Where Credit Is Due

Joseph Finnigan has helped lead the Vermont Federal Credit Union's growth from just over $1 million in assets in 1978 to more than $100 million, making the Burlington organization the third-largest credit union in Vermont.

by Jason Koornick

Joseph Finnigan is CEO of Vermont Federal Credit Union, which has headquarters in Burlington. The 19,000-member organization has grown its assets at a rate of at least 17 percent per year for the last five years.

Joseph Finnigan runs the Vermont Federal Credit Union based on a simple philosophy: "Not for profit, not for charity, but for service."

The 57-year-old CEO takes pride in overseeing a financial institution owned by its members rather than stockholders. Since he became involved with the credit union in 1978 when it held just over $1 million in assets, the organization has grown exponentially to more than $100 million in assets from 19,000 members. It's the third-largest credit union in the state. Finnigan has personally overseen much of the credit union's growth and is respected as one of the state's top financial managers.

Finnigan's second-floor office in the main branch on Pine Street in Burlington reveals a well-organized man who takes a hands-on approach to his job. His mahogany desk is covered with papers laid out in orderly piles. A handheld calculator and a laptop computer are the only electronic conveniences. His corner office offers scenic views on two sides. Lake Champlain and the Adirondack mountains are visible to the west, although the view is mostly obstructed by the Chittenden Bank building across the street, a constant reminder of the challenges faced by the credit union in competing with privately held banks.

The Vermont Federal Credit Union is in a period of transition and rapid growth. Within the last year, the organization expanded its field of membership to include anyone who lives or works in Chittenden, Addison, Grand Isle, Lamoille or Washington counties. It has grown its assets at a rate of at least 17 percent per year for the last five years.

"If you don't grow, you won't be able to respond to the needs of the members," Finnigan says. The organization has yet to mount a marketing campaign directed at the newly expanded field of membership. "In the past, marketing efforts have been with families and representatives in the different agencies that we served. "Now it's a little different", he says.

Finnigan explains that one of the biggest tasks facing the organization is educating the public about the benefits of a credit union, an activity that often depends on face-to-face interaction. "Marketing a credit union is an educational process," he says. "Of course, banks sometime help us, with all the fees they charge."

The major difference between a bank and a credit union is that credit union members are also the owners, Finnigan explains. Credit unions provide services to individuals only.

According to Joe Bergeron, president of the Vermont Credit Union League, a credit union is like a cooperative store or housing complex in that all profits are returned to the members in the form of lower rates and fees as well as new services. Credit unions are usually formed by employee groups to pool their financial resources and provide a source of inexpensive credit. There are 44 credit unions in Vermont.

The organization that would eventually become the Vermont Federal Credit Union was started in 1953. It was called the U.S. Government Employees Credit Union of Chittenden County, and its members were postal workers, IRS and immigration employees and other federal workers from the Burlington area.

Membership soon expanded to include employees of any federal agency. Finnigan explains that the organization, which had an office in the Burlington Federal Building, was born during a surge of credit unions around the country.

"Credit unions were formed in a period when individuals felt they couldn't receive certain banking services from commercial banks," Finnigan says. "It really started as members helping members, since deposits could be used for others to borrow."

Lance Potter (left), vice president for Information Services; Robert Cowie, vice president of operations; Kelly McDonough, vice president of finance; and Joseph Finnigan make up the senior management team.

Finnigan says he has always liked working with numbers. He claims to have learned the value of work and savings at an early age. "I had a paper route when I was 12 years old, when I started the savings that would help me through school."

The Burlington resident grew up in a family with 10 children. He graduated from Burlington High School in 1962, then attended Champlain College for two years. Upon returning from a three-year stint in the U.S. Army, he settled in Burlington for six months and met his future wife, Susan Carpenter. He worked for IBM and attended a co-op program in Boston at Northeastern University majoring in accounting. Upon graduation, he worked for the IRS in Boston. He was transferred to Burlington in January 1974, under the Economic Stabilization Program. During his tenure at the IRS, Finnigan was active in the IRS Employees Labor Union, serving as president for four years.

Besides being a member, Finnigan first became involved with the credit union in 1978 when he was asked to join the volunteer board of directors. Soon after, he was elected to the position of treasurer, working closely with the organization's two part-time employees. He prides himself on the introduction of two early programs that set the stage for future growth: cash transactions and checking accounts.

The board of directors asked Finnigan to assume the position of CEO in 1980, when the credit union managed approximately $2 million in assets. He was hired as a full-time manager in 1981.

Finnigan implemented changes that improved the efficiency of the operation, including a new bookkeeping system and interest calculation timetable.

The years between 1980 and 1983 saw continued growth and expansion of member services: The credit union introduced IRAs, CDs, travelers checks, first mortgages and money market accounts, and increased the loan limit to $5,000.

Another development from the early '80s highlights the credit union's cooperative approach. The organization bought into a computer system along with 13 other credit unions, "because we couldn't afford to buy it ourselves," Finnigan says. The system enabled all the credit unions to automate their monthly statements, although each had its own designation to prevent the free exchange of member information.

