Six years ago, the Tuscaloosa-based Alabama One Credit Union, one of the state’s largest credit unions, was embroiled in turmoil and legal problems that landed it in conservatorship, resulted in the termination of a number of directors and officers, and unleashed a barrage of unflattering publicity.
“It was like having Elizabeth Taylor on the front page of the National Enquirer every week,” says Patrick La Pine, CEO of the League of Southeastern Credit Unions and Affiliates, which represents 323 credit unions in Alabama, Florida and Georgia.
Fast forward to last July. Alabama One was named a Best-In-State Credit Union, along with four others in Alabama, by none other than Forbes Magazine. Of the nation’s more than 5,200 credit unions, only 182 received the honor.
The architect of this phoenix-like recovery is CEO Bill Wells, a 40-year veteran of the financial world, with experience as a financial regulator, chief risk officer and technology entrepreneur.
When Alabama One found itself in its 18-month conservatorship, Wells came aboard as agent for the conservator, managing the firm’s day-to-day operations.
“Clearly what was needed by that credit union was a leadership and a cultural overhaul,” says La Pine. “It had lawsuits from members, from staff, and obviously regulatory issues with the state.”
Sarah Moore, then administrator of the Alabama Credit Union Administration, made the conservatorship decision and selected Wells, actions La Pine praises as “a bold decision.”
Wells discovered “that fundamentally the credit union was strong,” La Pine says. Even through the upheavals they had a very loyal membership.
Alabama One began as BF Goodrich Credit Union, but like most credit unions now serves a much wider community. Says La Pine, “But it had a very loyal base, even for all the bad press in the local papers and what not.”
When Wells arrived, tasked with assessing the best path forward, he says, “I got to know the institution a lot, got to know the team members a good bit, just felt it had the opportunity to be a great, great institution and fell in love with the institution, fell in love with Tuscaloosa.”
Success Where Most Fail
“Quite often when a credit union goes into conservatorship, it doesn’t come out of conservatorship. It ends up getting dissolved or merged into another credit union,” La Pine says. But Alabama One’s fundamentals were so strong, La Pine says, “I think the regulator wanted to work with them and help them, guide them through this process and get them back on solid footing, which they’ve been able to do.”
Wells started by meeting the people — members in the lobby, staff at work, in both the main office and the branches. Customers were loyal, he discovered, and staff members “embraced the change.”
Where staff had been somewhat embarrassed to wear the company logo, they began to wear it proudly out in the community.
“I’m an old bank regulator,” says Wells, who started in banking and then spent 15 years with the Office of the Comptroller of the Currency. “You know, when you do a turnaround, you focus on your problems or you kind of start rebuilding the institution and we did both at the same time.”
Throughout the tough times, there was little discussion about dissolving the credit union.
“I don’t think, given the strong fundamentals of the financial position, that was ever really an option,” says La Pine. “Usually that only happens when they’re in a dire financial position. I am sure the regulator was approached, but I don’t think there was any serious consideration.”
Instead, they worked through problems, anticipating litigation and dealing with it when it came, focusing on “doing the right thing for the credit union,” La Pine says. “They did the right thing for the membership because only through conservatorship could they discharge management and bring a new management but also they could discharge and reform the board.”
At that point, La Pine says, “you kind of hit the restart button.”
Says Wells, “You know you’re always worried about a run on the institution when you’re conserved. Our members, who are our owners, supported us.”
“We have turned this thing around, the ship is heading in the right direction, and we just see positive momentum for us going forward in the upcoming years.”
By the Numbers
Numbers seem to support Wells.
Assets stood at about $580 million when he arrived; today they are approaching $800 million. Alabama One is in the process of purchasing First Bank of Linden, which will bump assets up to $850 million, and membership has grown to about 60,000.
Moreover, its captal ratio is “about 9.5 right now.”
“One of the things that for us is significant — you know 2020 was a big challenge for all financial institutions — but we merged a credit union out of Montgomery.” Alabama Rural Electric Credit Union, which serves the rural electric cooperatives throughout the state, merged in and immediately Alabama One increased its reach from some 23 counties before the merger to 55 or 56 counties — “and that allows us to be a statewide franchise.”
Technology updates are also in progress, sealing that statewide presence. Wells feels that inattention to technology was one of the fundamental problems under the previous management. The new team has worked to bridge that technology gap and build the services it now offers.
“We have a good digital banking platform, and we are investing heavily in intelligent teller machines,” Wells says. “In five to six years we want to be statewide. We want to be able to reach our members digitally but also have hub presences throughout the different parts
of the state.”
“We try to take more of a rural strategy,” Wells says. “The large cities are so heavily banked, so you’ll see us kind of play around the edges of some of the larger cities.”
According to West Alabama Watchman, the president, chairman and CEO of the Linden Bank, Ann Scott Yelverton, says joining Alabama One will be “an attractive fit for our bank, offering a comprehensive set of products and services to our customers and an expanded geographic diversification.”
La Pine says he expects credit unions to continue to make overtures to smaller banks.
For smaller banks, “Some of their best options for merging are actually credit unions, because if you are a $50 million bank and you feel like you need to merge, you may not find a bank that wants to take you on,” says La Pine.
“As we say down here in Florida, there’s just not enough juice from the squeeze for the acquiring financial institution, but for a credit union that could be a good marriage.”
Bill Gerdes and Joe De Sciose are freelance contributors to Business Alabama. Gerdes is based in Hoover and De Sciose in Birmingham.
This article appears in the March 2021 issue of Business Alabama.
