By Frank J. Diekmann
One of the largest credit unions in the country has said it has no official plans to convert to a bank. That statement alone should cause you to pause. And while some may find comfort in the CU’s reassurances, the more unsettling questions are why Seattle-based BECU even needed to clarify the issue in the first place, and, if a credit union that is growing like BECU has for the past decade isn’t happy with the credit union charter, why would any CU ever be?
As CUToday.info was first to report here, the $18.6-billion BECU has asked the state regulator to approve language that would allow it to keep the BECU name should it convert to a cooperative savings bank charter.
The report led to a statement to CUToday.info from BECU’s director of government affairs, Alison Phelan, that “BECU is committed to our members and to being a state-chartered credit union. We are not considering becoming a cooperative bank or changing our name. BECU was invited by the Washington State Department of Financial Institutions to participate in a work group to be informed and involved in providing feedback on the Bank Modernization Act, and we provided many areas of feedback on behalf of promoting strategic options for all credit unions. BECU is interested in establishing future options for all credit unions to remain member-owned cooperatives.”
Maybe It’s Just Good Planning, But…
Perhaps it was/is just an exercise in hypotheticals by a management team showing long-range foresight, but “strategic options for all credit unions” leaves a Puget Sound’s worth of squish room and also helps to deflect any criticism by suggesting it isn’t just thinking of itself, but all CUs.
But it isn’t just BECU that should be thinking long range here, but the rest of the CU community. The once little co-op founded with less than 10 bucks to serve workers at an aircraft plant in the days when no one envisioned how common air travel would become has grown to more than 1.1 million members. As BECU’s Stacy Collins explained here during a very informative session at CUToday.info’s CUTomorrow Conference, it is now growing by between 8,000 and 10,000 members every month.
Public Discussion Needed
That’s impressive growth for any institution, including a bank—and it’s hard to fathom how a bank charter would accelerate that pace. We’ve seen some less that cooperative motives in the past, but in this case it’s not about board members seeking to convert so they can be compensated, as BECU reports it pays board members anywhere from $10,000 to $12,500 per quarter.
Instead, there would have to be other reasons for considering such a huge move and, if there are, they deserve public discussion.
Appropriately, NCUA has made it more difficult for any federally insured CU to convert to a bank charter by requiring far more disclosures to and communications among members. But those are hurdles, not walls, and I’ve been told numerous times that there are still plenty of consultants and firms in the market hoping to catch at least one big credit union like the fish throwers at Pike Place Market.
Congrats to NWCUA
If there is one group that deserves some kudos in all this it’s the Northwest Credit Union Association. BECU is by far the trade group’s largest dues-payer–its assets are double those of all credit unions combined in Idaho, one of the association’s member states–and typically in an instance like this when a big pole is potentially shopping around for another tent an association issues some delicately parsed statement aimed at ensuring the dues check keeps coming.
But the NWCUA didn’t fold its tent.
The association’s CEO, Troy Stang, told CUToday.info the association believes that "only financial institutions which operate solely under the cooperative principals and under the credit union charter should be able to call themselves a credit union or imply as such.”
Congratulations to the Northwest CU Association for taking a stand.
BECU isn’t just a proud company, it’s a proud and high-profile representative for all credit unions. Its branding is iconic in the Pacific Northwest, its advertising creative and powerful, and its four-letter abbreviation as well-known as REI’s and Ivar’s, (which would certainly explain the desire to keep it should it ever become a bank).
Interestingly (but hopefully never ironically), its tagline is “BECU Own It.” Here’s to hoping its members will do so until long after airline travel is someday obsolete.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.infoor @FrankCUToday.