Where is Bill Cosby when you really need him? Credit unions sure could use a leader these days willing to take a little heat! As you know, the father of "Fat Albert" certainly has the temperature turned up to a full boil, of late, within the black community.
Seems Mr. Cosby has been a trifle too keen in his observations, a bit too clear in his remarks about the attitudes of youth, the misuse of language, and the lack of educational achievement within that community. Pretty blunt, hard-edged comments; nothing at all clever! Some folks think the master comedian is no longer funny. They're right! He isn't-at least not about those issues.
A major case of "incorrectitudinus politicatus?" Probably not; all the man has done is hang a social mirror in front of our noses. We all know in our heart that Bill Cosby did not create the image we see ... he just made us look!
Mirrors have a nasty habit, unfortunately, of being unforgiving! Mind if we sneak a quick glance at a credit union image? The reflection of interest is Lake Michigan-not the body of water, the credit union. The issue, of course, is charter conversion.
Lake Michigan Credit Union is the latest-and until Community Credit Union in Texas, the largest-credit union, at $1.1 billion in assets, to try (and fail) to convert from a credit union to a mutual bank charter. Nothing much new about that; several credit unions recently have discovered the local media, member outrage, and public notoriety while pursuing a charter change. Old news!
Did wonder, however; since I had not followed the Lake Michigan Credit Union story closely, why such a large credit union would undertake such a drastic shift? Assumed it involved the standard litany of concerns: restrained growth, earnings pressures, capital restrictions, membership limitations, business and mortgage lending caps, regulatory oversight. Anyway, thought I'd take a look!
Lake Michigan Credit Union (LMCU) appears to be a well-run credit union! Its rates and range of services are highly attractive and competitive (check it out at www.lmcu.org!). The members have "got it good" at LMCU!
Over the last five years, LMCU has increased in assets from $278 million to $1.1 billion-that's a pretty fancy 30% annual growth rate! Capital growth has matched asset growth during that period, with net worth growing from $22 million to almost $100 million -quite remarkable! And, even better; LMCU's return on assets (ROA) exceeds 2.00%! For you math majors and CPA-types, a credit union with a 2.00% ROA can remain "well capitalized (7% or more)" even while continuing to compound asset growth at 30% to infinity!! (You liberal arts folks will just have to take my word for it!) So, the future for LMCU looks very, very bright!
LMCU also has a broad, diverse field of membership in an affluent, economically strong region. Although LMCU has 105,000 members, it lists potential membership at more than 700,000 people. With over 85% of the potential membership still untapped, major growth and continued expansion for LMCU seem assured.
Mortgage and business lending limitations clearly are not an issue as LMCU has no significant lending programs in either of these areas. Capital also appears very strong at LMCU with a net worth ratio of 8.29% at Sept. 30, 2004. LMCU is, and always has been, a well-capitalized credit union under all regulatory standards.
Despite that astounding 30% annual growth rate, LMCU has actually increased its capital ratio in each of the last four quarters-a superb performance! And lastly, anyone who's been around a while knows that the Michigan Credit Union Division and its experienced leader, Roger Little, are among the best and fairest in the regulatory business.
Strange, very strange! Why would the members of LMCU give up all this for a mutual savings bank charter? Who's idea was this? What was their motivation? What do the members get in exchange -other than taxation and loss of ownership?
Bill Cosby would probably call all this "attempted theft." But, that wouldn't be funny.
Jim Blaine is president and CEO of State Employees Credit Union, Raleigh, N.C.
Philanthropist: a rich (and usually bald) old gentleman who has trainded himself to grin while his conscience is picking his pocket. -Ambrose Bierce
