It’s Really the Principle of the Thing: RIP Teachers Credit Union
Every quarter we look at the merger numbers and keep track of the new credit unions chartered and post it on the CU De Novo Collective website. It’s our scoreboard and our warning to the movement. We are disappearing at a rapid pace. We are not even close to replacing the number of credit unions that are dissolved each year. There have only been 4 new charters granted this year and we’re on track to lose close to 140.
Every quarter Frank Diekmann publishes a series of articles summarizing the mergers, detecting patterns, questioning some accounting moves and in some way memorializing their history and paying homage to the founders. After the June NCUA merger report was released earlier this year he observed “that nearly all are below $10 million in assets (just two are between $40-$100 million in assets), and again [the report] uncovers CUs unable to find new managers, saying they simply can’t afford new technology (two of the CUs don’t have websites) and, in one case, one offering a pretty unique formula for how it determined net worth should not be returned to members.”
According to the NCUA merger reports, the No. 1 reason cited for mergers today is for “expanded services.”
In the September 2023, the NCUA quarterly merger report stated the $9.6M asset Port Washington Teachers Federal Credit Union (PWTFCU) would merge with the $56M asset Port Washington Federal Credit Union (PWFCU) on Dec. 21, 2023. They cited expanded services.
According to their website, PWTFCU has been serving all past and present district employees and their families for over 60 years (according to the NCUA records they were founded in 1950 so that would be 73 years in business). They offered new and used auto, home equity, unsecured loans, education loans and even had a category for boat loans. It doesn’t appear they had checking accounts or credit cards.
PWTFCU was is well capitalized at 36.9% compared to PWFCU, which sits at 15.6% (still a good number). The teachers credit union had a negative ROA and was only 35% loaned out, which is incredibly low considering the movement is at an all-time high right now. So, it’s hard to tell what happened there. Maybe teachers don’t like to borrow?
The credit union’s only branch, located across the street from John Philip Sousa Elementary School, closed that day for good. After that day all business was to be conducted at the only branch that PWFCU has.
You probably noticed some similarities in the name. The teachers are already eligible to join the PWFCU if they needed expanded services. In the end, PWFCU will get an influx of capital and money to loan out so there’s a plus. On paper, I guess it makes sense.
But after 73 years you have to wonder, what happened?
On small credit union mergers, Chip Filson recently wrote, “These are not financial failures. They are failures of morale. The greatest threat to the coop system is not external, but internal. The belief that the legacy of multiple generations of human investment they inherited, no longer matters.”
Said another way, FDR observed, “Humans are not prisoners of fate, but only prisoners of their own minds.”