Fake News Abounds in CU Land

By Bo McDonald

I recently read an article in American Banker titled, “Merge or die: Small credit unions struggle to stay afloat.” What a click bait headline and a patently false blanket statement!

One of my biggest rules when I facilitate a credit union strategic planning session is: NO blanket statements. I’ll ask for data to back what’s being said in order to prove a statement. I would ask the same of American Banker on this headline.

Not all small, or as I prefer to refer to them, boutique credit unions, are struggling to stay afloat. Those that choose to merge are typically doing so for one of a few reasons:

“No succession planning.” Shame on the leadership and board for not exhausting all options. In many cases I’ve seen this excuse used without even attempting to fill open CEO or board positions. The NCUA has recently issued a proposal on this issue, which saddens me greatly that we are not doing our best to serve our members.
“No opportunity.” I would ask any credit union that is not growing to take a look around their community before signing those merger documents. If you can demonstrate no poverty, no unbanked or underbanked population, and everyone is financially empowered in that community, then carry on with the euthanasia of your credit union.
No one speaks publicly about this, but certain billion-dollar credit unions toss out sweet retirement deals for the CEOs of some small credit unions. Only the CEO taking the bribe, sorry, payout and the ego of the other credit union win in that deal.

It Comes Down to Fear

The merging of boutique credit unions comes down to fear. Some refuse to make succession planning a priority because it involves going outside of our comfort bubble and bringing new people who might have new ideas for “our” credit union. We say there is no opportunity because we’re fearful of taking a risk and making necessary change.

What about Maple Federal Credit Union? Pamela Stelly has led the $60 million, 8,300- member boutique credit union to unprecedented growth over the last few years. Maple achieved 20% membership growth and 24% loan growth in 2021 – well above peer.

Or perhaps, the example, of $67 million, 7,200-member Columbine Federal Credit Union. Within a 12-month span first-time CEO Arick Williams has shown an incredible turnaround by making some tough decisions and investing the time. The credit union reached 8% loan growth last year.

Then there is Members Credit Union, which has completely re-invented itself after identifying a huge unbanked population in its normally very wealthy community. This $41 million credit union experienced nearly 5% membership growth and 11% loan growth.

The Common Theme

I could go on, but the common theme among the three credit unions is the tenacity of the leadership. The CEOs and board members at these credit unions have faced their fears head-on in their decision-making process. Boutique credit unions’ success is not about the absence of fear but taking calculated risks that are well supported and executed despite fear. They continue to show passion and commitment to their credit union and creating opportunities within their communities and fields of membership.

In this article mentioned above, one consultant advised: “To survive, struggling credit unions could defer rate increases paid on deposits.”

To survive? Is that good enough? Is surviving the goal? I would hope not. You can’t grow by cutting expenses. You need a strong mission and vision; you need a committed leadership team that manages risk – not avoids it – and continues to make bold decisions that will build a credit union for the next generation.

Drawing a Line

I applaud Kathy Hilligas, manager at Central Nebraska FCU in Grand Island, Neb., quoted in the article, for drawing a line in the sand that merger is a last resort. Hilligas acknowledged that there are very few options in town aside from one out of town bank branch. Significant opportunities exist for her boutique credit union.

I chair the board of a credit union that recently opened up its field of membership in a rural Texas town in a similar situation to Central Nebraska. Our membership skyrocketed 30% in one quarter with new members who finally had a responsible financial services option.

“Whether you think you can, or you can’t, you’re right.” With misleading headlines trashing our boutique credit unions, it’s no wonder many CEOs think they can’t.

Bo McDonald is President/CEO of Your Marketing Co. He can be reached at bo@yourmarketingco.com

CUToday

Remember You're Not Alone With NCOFCU (pdf)

Comments

Effective January 1, 2026 - Credit Union Succession Planning

First Responder Credit Union Academy www. NCOFCU .org Effective January 1, 2026 This statement from current NCUA Chairman Todd M. Harper states that “this final rule on succession planning establishes a way for the NCUA to address one of the most common causes for unplanned and unforced credit union mergers. It also ensures that smaller institutions remain the cornerstone of ...

Read Complete Article HERE>»

Federal Reserve Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3‑3/4 percent

Federal Reserve issues FOMC statement For release at 2:00 p.m. EST Share Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months. In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3‑3/4 percent. In considering the extent and timing of additional adjustments to the target range for...

Read Complete Article HERE>»

Credit Union Profits Climb 21% As Margins Widen, NCUA Reports

If you don't read anything else, read this: Performance By Asset Category WASHINGTON—Federally insured credit unions posted a sharp rebound in profitability through the third quarter of 2025, with net income up 21% year over year to an annualized $19.1 billion, according to new NCUA data. The increase—one of the strongest gains across the agency’s quarterly metrics—came as institutions benefited from rising interest income, wider net interest margins, and relatively stable credit costs. The NCUA reported that Q3 data show interest income climbed 7.6% over the period while the systemwide net interest margin expanded nearly 13%, helping credit unions absorb higher operating expenses and modest increases in loan-loss provisioning. The earnings surge outpaced the credit union system’s 3.7% asset growth and came amid a mixed lending environment in which residential mortgage balances rose sharply, but auto lending weakened. The industry’s aggregate net worth ratio also im...

