Diary of a Recovery

Joe Brancucci, CEO of GTE Federal Credit Union, shares his perspective on positioning the Florida cooperative for the future.
Brooke C. Stoddard
Every quarter, Callahan visits a high-performing credit union for an in-depth, on-site examination of what makes that institution successful. The Anatomy feature which includes both written and video content appears in CUSP and on CreditUnions.com.


The enduring lessons learned from the two-day visit with GTE Federal Credit Union are just as relevant today as they were in 2011. The credit union’s story of struggle and triumph is a timeless reminder of what any credit union can accomplish with the right resources, strategy, and mindset.


GTE FCU was founded in 1935 as a Peninsula Telephone Employees Credit Union and emerged as GTE Federal Credit Union in June 1971. Based in Tampa, it had a good record of service andgrowth, but the recession of 2007 hurt GTE FCU, as Fort Myers became one hub of the national housing calamity.

GTE FCU lost $27 million in 2008 and $44 million in 2009. It was forced to reduce its assets to $1.6 billion and close 10 branches. Membership shrank to less than 200,000. The credit union was dealt another setback when CEO Bucky Sebastian retired at the end of 2009. The senior vice president of member operations (now the CFO) took over while a search went out for a new CEO.

That search, vetted by the NCUA, resulted in the selection of Joe Brancucci, the EVP/COO of BECU, headquartered in Seattle, WA, and a founder of Prime Alliance Solutions, Inc.

We asked Joe to submit a month-by-month diary of his work to restore robustness to GTE FCU. Excerpts from his submissions follow.

JUNE 2010

After discussions with NCUA and the GTE FCU Board, I learned I was chosen to become the new CEO. I would begin July 12.

While I was winding up at BECU, I spent a lot of time studying the GTE FCU financials. I spent even more time studying what had been driving the financials, e.g., the market forces and all the things in the background that aren’t directly reflected on the 5300

I met with the GTE FCU leadership team in early June and presented a high-level draft of a Capital Restoration Plan and a framework for a Strategic Plan. I also began to look for people to fill executive level positions.


July 12 was my first official day at the GTE FCU office. I set goals for my first month: 1) Create a Capital Restoration Plan that would be fully vetted and approved by the Board at their August meeting; 2) Create a series of strategic assumptions thatwould become the basis for our strategic planning meeting in September; and 3) Visit each of the 28 branches and evaluate them.

I pledged to restore the previously imposed 5% employee pay cut, provided we met our goal of 7.1% capital at year-end, as well as retroactive payment if we were profitable from operations (not including the NCUA assessment) for 2010.

We ramped up lending, which had stagnated on account of being afraid to lend and not knowing how to lend. We saw results quickly.

We began to publish a monthly newsletter for our members entitled In Touch, and included a letter from me entitled CEO Corner. It also included a Talk2Joe button so members could send an email directly to me and, boy, did they useit the first few months.


At the Board level, we decided to close two branches outright, merge three branches into three others, and put five on a watch list. This reduced full-time employees by 27. In addition, we decided to right-size the organization and reduced the home office staff by an additional 22 FTEs.Total affected: 49 FTEs.

We worked with the Board to pass the Capital Restoration Plan, and I shared the long-term targets with the employees. Goals included average member age, product concentration, fixed-rate loan cap, delinquencies, and the expense ratio.


We eliminated the 25-cent debit PIN transaction fee for persons using eStatements as well as for persons over the age of 65 or under 12. We increased rates on longer-term certificates and made credit card statements available online.

We announced the CFC closures and layoffs, but the right-sizing was effective immediately. We communicated this in an open way and explained fully why we thought these painful actions were for the best long-term benefit of the credit union.

We converted from a three-year to a one-year ALLL evaluation. The shorter duration, applied appropriately in prior years, would have highlighted the severity of problems much earlier.


Last week was the presentation of the Strategic Plan. I am glad to get it behind me.

Consumer delinquencies are going down (it is the commercial delinquencies that are rising), and charge-offs are dropping.

We feel we now have a current, more vital employee benefit package to present in the marketplace than before. Looking to the remainder of the year, we know we’re going to break some dishes, but we’re also going to put 2010 behindus. The big stuff can take you down quickly and you have to do it right, but if you forget to do the little stuff, it can take you down just as quickly.


The NCUA was in this month and took us off the troubled list. This is a milestone for us.

I blogged about the Engaged Member portion of our new strategic guidance and how we’re going to be our members’ first choice for financial solutions.


We have a long-term strategy to be a preferred employer in our marketplace. We want to improve our competitive position by having a total compensation package that is attractive to those we’re looking to recruit and retain.

I also wrote a lengthy 2010 CEO Reflections for the employees. I focused on our major accomplishments during the second half of the year in nine broad categories, including Transparency, Board Relations, Engaged Members, Engaged Employees, Strategic Plan,and Operating Plan.

We exceeded our net worth ratio goal of 7.1%, which is a real accomplishment considering where we were. It’s a legitimate source of pride for all the employees.


We saw we were not meeting some of our lending goals, which is owed to the economy and our being a smaller organization than we were in 2008. Because we are working with a smaller number of members, we have to be more effective and efficient.

For the first time in a long time, this was a month we did not have a net member loss. Accordingly, we hope we have hit bottom and will begin to have monthly net member gains.

We started a new tradition: Chats with Joe, to help dismantle silo thinking. These are two-and-a-half hour, informal discussions with me and 35-50 employees in each session. Employees are encouraged to sit next to other employees they don’tknow, so they can get to know them and what they do in the credit union.


We were happy to report that January was a profitable month and that delinquency for the month was at its lowest level in a long time. It appears to be ticking up in February but is below 4% (far better than where we were), and we expect it to continueto decline. Where we have fallen short of our goals is in net member growth and overall loan growth, specifically in mortgages.

The closing of CFCs is behind us. One lesson is that we didn’t lose as many members as we anticipated. Those we did lose were ones with very small accounts, who tended to merely use the credit union to hold their paycheck money for a few days.

We’ve now had 80% turnover in the executive team and are working at getting all the various parts to work in harmony. We also worked toward turning over the servicing of our 9,500 mortgages to Prime Alliance Loan Servicing.

MARCH 2011

The first of March was a huge day. We rolled out our Member Advantage program. Nearly 28% of our 180,000 members qualified for Member Advantage, a higher penetration than we had projected. The program marks the beginning of a new era of member responsibilitytoward the success of the credit union.

On March 7, we launched our Early Saver program. This program promotes savings by paying a high dividend on the first $500 of savings.

APRIL 2011

I reminded our employees that we were granting too many waivers of NSF fees. During the first quarter, we waived more than 12,000 of these fees, which represented more than $353,000 in lost fee income. We should waive a fee when it is our mistake, ifit’s the member’s first NSF, or the first one in the last 12 months. Our fees are reasonable and meant to discourage behavior that is not consistent with the direction we want to go.

We are also conducting a brand equity study and exploring the feasibility of rebranding. I’ve asked the employees to submit suggested names they believe reflect our vision and would prove beneficial to our future.

We initiated a new fee schedule to take effect June 15. This new structure eliminates most transactional fees and increases or adds behavioral fees. We believe that members who truly understand the value of the cooperative will understand and embracethese fee changes.

April 3, 2015

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