CUJ Q&A

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After 29 years "on the road," Tom Graves, the new president and CEO of King County Credit Union here, says he is "coming home."

Graves, who was born and raised in nearby Renton, Wash., came to King County CU after two-plus years at Government of Guam Employees CU in Barrigada, Guam. Prior to that, he has been in a variety of locations, including Chicago, Alaska, California and the Philippines. He recently told The Credit Union Journal about some of his experiences, and why he returned to the Emerald City.

CUJ: What credit unions have you worked for in your career?

Graves: I started with Alaska USA Federal Credit Union in 1976. I was with Alaska USA for 16 years, until 1992. I spent nine years in Anchorage, I was in the Chicago office from 1986 to 1988, and then I came back to Alaska in Juneau. My next stop was Pacific Services Credit Union in Walnut Creek, Calif. I was there from 1992 to 1995. Then, I was with E-Central Credit Union in Pasadena, Calif., from 1995 to 2002. From December 2002 until last month, I was in Guam. I arrived there six days before the worst typhoon in history, which caused my family to stay in Pasadena until the following summer.

CUJ: How did you like living on Guam?

Graves: It is a remote location. It is out there 1,500 miles east of the Philippines, just a dot in the Pacific Ocean. But the Chamorro people [native to the Mariana Islands, of which Guam is a part] are incredibly warm, and all the residents of Guam are greatly loyal Americans. Many things are familiar, such as the cars people drive and the shows they watch, but there is a unique island twist. Some things are surprisingly sophisticated, such as telecommunications. The biggest challenge is the remoteness. Even with discount airfares, it costs more than $1,200 to get to the U.S.

Going out there was a wonderful experience for my family and myself. My wife and I have three daughters: twins age 15, and a younger daughter who is 13. My family is still on Guam while the girls finish the school year. I will go get them in June.

CUJ: What about working at Government of Guam Employees CU?

Graves: I was brought in to turn things around. The credit union's net worth is the fourth-highest in the country, but it was not being leveraged properly. The net charge-off ratio was the worst in the nation. NCUA was in there every four months.

Another challenge was at the board level-there were three chairs in two years, and one of them received a federal indictment. The board had a politically charged atmosphere that was not always conducive to the credit union. Guam only has a population of about 150,000 plus 10,000 to 20,000 military personnel, so every environment, every board there is highly politically charged. I helped straighten out some accounting issues, and now, NCUA only makes annual visits. It was rewarding to have the organization get turned around as rapidly as it did.

CUJ: What led you to King County CU?

Graves: For one thing, Government of Guam Employees Credit Union doesn't need me any more-they are doing great. Clint Elsom, the former CEO at King County, retired after 24 years. When this opportunity came up, all my friends and colleagues called and e-mailed me as fast as they could. When the recruiters came, I decided to check into it. Seattle is home: I grew up in Renton, which is close by, and I got my degree in accounting from the University of Washington. I want my kids to get to know my family, and they are all here.

CUJ: What kind of challenges do you face at King County CU?

Graves: It is not a turnaround. Clint left a well-run organization with no bombs on its balance sheet and no problems. Though, it faces the same challenges other mid-sized credit unions face.

CUJ: Such as?

Graves: It has a relatively low loan-to-share ratio, about 45% to 46%. Its financial performance is solid, but not spectacular. Also, we have an aging field of membership. The traditional field of membership has been King County employees, though most credit unions in Washington can add anyone in the state. We will focus on King County. We added some fields of memberships in the past few years through mergers. One of those is Starbucks, which hasn't been worked yet. We will evaluate things like that.

It is the board's desire that we raise the loan volume, so that is one focus. I am looking at participation loans to bring up the loan-to-share ratio quickly, though that hasn't yet been approved by the board. We don't see business loans or services as a top-tier priority, maybe in the next two to five years. From my Guam experience, many folks have secondary income through businesses.

CUJ: What is your assessment of the challenges facing the CU movement?

Graves: I am concerned how we have homogenized ourselves as an industry to not take risks. We put together numbers that look good to regulators, but don't extend credit out to our members.

I think we will continue to see credit unions moving in one of a few directions. Some will remain stagnant and will serve their traditional field of membership for as long as the boards can hold out. There will be more mergers, such as Harborstone and Twin County up here. And, some will work to rediscover their roots. I don't share the dim view that all consolidation is a bad thing. Credit unions do not occupy a large share of the financial services market. We don't have to worry about there being enough market share to go around, we just have to get active and get it in the door.

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