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Bonds Insists on Member Protection

Posted on March 2, 2011

CU Times, by Michelle Samaad

The Rundown

  • In nominating their boss, Bonds' staff cited his sound leadership and dedication to members.
  • Bonds will likely be remembered within the industry as being among the first to refuse to voluntarily pump additional capital into U.S. Central.
  • ‘It is not a fluke that member credit unions of Corporate America did not suffer a loss during the recent demise of U.S. Central,’ said one CEO.

When one of Thomas Bonds’ staffers recently pulled him aside with a grim expression on her face and said that he was needed in another part of the building, the mind of the president/CEO of Corporate America Credit Union started to race.

With every step he made to his destination, it took everything in him to prepare for whatever was waiting in that room, Bonds recalled. Surely, the outcome would pale in comparison to the tumultuous year the corporate credit union network had just experienced.

He quickly eased when he realized that his staff had prepared a celebratory lunch to congratulate him on being named Credit Union Times' 2011 CEO of the Year.

"Humbled would be the best way to describe it," Bonds said on receiving the recognition. "It’s a great honor. I am very humbled by it."

It was his staff that nominated their boss, writing in their submission, "To say 2010 was a challenging year is by every definition an understatement; the words demanding, taxing, perplexing and frustrating also come to mind. However, throughout the ups and downs we all experienced in 2010, CEO Bonds demonstrated sound leadership, a dedication to our members that was amazing and never failed to lead Corporate America in a manner that made us proud to be employees serving our members."

The honor comes on the heels of the $4 billion Corporate America and Louisiana Corporate Credit Union announcing their intention to merge. The Irondale, Ala.-based Corporate America will retain its name and continue to serve its 514 members credit unions in 26 states if the merger is approved. Louisiana Corporate, which serves more than 200 credit unions, would maintain its headquarters in Metairie, La. Bonds would continue on as president/CEO of the consolidated corporate.

In 2010, Bonds will likely be remembered within the credit union industry as being among the first to refuse to voluntarily pump additional capital into U.S. Central Federal Credit Union when the losses seemed understated. In an open letter to corporate credit union CEOs, he asked them to join him in expending 100% of the corporate network’s capital before any natural person credit unions were forced to pay anything into the NCUSIF.

With the backing of Corporate America’s board, Bonds also asked the NCUA that the corporate be allowed, in the form of a capital plan, to pay as much of its member credit unions' assessments as its retained earnings would permit–moves that occurred before the NCUA required Corporate America to write off its capital investment in U.S. Central.

"When all of this began to unfold, I believed we were misled," Bonds said. "And, I was angry about that on behalf of our members. [U.S. Central] was taking a position of telling us ‘you must do this or you won’t have access to our services.’ They had sent me a member expulsion policy. Obviously, we had an option to say no. We had to evaluate the cost of saying no and what would put our members at risk."

The losses due to concentration risk were not limited to U.S. Central, the industry soon discovered as many natural person credit unions were hit with compromised capital investments. Bonds’ proactive measures helped to create a buffer for Corporate America. In mid-to-late 2008, he realized that the corporate would reap the fruits of additional capital thanks to asset growth and market dislocation. Corporate America organized a paid-in-capital III offering, which resulted in more than $100 million to date in new capital being invested in the corporate on an entirely voluntary basis.

Bonds searched for alternatives when the NCUA levied credit unions with increased assessments and premiums. Through fee reductions and competitive dividend rates, he stuck to one of his goals of not rebuilding Corporate America’s retained earnings at the expense of its credit union members.

"It is not a fluke that member credit unions of Corporate America did not suffer a loss during the recent demise of U.S. Central and the ensuing write-down of capital at other credit unions," said Elaine Robbins, president/CEO of the $23 million Human Services Employees’ Credit Union in Atlanta.

Robbins said she believes Bonds’ tenacity is tied to an approach she was taught early in her credit union career: safety, liquidity and yield.

"It appears that in recent history many have abandoned that philosophy, but not Mr. Bonds. I applaud Thomas' commitment to sound and ethical management," Robbins said.

The year of 2010 was a time of transitions in many ways for Corporate America. Under Bonds’ tenure, the corporate severed its payment system alliance with U.S. Central in a move to eliminate automated settlement function. Corporate America also cut ties with U.S. Central’s ACH, international wire and core processing.

With a new streak of independence, the corporate launched an auditing program and a brokerage service and is in the final stages of a plan to offer enhanced educational offerings. Corporate America recently completed a small addition to its headquarters to accommodate new services and employees, including a newly hired vice president of risk management and inside general counsel. The corporate has a 10-person consulting division that travels to its credit union member sites to ensure that the communication lines are kept open on what’s needed and what may not be working regarding products and services.

In August 2010, Corporate America marked a milestone with the self-liquidation of its legacy assets, a move about which Bonds said, "Of all things I’ve tried to do, [it’s] the thing of which I may be the most proud." Compared to its peers the amount was small, but Bonds was able to guide and carry out what some said could not be done and continue on a path to profitability. He applauds NCUA on how the regulator handled acquisition of liquid assets.

Many of Bonds’ colleagues agree that he has the ability to tackle a problem from several different angles, including perhaps those that may not be mainstream or popular. That panoramic perspective might stem from Bonds’ foothold in the credit union industry. He is also a certified public accountant and an attorney.

"When many other corporates were being conserved, shrinking assets, causing losses in capital investments to their members, raising fees and laying off staff, Thomas was managing through the crisis, growing the credit union, increasing the equity of Corporate America, lowering fees and hiring talented people," said Ben Hayley, general counsel at the corporate.

Bonds was very familiar with credit unions, having been a member of one while in college. The month before he graduated, he interviewed with the NCUA and was hired as a district examiner in Knoxville, Tenn. He was then promoted to supervisory examiner in Atlanta before becoming a problem case officer in New York. Bonds’ career experience even included a short stint as an examiner for corporate credit unions. Wanting to come back home, the native Alabaman interviewed and was hired as CEO of Alabama Corporate Credit Union before it became Corporate America.

As the corporate credit union crisis proved, Bonds, along with many others, has strong opinions. But his intentions are not self-serving, many of his colleagues agree.

"The driving force behind Thomas Bonds' leadership has been his stubborn insistence that every decision we make has to be in the best interests of our member credit unions," said James Phillips, board member at Corporate America.

Bonds said it’s not his style to live in a bubble; he likes to be attuned to his staff's needs and concerns.

"I trust my senior staff completely. I talk to employees every day. I’m aware of what’s going on," Bonds said. "I don’t think we’ve ever had anyone leave. We have the lowest employee to asset ratio."

Indeed, the approximately 50 employees at the Corporate America receive support from the top when there is a need to strike a balance between work and family. Bonds said the most important aspect of his life is his devotion to family.

"I can’t expect [employees] to be any different. We have a saying here: ‘always put your family first.’"

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