The Future of Home-Based CUs

Many home-based CUs face an uncertain future in the wake of an NCUA proposed rule.

June 26, 2014

Jonelle McMillen knows precisely when her work day begins. “Either after breakfast or whenever the phone rings,” she says. “Sometimes that’s before 7 a.m.”

McMillen “commutes” from her kitchen to a spare bedroom that has served as the headquarters of the Beaver Falls (Pa.) Teachers Federal Credit Union for the past 13 years. She manages the credit union’s operations out of this space, but certainly doesn’t confine herself to it. McMillen makes regular visits to the school district’s four schools to meet with members. She has been known to meet with them at high-school football and basketball games, and even the mall.

“I have been referred to as the credit union on wheels,” she says.

Beaver Falls Teachers Federal, with $2.5 million in assets and a healthy net worth, celebrated its 75th anniversary last year. The 520-member credit union offers auto and personal loans, online banking, and soon will launch automated clearinghouse (ACH) services, as well as debit and credit cards.

But it’s also one of about 74 federally insured credit unions facing an uncertain future. That’s because NCUA issued a proposed rule in December that would require home-based credit unions to move into commercial office space within two years of a final rule. If NCUA’s proposal passes in its current form, home-based credit unions would immediately be required to schedule any meetings (including examinations) with NCUA staff in public places (“CUNA: Proposed rule too broad”).

“When our board members were first told of the proposed rule, they were very upset, and said we probably didn’t have any choice but to merge, and I tend to agree,” McMillen says. “But for now, we’re playing wait-and-see.”

‘High-touch’ service

For 17 years, Rick Frey has managed $702,000 asset Eagle Can Employees Federal Credit Union from his home in Wellsburg, W.Va. Frey retired from Eagle Manufacturing Co. about 18 months ago, after working 43 years alongside most of the credit union’s 157 members.

When employed at the plant, Frey would oft en conduct credit union business during lunch breaks or after hours. If need be, he’d return to the plant to deliver a check to a member who worked a different shift . And Frey had the company’s blessing to step away from his factory job to handle urgent credit union business.

“They’re not high-tech, but they’re certainly high-touch,” says Ken Watts, president of the West Virginia Credit Union League (WVCUL).

Eagle Manufacturing Co. has furnished the credit union with a secure office at the plant—equipped with a desk, computer, file cabinets, a phone line, and an Internet connection. Frey maintains a regular presence there, serving employees and executives.

It’s his custom to make life easier by delivering checks to members’ workstations. “I try to keep the members spoiled,” Frey says.

The company has given Frey approval to transition the credit union’s entire operations to the office to comply with the NCUA’s final rule, if necessary.

“They’re extremely supportive,” Frey says. “If I need anything, they’ll help us.”

NEXT: A way of life



1. Regulatory advocacy resources select “legislative and regulatory advocacy”

2. Small Credit Union Committee

NCUA’s Office of Small Credit Union Initiatives

A way of life

Serving as manager at Beaver Falls Teachers Federal isn’t a job—it’s a way of life. Only five people have held the position since the credit union formed in 1938, and all worked from home.

McMillen received her indoctrination in 1971 when fellow math teacher Donald Hicks, then the manager, recruited her onto the board and instilled within her a passion for credit union principles.

“He would host board meetings in his home,” McMillen recalls. “After school, I’d go to his home and have dinner with his family. I saw what the credit union meant to him, and he’d tell me stories about all the people the credit union helped who probably couldn’t get help anywhere else.”

Like her predecessors, McMillen goes the extra mile to serve members. She implemented online banking at Beaver Falls Teachers Federal as an after-hours project with the help of an NCUA grant for small credit unions. She received an iPad as a gift from her husband so she could better monitor emails from members while she’s on the go throughout the district.

Likewise, managing Eagle Can Employees Federal has become a major part of Frey’s identity. Officially, he works about 15 hours per week, but he’s never really off the clock.

“When you do this for a while, it gets into your blood,” says Frey, who first became involved with the credit union more than 30 years ago as a board member. “It’s something you do because of the sense of satisfaction you get from helping people.”

Formidable obstacles ahead

It’s difficult for small credit unions to keep up with a growing regulatory burden, expanding technology demands, and members’ appetite for quicker and more sophisticated services.

Frey and McMillen lean heavily on WVCUL and Pennsylvania Credit Union Association, respectively, as well as CUNA and NCUA’s Office of Small Credit Union Initiatives, for help—especially in navigating compliance issues.

Frey regularly attends WVCUL seminars and has been an officer and program director in the local chapter. On-site, he receives help running the credit union from another longtime Eagle Manufacturing Co. employee, Jim Cavalier.

For additional support, McMillen turns to Denise Godwin, assistant manager and treasurer, and Richard “Pete” Kinkead, who previously ran the credit union.

But if NCUA finalizes its proposal in its current form, Beaver Falls Teachers Federal’s existence could hinge on the board’s ability to find a replacement for McMillen.

“Moving the credit union to another location is really going to be a challenge,” she says. “I’m going to be 69 this year. I don’t mind running the credit union from my home because of the flexibility it gives me. But could we find somebody else willing to run the credit union from a different location and be ready in two years? I don’t know.”

The credit union has survived rough transitions in the past, she points out. As Beaver Falls Teachers Federal celebrates three-quarters of a century in existence, the credit union will call on that persevering spirit once again.

“We sure hope we’re here 75 years from now,” she says.

ADAM MERTZ is Credit Union Magazine’s senior editor. Contact him at 608-231-4342 or at Follow him on Twitter via @AdamMertzCUNA.