Peninsula Credit Union’s Jim Morrell: “Our Collective Voice is Louder Than That of Any Individual”

March 25, 2014

Editor’s Note: With 2013 in the rear-view mirror, Anthem asked Northwest credit union presidents and CEOs to reflect on the past, consider what lies ahead and talk about the challenges — and the opportunities — that await credit unions in 2014. Look for “The CEO Perspective,” an occasional series of interviews from the corner office, in upcoming Anthems.

Jim Morrell does not work in the financial services industry.

“I believe I can help have a positive effect on our ability to continue to be a movement and not just an industry, and on our ability to make a positive impact on people’s financial lives.”
– Jim Morrell, president and CEO
of Peninsula Credit Union

Well, okay, technically he does. But for the president and CEO of Peninsula Credit Union, working as part of the credit union movement is simply not the same as working in the financial services industry. And it’s crucial, he says, for members, colleagues, lawmakers and regulators to understand why.   

“Each of our credit unions began with a group of people who gathered cooperatively to pool their funds together and create a different kind of financial institution,” Morrell says, “a place that kept their mutual interests in mind and wasn’t driven by the motive of profit for a few select shareholders.”

“And we still work together,” he says, “to serve people by improving their financial lives.”

How deeply does that cooperative philosophy run through Morrell’s veins? Ask him about data breaches or tax reform. Talk about regulatory burdens or economic forecasts. Chat about the many ways Peninsula impacts the community it serves. At some point, every conversation will come down to this: “Our collective voice is louder,” Morrell will tell you, “than that of any individual.”

Asked to provide a recent photo for this story, Morrell submitted a picture of himself surrounded by his Peninsula colleagues. “It should be obvious,” he wrote, “though I may not have mentioned it directly, that everything we are doing takes a team.”

And yet it’s hard to imagine the credit union movement or the Peninsula team without Morrell, who is one of the Northwest’s most dynamic voices.

He has been president and CEO of Shelton-based Peninsula since 2012, after stints at iQ Credit Union in Vancouver and Maps Credit Union in Salem. Today, Morrell serves as co-chair of the Northwest Credit Union Association’s Washington State Governmental Affairs Committee and is a member of both its Grassroots and Political Action subcommittees. He also serves on the board of directors of the Western Payments Alliance, representing 1,200 financial institutions in 12 western states.

Morrell is a member of the Shelton-Mason Chamber of Commerce’s Finance Committee and the Shelton Skookum Rotary Club. He serves as a Skookum Rotary Foundation board member, and as a board member for The Community Foundation of South Puget Sound. He recently served the City of Shelton on its Poverty Task Force.

Morrell is a former participant in the Filene Research Institute’s i3 program and a past chair of the CUNA Technology Council.He also is certified as a Credit Union Development Educator. In 2008, he was named Information Technology Executive of the Year by Credit Union Times; in 2010, he was recognized as the Credit Union Professional of the Year by the Washington Credit Union League.

The common thread running through Morrell’s resume? “I believe I can help have a positive effect on our ability to continue to be a movement and not just an industry,” he says, “and on our ability to make a positive impact on people’s financial lives.”

Q: You advocate on behalf of credit unions in Olympia and Washington, D.C., where you’ve spoken passionately about the need to make sure people understand what makes the credit union movement unique. What’s the message you’re trying to deliver?

A: It’s a message that is grounded in the 100th-anniversary theme of my alma mater, Pacific Lutheran University: “Educating for Service.” What we do as credit unions is serve people by working to improve their financial lives.

I believe we have an obligation as a credit union movement to move people from whatever financial place in life they find themselves to a better place. If someone is unbanked or under-banked, for example, how can we provide options that will treat them fairly, as our original founders would have wanted?  It’s not by charging interest rates of 400 percent when they have an unexpected family emergency, but by helping to teach them good savings habits and creating an atmosphere of extraordinary trust. When someone is fortunate enough to have wealth, what do we do to help them plan for their retirement or their child’s education, buy a new home or car, or find other ways to further enhance their financial life?

Lawmakers and regulators need to hear these stories of how we work with our members and why we are doing what we do as financial cooperatives. It’s important that they not be confused by the noise created by other lobbying groups and industries that would like to see us eliminated for their own profitable gain.

Q: Do you think that message is being heard?

Jim Morrell (standing at left) joins his Northwest credit union colleagues for a meeting with Rep. Derek Kilmer during last month’s Governmental Affairs Conference in Washington, D.C. “We will be much more effective,” Morrell says, “if we make sure that these folks know us, know our story, and know that we are fighting on a daily basis for the constituents and communities that they represent.”

