experience is more than sports and academics.  It is preparation for life. As implied in the  comment below, there will be ups and downs; mistakes and consequences.

Credit unions often offer financial “coaching.”  How is this interaction presented?   Conditionally-do this and we will give you a loan? Programmatically-follow these rules and you will be financially better off?

Or, we’re in this together.  We both want to succeed at a high level.  And when we don’t achieve what we aspire to, let’s pull ourselves up by our bootstraps and try again.

Academics and sports.  Motivations for life, not just college. Here’s the message.

Coach and Life Philosophy:  Though it is not explicitly written in a coach’s job description, we’ve been tasked to make fast boats and to develop the future gutsy citizens of our world. To this end, the coaches will challenge your sons and daughters to grow and evolve as young people at a top educational institution. We will pull/push them towards success in everything they do – motivating and inspiring them to accomplish well beyond their own scripted potential.  We do this both on and off the water and we are committed to providing the tools to succeed in all aspects of this unique student-athlete experience.  And yes, even top student-athletes with character can and will make poor choices every now and again with respects to academics and behavior. I can assure you, we will be there for them and they, in turn, are expected to pull up their boots straps, make changes and embrace any consequences.

If you are curious which college sent this, it is the first land-grant college in New York State.

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Saving Members Money

CEO’s monthly messages to staff are an important communication on results and vision.

Leaders use stories to illustrate strategic purpose.  They  include examples of what an organization strives to be.

One example is WEOKIE Credit Union’s Jeff Carpenter’s internal newsletter illustrating how it delivers the benefits of cooperative ownership.   The following are vignettes of saving members money by refinancing from much higher rates and by understanding member’s specific circumstances.

The following cases are used by permission with only the names changed:

  • David came in to see if we could refinance his vehicle from Flagship where he was paying almost 17% interest! WEOKIE approved him at 7.49% and lowered his monthly payment from $660 to $400. David left happy knowing that not only would he be paying less every month, he also is saving over $3,000 in interest.
  • Rebecca consolidated her credit card debt with us. She was paying 24.99% and higher in interest on her credit cards. We were able to lower her interest to 11.99%. This saved over $2,400 in interest alone! The new monthly payment of $211.00, including payment protection, is $200 less than it was before!
  • Jordan refinanced his auto loan with WEOKIE at a 2.99% interest rate. The dealership had originally financed him with Santander Bank in Texas at a 20.99% interest rate. After some time building his credit and making good payments, he was able to refinance at this significantly lower rate. He will save about $7,601.41 in interest!
  • James refinanced his auto loan with WEOKIE at a 7.24% interest rate. He reluctantly financed with Capital One when he purchased the vehicle with a 15.67% interest rate. WEOKIE was able to cut his rate in half, which will save him about $8,207.30 in interest!
  • Ed came in asking for a payoff quote on his auto loans. Kady asked him why he was needing a payoff and he said he was refinancing to lower his interest rate. She asked more questions and learned he is purchasing another rental property. His goal was to reduce his debt to income ratio since he always does really short terms on his auto loans. After learning more, we proposed a cash out loan and lower interest rate to help him stay with WEOKIE. We were able to lower his rate to 1.99% extend his term to 60 months, lower his payment from $886 to $536 AND give him $15,000 in cash for his new rental purchase! Ed was ecstatic we could help him reach his financial goals without leaving WEOKIE!

Examples Tell the Cooperative Story

These cases demonstrate the credit union difference more concretely than general slogans.   They recognize staff initiative and document specific member benefits.

Stories are easier to remember than grand plans.   Thanks to Jeff and his team for sharing these examples of cooperative employees making a difference.

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Why Latino Credit Union Matters Today

In2003, just three years after being chartered, Latino Credit Union won the Herb Wegner award for outstanding organization.

The credit union today is one of the most successful coop startups ever.  But the communities it serves and its ongoing financial performance are not its most important lesson.

Latino’s Example as a Coop

When banks are organized, it is the wealthy who put up the capital to secure the charter.   This has always been the practice and always will be.

At its founding the employees of Latino Credit Union spoke five languages and came from 16 countries. This paradigm of recent immigrants and low-income workers forming their own financial coop is a stark contrast to the for-profit banking model.

Credit unions demonstrate how individuals who are the most vulnerable and threatened in society can join together for opportunity.   Hope and trust replace fear and exploitation.

Credit unions are a different way, a unique self-help option in a capitalist system dominated by large financial firms and private wealth.

