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Credit union backers urge partnership with off-Island institution
Volunteers working to create a credit union on Vashon announced their recommendation last week
that a long-standing Bell-evue-based credit union open a branch on the Island.
After months of studying the issue of forming a new credit union, the group decided it makes the most sense to invite to the Island a well-regarded and financially healthy credit union rather than create a new one from scratch.
“From the beginning, the purpose of this project was to make it easier to finance (the Island’s) sustainable activities. … What we’ve discovered is the simplest way to do that is to partner with a like-minded credit union. In my mind, that’s good news,” said Rob Harmon, one of the credit union volunteers.
One of the most notable ways partnering with an existing credit union makes sense is that it requires far less community money than to build one from the ground up, organizers say.
In their months of research, the volunteers of CU Vashon — as they called the credit union project — learned that creating a brand new credit union would be an expensive proposition. Federal laws dictate that a new credit union must have enough capital in reserve to cover two years of operating expenses and 7 percent of its deposits. To form the most basic of credit unions would require hundreds of thousands of dollars, and to form a full-service credit union, which Islanders indicated they favored in a recent community survey, would require considerably more, according to Bill Moyer, one of the credit union organizers.
“We could need very likely need to raise a million dollars in capital,” he said.
Raising this kind of money could take three to five years, tie up funds that could be used for other Island needs and still a credit union might not be a sure thing, said Rex Stratton, another of the group’s primary organizers.
Aside from Tulip Credit Union, which serves low-income people and is governed by different rules, no new credit unions have formed in the state in the last 12 years because of the upfront capital needed, Stratton said. But Vashon is a different kind of place, and the organizers believed strongly in their mission and kept working on advancing the project.
Meanwhile last June, unbeknownst to the credit union group, Islander Greg Kruse, a contractor who specializes in energy efficiency, invited Shannon Ellis-Brock, a vice president with Puget Sound Cooperative Credit Union (PSCCU), to the Caulk the Rock energy fair to share information on the credit union’s low-interest energy efficiency loans, she said.
At the fair, so many people approached her and asked if she was with the credit union the Island was creating that her husband, who had come along for the day, said to her, “Maybe you should have a branch here.”
She, of course, had been thinking the same thing — and the ball began rolling.
She broached the idea with Kevin Ellisen, the credit union’s CEO, and within days the two came to the Island to meet with many of the CU Vashon volunteers, she said. It was a several-hour meeting.
“I came away thinking it a was a good thing and that we could go forward,” she said.
The Vashon credit union volunteers were also impressed, Stratton said. They had done their homework on PSCCU, as well as 12 other credit unions that could conceivably serve Vashon, and they liked what they learned.
PSCCU has about 4,000 members and $50 million in assets, according to Stratton. This makes it a small credit union, an advantage for Vashon, he said. Islanders could have more say in where their money goes with a small credit union than with a credit union behemoth, such as Boeing Employees Credit Union, which has 600,000 members and $6 billion in assets.
PSCCU’s overall financial health is good, Stratton said. Their loan losses have been small, meaning they are careful in making loans and were not part of the loan-making frenzy a few years back. They are involved with green technologies and weatherization, and Stratton said he expects them to be active in this community and solve some community problems.
Members of the CU Vashon group have unanimously endorsed this partnership, he said, and are looking forward to the possibilities it will create.
“We had a concept that was a dream and a wish, and we’re looking at potential fulfillment in the near term,” said organizer John Staczek “Fulfillment is at the doorstep.”
Indeed, all parties involved say they hope that a full-service Vashon branch will be open by next summer. Still, there is much work to do. PSCCU is working to create a forecast of what the financial picture of expanding here might look like, and the board will vote in September on the expansion. It is expected to vote yes, Ellis-Brock said, as early conversations with board members have been positive. Also, a location needs to be found and renovated, and Island staff has to be hired and trained.
The CU Vashon volunteers have plenty of work to do as well. Their vision was never to simply open a credit union and be done, but rather, to create a financial “third place,” Stratton said, where Islanders can gather to talk about challenges and how to meet them, drawing on Island creativity and innovation to do so.
Preparing for their new roles, they have renamed themselves; the group is still CU Vashon, but now it stands for “Community United Vashon,” Stratton said.
“We will work with PSCCU and other financial institutions to create financial solutions on Vashon,” he said.
One of their first orders of business, Stratton said, is that he and Harmon will team up with WisEnergy to improve the energy efficiency of Vashon’s homes. The biggest obstacle to some of WisEnergy’s goals has been financing, Harmon said, and with PSCCU on board, with its solid track record of low-interest loans and other work in the energy efficiency field, he believes that obstacle may soon cease to exist for many Islanders.
The list of possibilities a credit union might assist the community with is long, organizers say, and and includes offering micro credit and agricultural loans and providing a solution to the Island’s problematic septic systems.
As for PSCCU, Ellis-Brock said they are receptive to Vashon’s ideas and have some of their own.
“We’re open-minded and progressive enough … to do things that are not the norm in the banking industry. You have to adapt, try new things. It’s not that scary.”
This fall, CU Vashon volunteers plan to host community meetings to offer more information on credit unions in general, this new partnership in particular and what it could mean for Vashon.
It means a lot, according to Moyer, who was one of the first people behind the idea of bringing a credit union to the Island.
“Our partnership with PSCCU is an opportunity for Islanders to be the authors of our financial future,” he said.