Wednesday, August 1, 2018

PenFed "No Speed Limit"

The Wall Street Journal is reporting on the aggressive growth strategy of Pentagon Federal Credit Union (McLean, VA) to serve everyone.

James Schenck, chief executive of the credit union, mantra is "No Speed Limit." Pentagon Federal Credit Union (PenFed) has the goal of quadrupling it assets to $75 billion by 2025.

To help fuel its growth, "PenFed has acquired 13 smaller credit unions in a 20-month span between 2015 and 2017, before receiving a regulatory warning about new deals."

The article also points out that anyone can join PenFed by making a one time donation to two troop-supporting organizations. According to the credit union, less than one in five members joined this way.

This would suggests that approximately 300,000 members have been added via these two associations.

However, Robert Taylor, chief executive of Idaho State University Federal Credit Union (Pocatello, ID), worries that credit unions that engage in “expansionism for the sake of expansionism” risk the industry’s reputation.

It could also risk the industry's tax exemption.

Read the story (subscription may be required).


  1. When you join and pay the donation you pay that directly to the CU. Who's verifying that they actually send on the donation? I can tell you that NCUA doesn't verify this.
    Sounds like a great opportunity to pad non-interest income

  2. Economic cannibalism. We are eating our young. Soon there will be no more prey for Pentagon to gobble up. What will be there next hat trick for asset growth? How much cash compensation is being paid out to the merged out credit union CEO and directors to induce the acquisition? How much net worth is being raped, pillaged, plundered, exhausted, depleted, and extinguished from the merged out credit union to grease the pigs at the trough? The members net worth is being squandered. NCUA approved. Members screwed.

    1. NCUA should be congratulated for doing the right thing, approving the mergers.
      There are thousands of credit unions spending millions of “member” capital by sending board members to exotic (or simply expensive) boondoggles while their members get mediocre and below market value versus larger credit unions and banks.
      If you want to soap box on protecting members, work on THAT monumental theft of capital.

  3. To get to $75 billion by 2025, this credit union would need annualized growth of 20% per year, which also means it will need a lot of capital to get there. Assuming the growth is all organic, it would need an ROA of about 2.00% per year to support 20% growth. That's a lot of profit (and risk) each year. Much more than most banks make (take). I guess I don't understand which of the cooperative principles states that you should take that much profit from your participants. Is the board representing the CEO, or is it representing its members?

    1. Is the board whose credit union sends them to expensive conferences to “learn” how to be “better”, only to continue to not provide the technology, convenience and rates that the large credit unions provide...looking out for their members?



The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.