Presence-More than a Place, a Home

Latino and other credit unions offer more than branches, virtual delivery and personal service.

In America today, there are those who profit from individuals who have the least or know the least.

The coop model is about presence, a place to turn when a person is in need.  A financial home where people know their interests are paramount, like the family home.

It is about more than a place.  The credit union replaces uncertainty with freedom from fear, the fear of being vulnerable or afraid.

When the credit union option is at its finest, people can begin to realize who they want to be.  They have a rusted partner as they strive to live out their hopes and dreams.

Latino Credit Union shows why coops matter, a path for those without advantages but willing to work together for everyone’s sake.

 

 

 

 

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A Much Needed Message for today—From 2003

John Herrera’s Wegner award acceptance speech as Chair of the Latino Community Credit Union is as moving and thoughtful today as it was that evening.

In 2003 Latino Community was only $11 million in assets, relying on credit union deposits and just ramping up its loan operations.   But its initial success and impact were already noteworthy.

Herrera’s speech touches a number of important themes:

  • The “family” of supporters-over 20 on stage with him;
  • The Movement has developed an “accent”-an accent on people and community;
  • His staff: they speak five languages, are from 16 countries and routinely work beyond closing hours until everyone is served.

But his two most vital messages, more relevant than ever, start at:

5:00- “Our story is your story”- a shared vision for all persons to have access to affordable financial services;

8:45- “Immigration and the treatment of immigrants”- There are “no illegal human beings.” Immigrants are a critical aspect of America’s democratic enterprise.  The first credit union was created by and for immigrants, who couldn’t speak English.

Here is the full speech, just over 10 minutes with the family of supporters on stage beside him.

https://youtu.be/T9UfOhtljws

Questions for Today

When was the last time you heard a credit union leader speak this movingly about their credit union’s addressing critical economic issues for its members?

When have you witnessed a more concrete example of the movement gathered around a common vision?

Which credit union leader has spoken recently or more eloquently about the role of the immigrant community for America?

Can you identify another time such as this evening, when you were proud to be a part of the credit union movement?

Hopefully this speech reminds us of who credit unions can be at their best;  and whether we are building on the legacy we have been given.

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The Latino Community Credit Union-A Timeless Example of Cooperative Action

The 2003 Herb Wegner award for outstanding organization is perhaps even more significant today than when granted almost two decades ago.

Here is co-MC Annaloro’s description of the special nature of this award which had been given only 14 times before.

https://youtu.be/nqJORMMiFto

In 2003, Latino credit union was three years old, held $11 million in assets and had just 8,000 members.  Even then the credit unions was know for “punching far beyond its weight class.”

As Chair Chuck Purvis stated in his opening remarks, it is an example of the movement coming together to “effectively serve the needs” of the Hispanic market.  And those needs were clear and unmistakable as documented by the introductory 10 minute video from that evening. Why a credit union for the Hispanic community:

https://youtu.be/Hbjgz81jU5s

Latino Credit Union Today

This is a powerful example of credit union’s ability to respond to some of the most vulnerable persons in our society.  Few could foresee what the long-term results of this initial organizing effort would be.

Today Latino Community Credit Union has $663 million in assets and continues it focus on lending with a loan-to-share ratio of over 100%.  It has a below peer operating expense ratio even though it manages 13 branches with 157 employees serving in excess of 101,000 members.

Every aspect of its performance is exceptional with recent annual growth in shares (24%)  and loans (28%) at the very top of the industry.  It reported net worth of 11.2% at June 30 even with this high level of balance sheet growth.

Latino’s Meaning for Today

When passion and commitment meet human need, the opportunity for success is great.  This is the circumstances in which credit unions were begun in 1909.  Inequalities and vulnerable populations have not disappeared from American society.   The continued growth of payday lenders and check cashiers is an ongoing example of persons living paycheck to paycheck

Latino also shows the power  of new startups.  Some today disparage the efforts to form new credit unions.  They point out their small size forgetting that every credit union that exists today started small. Some point out the capacity of existing credit unions to serve more-and yet many parts of the their current FOM’s remained unserved or underserved.

Succeeding from scratch is not an easy thing to do.  Latino maximized its chances of success by getting inspiration from those who had already achieved what they want to accomplish.

We will learn in tomorrow’s acceptance speech, how these people became mentors-”family”-helping along the way.  Mentors increase the chance of success because they will have already confronted many of the questions that determine whether or not a start up will succeed.

We will see these people stand on stage with the Chair of Latino Community as he reminds us of a message-especially relevant today-why America needs more credit unions.