By Ray Birch
KENNEWICK, Wash. — When Doug Wadsworth, president and CEO of Tri-CU Credit Union, wrapped up what he describes as another time-consuming and inefficient NCUA exam earlier this year, he was left with a sense of lingering frustration.
That moment, combined with years of reflection on the challenges of running a small institution, eventually pushed him to create a new effort designed specifically to help credit unions under $500 million in assets.
The initiative, called the Endangered Small Credit Union Defense (ESCUD), was launched in late July. Structured as a nonprofit social welfare organization rather than a trade association, it seeks endorsements—rather than dues or memberships—from small credit unions to build collective leverage.
Doug Wadsworth (L) with NCUA Chairman Kyle Hauptman.
A ‘Perfect Storm’
Wadsworth, ESCUD president and founder, said the idea grew out of what he calls a “perfect storm” of events. After 17 years leading a $74-million credit union, he had already been working on a book about small CU profitability and mission. Then came an exam cycle he found unnecessarily duplicative and ill-timed, followed by frustration in trying to gain traction with both regulators and trade groups on regulatory relief.
At the same time, he saw warning signs in the industry. Large credit union leaders at a small-CU conference he had just attended, projected there would be “half as many credit unions in ten years” – in other words, most smaller institutions would probably not survive the next decade. Meanwhile, in his own community, a large, fast-expanding credit union from out of town announced plans to build multiple new branches—a reminder, Wadsworth said, of the competitive pressures smaller players face.
For him, the threats boil down to two main forces: “The two biggest challenges are the regulatory compliance burden that keeps growing and competitive pressure. Increasingly, that pressure isn’t just from banks, but also from large aggressively expanding credit unions, which is new,” he said. He emphasized that he advocates for all credit unions (big and small), but that the cooperative ecosystem is evolving, and small credit unions are facing mounting competitive pressure, that didn’t exist 10 years ago.
What ESCUD Hopes To Accomplish
ESCUD’s stated mission is twofold:
- Advocacy for regulatory relief: Wadsworth and his colleagues want to focus attention on rules and regulations that they argue are disproportionately costly for smaller institutions, without providing any value to the small credit unions. Their early advocacy priorities include relief from CECL, HMDA, NMLS and certain BSA requirements.
- Promotion of member-focused values: The group also encourages small credit unions to highlight and expand their “people over profit” practices, which Wadsworth argues are vital to the credit union tax exemption’s long-term defense.
He added that part of the challenge has been small credit unions themselves.
“Many of us have been asleep at the wheel, too busy running our little shops to dedicate time to advocacy,” he contended.
That silence, he argues, has left trade associations focusing their energy on advocacy that helps the big credit unions get even bigger, rather than the specific regulatory relief small credit unions need.
“That’s what we’ve done—put together specifics,” Wadsworth said, noting his recent detailed letter to the NCUA outlining potential relief measures for small credit unions. “Regulators ask for specifics. We know what they are.”
ESCUD has already secured endorsements from a growing list of small credit unions. With that, Wadsworth said, doors are opening—he’s met with NCUA Chairman Kyle Hauptman, spoken on an NCUA town hall panel, and begun conversations with America’s Credit Unions and his local trade association, the GoWest CU Association, about potential collaboration.
Positioning In A Crowded Landscape
The new group is quick to say it is not a competitor to existing leagues or national trade groups. Instead, it aims to add an organized voice where, in Wadsworth’s view, small institutions usually get overshadowed. Wadsworth acknowledged that associations such as America’s Credit Unions and regional leagues are active in regulatory advocacy, but he believes there is an urgent for a more concentrated focus on the unique needs of small credit unions.
Industry observers note that small credit unions face some of the steepest survival challenges: regulatory compliance costs, limited economies of scale, and competitive pressures from larger peers and banks alike.
‘We Don’t Want To Go Extinct’
Wadsworth is clear that ESCUD is still in its early stages—just a few months old—but he insists its message is resonating.
“Small credit unions provide unique value to members and their communities, and that value is irreplaceable,” he said. “We don’t want to go extinct, to the detriment of those who need us most. Small credit unions will only survive if we wake up, and start speaking up.”
Wadsworth recently published a book on amazon, written to help small CUs survive and thrive: Keep it Simple, CEO, a DIY Profitability Guidebook for Small Credit Unions. He can be reached at Doug@Tri-CU.com or on LinkedIn here.