A: The role we play as credit union professionals in defending our credit union tax status is rooted in who we are as not-for-profit, democratically controlled financial cooperatives, and only time will tell whether Congress has the ability to tackle tax reform in any significant way.But at the end of February, it was very gratifying to learn that the 1.3 million “Don’t Tax My Credit Union” contacts with lawmakers had worked.  The tax reform proposal released by House Ways & Means Committee Chairman Dave Camp was a big win.

Not only was the number of contacts nationally impressive, but the collaborative efforts that took place to heighten awareness on a local level were equally inspiring. For us, that involved working with Our Community Credit Union, which also has a main office in Shelton. Together, we ran ads in our local newspapers, and on Fridays, our staffs wore “Don’t Tax My Credit Union” T-shirts. From the streets of Shelton to the halls of Congress, our voice resonated.

I don’t think Congress has the ability or motivation to move tax reform forward this year, but building relationships with elected officials at the state and federal level will continue to be important. Fortunately, we do have many legislators who understand our cooperative structure, and some are actively taking steps to support other credit union initiatives (like Rep. Denny Heck’s co-sponsorship of supplemental capital legislation, for example).

But we must continue to build relationships with legislators in both D.C. and Olympia, and we will be much more effective if we make sure that these folks know us, know our story, and know that we are fighting on a daily basis for the constituents and communities that they represent.

Q: That fight includes standing up for members who were affected by recent data breaches at Target and other retailers. What effect did these breaches have on Peninsula and its members, and what kinds of fixes – technological and/or legislative – would you like to see?

A: In Washington, only 31 credit unions reported their Target-related losses in a survey by the Credit Union National Association, but the numbers were still staggering: $2,617,455 in losses, $50,754 on average per affected credit union, replacement of 269,000 compromised cards at an expense of $10 per card.

Since December, we’ve had an opportunity to educate our members about the tools they have to manage and monitor their accounts — online banking, mobile banking, PFM alerts, etc. But recent discussions I had at the Governmental Affairs Conference in Washington, D.C., highlighted the importance of our relationships with legislators on topics such as this. Most were unaware of the burdens financial institutions take on when it comes to data breaches.

Legislation over the past few years has served to reduce interchange revenue for financial institutions, but it does not appear merchants have passed along that savings to consumers. Furthermore, merchants currently are absolved of much of the liability for data breaches, while financial institutions take on the potential for fraud losses and costs associated with reissuing cards. Technology scheduled to come on line over the next couple of years, namely EMV chip security, would transfer some liability to merchants, but financial institutions still would bear the burden of costs associated with issuing EMV cards.

It should come as no surprise if or when institutions begin to indirectly pass along the costs associated with EMV implementation to customers. If banks do this, it could be an opportunity for credit unions to gain market share due to consumer anti-bank sentiment. But we, too, will have to figure out how to incorporate these costs into our infrastructure.

Undoubtedly, organizations such as the National Association of Convenience Stores and other merchant groups have relationships that help color our representatives’ minds. Whether in-person or by e-mail, when visiting D.C. or finding ways to build a relationship with local elected officials, it is imperative that we share our story, our members’ stories, and the financial impact data breaches have on our bottom line.

In the meantime, we all need to ensure our respective card processor is utilizing the most aggressive monitoring and capability for early detection.

Q: What other legislative and regulatory issues are likely to rear their heads in 2014?

A: Despite relatively few credit union failures due to insufficient capital, the National Credit Union Administration has proposed a new Risk-Based Capital rule. It’s crucial that we analyze this rule, provide feedback, and attempt to mold any new requirement into a strength rather than a threat. An assessment of how or whether this new rule helps or detracts from increasing a credit union’s market share should be part of this analysis.

After using the NCUA’s online calculator, many credit unions have said that “we’ll be fine” under the new rule. This is a great first step, but I would encourage everyone to understand not only “if” they will be affected, but “how.” I have found myself asking several questions:

  • Why do we need two levels of capital requirements — the existing PCA system and the NCUA’s Risk-Based Capital regulation? Is there really a benefit in having two sets of rules to protect the safety and soundness of America’s credit unions?
  • The new rule allows the NCUA to assume additional authority to impose even higher capital requirements on individual credit unions that could exceed even well-capitalized levels. The burden of regulations is already difficult enough, and I anticipate that it will be even more difficult for us to manage to the potential of moving targets.
  • The National Credit Union Share Insurance Fund’s one-percent deposit exists for safety and soundness, but it is ignored in the risk-based capital calculation.
  • A number of risk weightings, especially for member business loans, mortgage concentrations and CUSO investments, do not appear to recognize credit unions’ experience and good business practices and judgment in these areas.

