It’s becoming harder and harder to find the original credit union stories. So many CUs have eliminated them from the “About Us” section of their website. But I remember the story of Portland Teachers CU. In 1932, sixteen school teachers pooled six dollars each to create PTCU (today called OnPoint). In 79 years PTCU has grown to serve 244,000 members with assets of just over $3 billion. Not bad.
Now let me be on point. We all started with about the same amount of money. I don’t know if there was a credit union that started out with $50 million dollars or anywhere near that. These were all tiny upstarts. Yesterday The Financial Brand posted an interesting article about the future of the industry – 20 years out. Like so many, the prediction is mass consolidation and the end to the small credit union.
Today I was a guest, along with Sarah Snell Cooke, on The Power of Performance radio show with Jason Dias of Eloquent Online.
The show was meant to debate a hot topic that appeared in the CU Times last week. GTE Federal Credit Union changed their name to GTE Financial. Although I applaud the fact they did not kick their sponsor name to the curb (like Portland Teachers did) – to drop the credit union moniker was a point of contention with me.
During the discussion the largest credit union in the world was mentioned. Navy Federal Credit Union. Their “About Us” page says they were founded in 1933 with seven members and today serve over 3 million members with assets of almost $50 billion – with a “B”. That makes OnPoint look small. They no longer serve only the Navy. The serve all branches of the military and yet they remain true to their founders in both the brand “Navy” and the category “credit union.” Sarah said they grew because they had tremendous resources and that most small credit unions don’t have those.
Here’s where I get confused. The 1930’s was the boom age of credit unions. The majority of credit unions still standing were founded well over 60 years ago. And if they all started with a group of wide-eyed optimists plunking down six bucks each – how is it they all aren’t huge?
To be fair – Navy has a great field of membership because every year there are new recruits. A fresh batch. Many credit unions that were founded by say, the railroad workers, didn’t have it so lucky. But in the 80’s we were allowed to expand to family members and retirees. That’s how credit unions like Boeing boomed.
And after HR 1151 passed in 1998 – credit unions were allowed to have multiple common bonds. Anyone who lives, works or worships became the phrase that pays. But did it? Credit unions began to change their names in an effort to show the world that anyone could join. And when all of the good ones were taken we shifted to synthesized or pharmaceutical names. “Ask you doctor if Aventa is right for you.”
My dear friend Gene Blishen posted a brilliant blog yesterday in response to all this madness. He cited the Financial Brand article and the “shrinkage” of credit unions in America. Here’s a quote:
“I believe the key component to losing credit unions is their own belief that they are no longer relevant to their membership based on criteria that they inherited from outside sources. They begin to drink the wrong coloured Kool-Aid.” He goes on to say “By following the Pied Piper of ‘bigger is better’ they forget the culture they have and the history they have come from. To put it bluntly, they just give up…”
I would hate to tell one of the 16 teachers in Portland that put up what was a ton of money in 1932 that their vision was in vain. It’s too hard for a small credit union to stay in business in 2012. What with all the regulation, and technology, and competition.
Because it was so easy in 1932 – right?
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September 5, 2012 at 4:01 pm
Christopher Russell
Level playing field, Denise? Not so fast. Many credit unions started with massive subsidies from their sponsor organizations, e.g. free rent, free intra-company communications, employees on the sponsor’s payroll, etc.
Then there is the case of the Realtors FCU, which not too long ago received a cash donation of $10 million from the National Association of Realtors in order to start a credit union. Word on the street is that management spent the money like a drunk sailor on shore leave. A few years later (a short while ago), they went out of business.
Ultimately it’s management that separates the overachievers from the underachievers, and, unfortunately, our industry has too many of the latter. Perhaps as the radio host suggested, GTE no longer wants to be associated with this ilk. If this was even the slightest factor in their decision, can you blame them?
To paraphrase Tevya (you know the character, Denise!), it’s no sin to be small. But, it’s no great honor either.
September 6, 2012 at 6:13 am
Denise Wymore
Christopher,
Thanks for the comment and you’re correct. Almost all credit unions began at the sponsor’s location – meaning there was no rent to pay, no phone or electricity bills – so in essence there was a level playing field.
The Realtors FCU was a tragic tale. Lauded by so many that a new credit union with a common bond can form in this economic climate. But alas – failure on many levels.
As a dear friend of mine said regarding the GTE decision. Not being proud of being a credit union is like being embarrassed that your father is a construction worker.
September 10, 2012 at 7:00 am
Glenn Coble
We started 52 years ago by Erie RR employees. Our first branch was a lunch box. We did drop the Erie name when we absorbed a smaller CU and became community chartered; an action that still evokes criticism from some of our “old-timers.” We are now the Marion Community Credit Union, a name that, along with the stupid requirement to tell everyone that we are backed by CUNA, takes up about half the time of a 30 second ad.
Two years ago we celebrated our 50th year and we told our story a lot. I believe our front line loves that story and we will continue to tell it as long as I’m here.
I use our size (9000 members, 60m) as a positive. We have nearly doubled in the last 8 years but being small has given us an advantage especially since we now have “Shared Branching” and a large ATM network. In our ads we quite often say “We’re just like the big boys… but we know your name.”
I believe within the phrase that Christopher quoted, “it’s no sin to be small. But, it’s no great honor either” there is a hidden dig at being small. I know this industry is filled with facts and studies and surveys to prove whatever the author wants to prove. But the seat of my pants tells me that there are dozens of factor that govern the size of your CU. But if the CU has a culture of caring, honesty, improvement for its members and community involvement it will grow at a health, steady rate.
Money is not always the answer. I find it ludicrous that we, as non-profit organizations are always looking to improve our profit and that our regulators seem to regulate us on that basis.