After 31 years at the helm of AAL Credit Union, Roger Fischer,
and his counterpart, Kay Hinkens, president of AAL Members Credit
Union for 14 years, spent their summer not on vacation, but at work,
hammering out the closing of both institutions.
Both Appleton, Wisconsin, credit unions were closed June 30 and
reborn as the AAL Bank and Trust. They kept most employee positions
intact, but the CEO spots, and most member accounts were transferred.
''This decision was made by our sponsor of 14 years, the Aid
Association for Lutherans,'' said Hinkens, whose CU was formed
to serve fraternal members of the Aid Association for Lutherans
throughout the country. (AAL CU served AAL employees.) ''The
sponsor, an insurance company, wanted to capitalize the institution,
and, as a credit union, that was not possible. They informed us
they would no longer be our sponsor.''
''They can invest their money as they need and see fit, but
if they did it as a credit union, it would become the members' money,''
explained Fischer. ''Of course, the members themselves had to
decide whether to liquidate the credit union,'' he said, adding
that it was a purely democratic process, with which both CU boards
of directors struggled mightily.
Hinkens said both CUs were left with three options. ''We could
merge with another credit union; we could go out on our own or we
could liquidate.'' (AAL Members Credit Union had $187 million-in-assets
and 48,000 members; AAL Credit Union had $37.9 million-in-assets
and 8,300 members.)
''Going on their own was deemed unworkable,'' said Hinkens.
''We're in our sponsor's building and were using their mainframe.
That entire infrastructure would have disappeared and we'd need
a new location. The costs would be prohibitive. And because we serve
members of AAL in all fifty states, no local credit union merger
partner seemed appropriate.''
Both boards decided it was in the best interest of members to explain
the circumstances and conduct a vote to liquidate. Members could
opt to sell their loans and keep deposits in the newly formed bank,
or move them elsewhere. About 90% of AAL Members CU did just that,
and 93% of AAL Credit Union members did so.
''To split the capital, we paid a liquidity dividend of $50
to each eligible member, after repaying all debts'' said Hinkens.
''Most employees were offered positions. Neither Roger nor I
were asked to remain.''
Hinkens' CU career spans some 30 years time (she started with Nationwide
CU) and later, helped to start AAL Members. ''I'm proud of what
we accomplished here. Without branches, we built a thriving credit
union using mail and later, the Internet. Neither of these credit
unions went out of business for safety and soundness concerns. Our
sponsor just went in a different direction. I'm glad they were considerate
enough to take the members' options into consideration,'' she
AAL Bank and Trust had its banking powers approved in March, 2001
and opened its doors as of June 1; AAL Members CU closed its doors
on June 30 th.
''There's no object lesson here,'' surmised Hinkens. ''This
is really nothing new. Military credit unions have closed before.
Credit unions sponsored by paper mills and other kinds of manufacturing
companies have closed. I don't see a pattern. Our sponsor had a
different vision to have a capitalizing entity to grow. I've been
treated well and I have no regrets.''
''AAL Bank and Trust will not likely be a 'traditional' bank,''
noted Hinkens, because AAL is the sole stockholder. ''I think
it'll be more of a 'fraternal' bank that will keep its members'
interests in mind. But it is a stock held bank and not a credit
union. The members no longer own it.''
''Yes, something was lost,'' agreed Fischer. ''The
members lost stock in something they owned, something in the past.
The sad part is, with a lot of people- if you asked them what it
was- they probably wouldn't know.''
Neither Fischer nor Hinkens have made definite plans of their own.
''I thought about driving a truck. Or working for a builder.
Or maybe taking another credit union job. I don't know yet what
I'll do.'' Hinkens said she is through with the 8-to-5 grind.
''I've had a passion for credit unions almost my whole life.
Maybe now I'll try something else. I might work with the local arts
community, do some volunteer work consulting for other credit unions.
But first I'll take a few months off to just relax.''