"Unlike banks, credit unions share knowledge and information," Finnigan explains. "Not about customers but ideas for product development and resources." He points out that the credit union is part of an ATM network with 96 machines from different credit unions.

The credit union took an important step in 1983 when it acquired and moved into its first property a building on George Street next to the Federal Building.

During the following years, the organization continued to add banking services like credit cards while growing the membership and loan portfolio. An expansion in 1987 doubled the size of the George Street office, allowing the credit union to close the Federal Building office. It opened a branch in Essex Junction, which remained active until 1991.

In 1987, the credit union employed 10 people and served approximately 4,500 members. The organization became a state-chartered credit union and expanded its field of membership to include any government employee in the state. The name was changed to the Government Employees Credit Union.

The next year, the organization was approached by a smaller credit union comprising employees of Simmonds Precision in Vergennes, a division of BF Goodrich. With about 500 members and $1 million in assets, the Simmonds Precision Credit Union was looking to provide more services but lacked sufficient resources. When the merger was complete in the second half of 1988, the Government Employees Credit Union accepted its first non-government employee members and added a branch in the Simmonds plant.

The Simmonds merger was the first of several credit unions the VTFCU would incorporate into its fold in the next decade.

The credit union took a crucial step forward in 1990 when the members voted to convert the credit union charter to federal status. "A federal charter allowed the credit union to move into areas the state charter wouldn't allow," Finnigan says. The name was changed to Vermont Federal Credit Union. Finnigan says the federal status gave the credit union more leverage in the early '90s when the troubled St. Albans Credit Union was force-merged with the VTFCU.

In 1993, the Middlebury Co-op Credit Union merged with the VTFCU, bringing $1 million in assets, 500 new members and a branch office. The Middlebury merger was significant in that the co-op held a community charter that included all of Addison County. The Central Vermont Railway Employees Credit Union joined forces with the VTFCU in 1995.

By 1992, the credit union was close to outgrowing the George Street office. After what Finnigan calls "lengthy negotiations," the organization purchased the bottom two floors of the building at 84 Pine St., which serves as the credit union's main branch. "The move was a big step for us," Finnigan says. "There was a sense of pride for the members who assisted in the decision. Bricks and mortar are important."

Loan manager Donna Bogue (second from left) and loan officers Bob Baran (left), Cindy Abbiati and John Gibeault make sure incoming money is properly turned into car loans, home equity, home improvements and mortgages.

Finnigan explains that the Pine Street facility is a perfect home for the VTFCU. Since the space was the former home of the Franklin Lamoille Bank, it was outfitted with everything the VTFCU needed, including furniture. "It was a great situation to step into this space without going through all the planning and building from the ground up," he says. "The building is centrally located. It offers drive-up and parking and was the home of our first ATM. It all added up to additional services and enhancements for our membership."

The new main office led to an increase in membership during the months following the purchase. "It moved the organization ahead dramatically because member needs were bring met," Finnigan says.

The '90s saw the addition and expansion of VTFCU branch offices, including one in the immigration building in South Burlington and a St. Albans branch that opened in 1998. The credit union bought and renovated a building for the the Middlebury branch in 2000.

Today the VTFCU has 44 employees around the state, controls over $98 million in assets and serves 19,000 members. Finnigan calls the staff "one of the organization's biggest assets. People helping people is our number one priority, and the staff does a wonderful job."

Most executive decisions are made by a senior management team made up of Finnigan and three main administrators: Kelly McDonough, vice president of finance; Robert Cowie, vice president of lending; and Lance Potter, vice president of information services. He says the management of the credit union is "truly a team concept." Polices are formulated during annual strategic planning sessions.

Growth presents new challenges, Finnigan says. "As you grow, it's more difficult to put money out as fast as it is coming in. It's harder to turn around the money into car loans, home equity, home improvements and some mortgages."

Finnigan admits that the VTFCU is moving into uncharted territory as it seeks to market its services to the considerably broader field of membership allowed by its most recent charter. "We are trying to develop a new strategy and thought process about how to move forward," he says. "It will be different than in the past, but our goal is the same: to have a positive impact on the financial well-being of our members."

Bergeron, of the Vermont Credit Union League, attributes the growth at VTFCU to Finnigan's "aggressive management, strong leadership and attention to detail."

"Joe and the management team are highly professional, but there is a real family atmosphere there that trickles down through the whole employee structure and membership. Everyone is closely tied in the organization."

Burlington attorney and City Councilor Ian Carleton has been a member of the credit union since 1999 when he was a clerk for a federal judge. He does all his banking at the VTFCU. "I enjoy banking there because there are no fees attached to the accounts," he says.

Carleton took out a mortgage for his first home through the VTFCU. He calls the process "well-served and easy. I never felt like they were trying to sell me anything."

"They make me feel 100 percent secure in their lending practices," he says. "The staff is really friendly and helpful. They know me by name."

Originally published in September 2002 Business People-Vermont