Anyone that knows me knows that I can generate a lot of questions. What I know about myself is that all of my thoughts are not as good or complete as possible until there has been an opportunity to incorporate the thinking of a lot of folks who have a variety of perspectives. Together we can and must produce insightful feedback on this proposal. Our collective voice is louder than that of any individual.

Q: Even your national advocacy is rooted in what’s happening at the local level. How does Peninsula impact the community it serves?

President/CEO Jim Morrell, surrounded by his Peninsula Credit Union colleagues: “It should be obvious, though I may not have mentioned it directly, that everything we are doing takes a team.”

A: In July 2013, our board of directors approved this Community Development Mission Statement: “Peninsula Credit Union is dedicated to promoting community development. Whether low to moderate income or wealthy, unbanked or under-banked, by listening to people, serving their financial needs with affordable financial services, educating to create a personal development plan, we demonstrate our care to enrich their lives and helping to achieve financial stability…always!”

That statement informs everything we do, and I’m proud to say that the interaction and relevancy we have with the communities we serve is significant. It includes our Asset Building Coalitions and “Bank On” efforts in both Kitsap and Mason counties, where we teach financial education classes. And it includes making sure that our Shelton and Belfair branch staffs, as well as our entire leadership and executive teams, have become Community Development Certified Financial Counselors through the National Cooperative Business Association.

Over the past year, I am most proud of the collaboration between Peninsula Credit Union, Kitsap Credit Union and Connection Credit Union in response to sequestration. We came together as credit unions and with other community partners to raise the level of importance for financial literacy and the way that we as credit unions work with people through both good and challenging financial times.

In the year ahead, we will continue to leverage the training we are providing for our staff to be certified financial counselors, and we will add additional tools and resources to support financial literacy efforts. And on April 1, we will launch two new programs that will help us live out our Community Development Mission Statement:

  • “Borrow and Save,” which will allow members to obtain small personal loans to bridge unforeseen circumstances at a rate several hundred percent less than the trap of payday lenders or check cashers. Peninsula is one of a dozen financial incubator sites across the county to test the program, with the help of the Filene Research Institute and the National Federation of Community Development Credit Unions and the support of the Ford Foundation; and
  • “Save to Win,” joining six other Washington credit unions in offering the prize-linked savings program. (Learn more about the program here.)

“Save to Win” is woven into my past and present in a couple of ways.

During my time with the Filene “i3” innovation program, I had the opportunity to meet Dr. Peter Tufano, then a Harvard economist, who was researching prize-linked savings programs in Africa. (It was Tufano who planted the seed for prize-linked savings at i3 and worked with the group and Doorways to Dreams to create a pilot program in Indiana. That program spread across the country before coming to rest in Michigan, where in 2009 the Michigan Credit Union League expanded the idea into what is now known as “Save to Win.”)

Fast forward to 2011, when the state of Washington passed legislation sponsored by Derek Kilmer, who was then a state senator. Now a U.S. Congressman, Rep. Kilmer late last year introduced a similar bill in Congress, and he will be on hand at 8 a.m. on Monday, March 31, when we launch our “Save to Win” program at our Belfair branch (N.E. 23550 Highway 3; 360.275.6066).

At this event, we will also be raising funds to benefit a community social service organization called North Mason Resources. So not only do these programs directly benefit those who choose or need to open “Save-to-Win” or “Borrow and Save” accounts, but at the same time they help improve relationships with a community partner and a U.S. Congressman.

Q: That sounds like a win-win situation for Peninsula Credit Union and for the community.

A: Consumer confidence on the Olympic Peninsula was shaken twice during 2013 by sequestration and government shutdowns, as well as higher unemployment. But overall, the trends for 2014 are positive, and I believe we can build on our value-added reputation and the positive sentiments consumers have about credit unions to both help people and increase market share.

The key is that as community-based institutions, we must remain relevant to our members and the communities we serve. If we can do that, then yes: It’s definitely a win-win.

Up Next: Look for the next “CEO Perspective,” featuring Trailhead Credit Union President and CEO Jim McCarthy, in the April 8 edition of Anthem.

Questions about this story? Contact Gary M. Stein: 503.350.2216,

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