Read Complete Article HERE>»

Sunday Reading - Lake Manly Returns

Lake Manly Returns An ancient lake has reemerged in California's Death Valley National Park following record rainfall this year. Between 128,000 and 186,000 years ago, meltwater from ice covering the Sierra Nevada fed rivers that emptied into Badwater Basin, North America’s lowest point at 282 feet below sea level. The steady flow sustained Lake Manly, nearly 100 miles long and roughly 600 feet deep. The lake disappeared as Death Valley evolved into the driest place in North America , with some areas receiving under two inches of rain annually. This year, however, the park received 2.41 inches between September and November, marking its wettest autumn on record and triggering the temporary return of a shorter, shallower Lake Manly. Above-average rainfall periodically brings Lake Manly back, including in 2023 when Hurricane Hilary dumped 2.2 inches of rain on a single August day, allowing visi...

Read Complete Article HERE>»

Fed to Keep Rates Higher Even Longer; CU Economists Still See Chance for Cuts Soon

CU trade economists think another good inflation report or two might convince the Fed to lower rates twice this year. By Jim DuPlessis | June 12, 2024 at 04:11 PM Fed Chair Jerome Powell speaks at a news conference in Washington, D.C., Wednesday afternoon. The Fed kicked the can down the road Wednesday, keeping rates at their current high level and signaling that it will take more time in reducing them. The Federal Open Market Committee (FOMC) ended its two-day meeting Wednesday with a decision to maintain the federal funds rate at 5.25% to 5.50%. Its projection report showed half of FOMC members expect the rate to fall to 5.1% by year's end, indicating one 25-basis-point rate cut this year. In March, the median expectation was for two rate cuts. Fed Chair Jerome Powell said half of members expect rates will fall to 3.1% by end of 2026. The FOMC's four remaining meetings this year are July 30-31, Sept. 17-18, N...

Read Complete Article HERE>»

Sunday Reading - What happened at Pearl Harbor?

What happened at Pearl Harbor? On Dec. 7, 1941, Japan launched a surprise attack on the American naval base at Pearl Harbor, Hawaii ( watch visualization ). The strike marked the culmination of a decade of rising tensions as Japan expanded its empire across East Asia and the Pacific. With its industrial capacity unable to match the United States in a long-term war, Japanese leaders opted for a preemptive blow designed to cripple American naval power. The attack—which permanently sank three American ships, damaged 15 more, and killed 2,403 Americans—was a tactical success but a strategic failure. Japanese forces did not hit the base’s oil reserves, submarine facilities, or repair yards, all of which proved crucial in the months that followed. The US Navy ultimately refloated all but three damaged ships, returning many to combat . Pearl Harbor was the deadliest attack on US ...

Read Complete Article HERE>»

NCUA promises flexibility in examinations and the flexibility to prudently adjust or alter member loan terms

In an effort to help members through the coronavirus crisis, the NCUA will give credit unions the flexibility to prudently adjust or alter member loan terms and will not subject those decisions to “examiner criticism,” agency Chairman Rodney Hood said Monday. Hood, in a letter to credit unions , outlined the steps the agency is taking to address the health emergency. Those steps include requiring all agency staff to work offsite through March 30. All examination work will be conducted offsite as well, the agency said. “A credit union’s efforts to work with members in communities under stress may contribute to the strength and recovery of these communities,” Hood wrote in outlining steps that credit unions may take to help members. Those steps include: Waiving ATM fees and increasing ATM daily cash withdrawal limits. Waiving overdraft fees. Waiving early withdrawal penalties in time deposits. Easing restrictions on cashing out-of-state and non-members checks. Easing credit terms f...

Read Complete Article HERE>»

NCUA"s new video module provides best practices for merging

The three-part video module provided by NCUA, available online here , examines current trends in mergers, when a credit union board should consider a merger and how to negotiate a merger agreement that best serves the credit union’s interests. Every credit union should discuss the possibilities of a future merger in their strategic planning.

Read Complete Article HERE>»

Is it a ‘skip’ or a ‘pause’? Federal Reserve won’t likely raise rates next week but maybe next month

WASHINGTON — Don’t call it a “pause.” When the Federal Reserve meets next week, it is widely expected to leave interest rates alone — after 10 straight meetings in which it has jacked up its key rate to fight inflation. But what might otherwise be seen as a “pause” will likely be characterized instead as a “skip.” The difference? A “pause” might suggest that the Fed may not raise its benchmark rate again. A “skip” implies that it probably will — just not now. The purpose of suspending its rate hikes is to give the Fed’s policymakers time to look around and assess how much higher borrowing rates are slowing inflation. Calling next week’s decision a “skip” is also a way for Chair Jerome Powell to forge a consensus among an increasingly fractious committee of Fed policymakers. One group of Fed officials would like to pause their hikes and decide, over time, whether to increase rates any further. But a second group worries that inflation is still too high and would prefer tha...

Read Complete Article HERE>»

Help your credit union and NCOFCU with a Charitable Donation Account (CDA)

What is a NCUA Charitable Donation Account (CDA) Investment? CDA is a hybrid investment which grants a federal credit union expanded investment powers to fund charitable contributions. To qualify as a CDA, the primary purpose of the investment must be to fund charitable contributions. To meet the primary purpose test, a minimum of 51% of the earnings and capital gains must be distributed to charities at a frequency of no less than five years. Gains and interest in excess of the 51% are booked as investment income by the credit union. How does your credit union retain control over the CDA? Your credit union maintains authority over the investment management of the CDA. MEMBERS Trust Company will develop an Investment Policy Statement that is compatible with the credit union’s risk tolerance, investment time period and business objective for its CDA. Investment strategy may be changed at any time by the credit union by simply notifying MEMBERS Trust Company of the need to change ...

Read Complete Article HERE>»

First-responder Credit Union Newsroom

Search This Blog