Glatt left RFCU in Rockville, Md., Aug. 1, four months shy of the two-year anniversary of when he was named to guide the newly chartered credit union in December 2008. Upon hearing the news, industry bloggers lit up the Web with speculations on whether Glatt's departure was bigger than his reason for leaving: to be with his wife, who had taken a CEO job in New Jersey.

“The credit union will likely need additional capital infusions if the current rapid growth and high expense trend continues. It is easy to assume that the Realtors are having second thoughts about their commitment,” wrote the president/CEO of a large CU in California.

Another CEO from a midsize CU on the West Coast questioned nearly every aspect of RFCU's financials: where the $15 million in capital raised went, interest income earnings and whether salaries and benefits took away from operational costs.

“As with any new business venture, a de novo credit union of REALTORS Federal Credit Union's scale required a significant amount of start-up capital to support operations until it is able to become profitable,” said Jane Pannier, the acting CEO of RFCU.

Up-front costs to build a completely branchless delivery system included expenses to develop marketing materials centered on a new brand identity, recruiting and hiring staff, and building RFCU's administrative offices, Pannier explained. Ongoing operational expenses associated with running a CU were also supported.

In late 2007, the National Association of REALTORS, a Chicago-based group representing 1.2 million commercial and residential Realtors, voted in favor of setting up a federally chartered credit union. At the time, NAR's board approved $10 million to get the cooperative up and running with an additional $5 million available over the next five years. The idea to have its own CU didn't spring up overnight. Prior to the vote, NAR spent nearly two years conducting feasibility research including communicating with members on their interest in joining.

With a new charter issued by the NCUA in November 2008, the CU opened for business in May 2009 marking a milestone as the industry's first virtual-only CU. That $15 million capital grant was distributed in two installments of $10 million and $5 million in 2009. A query on whether the group would be providing any additional grant money was not answered.

However, NAR's seed money certainly contributed to RFCU's growth since it launched, Pannier said. The association remains its biggest advocate through the support of volunteer members on the CU's board and continual marketing efforts to the group's membership, she added. Today, with more than 5,500 members, RFCU's asset size is nearly $72 million, according to NCUA Call Report data as of June 30, the most current financials on record. Pannier acknowledged, “This type of growth is unprecedented, [but] we are extremely proud of our accomplishment.”

“In two short years Tom grew our fledgling enterprise to over $70 million in assets, making it one of the fastest growing credit unions in the country. Tom left us with an excellent team and because of his leadership we are very excited about the future of REALTORS Federal Credit Union,” said Dale Stinton, CEO of NAR in a July 30 statement. Stinton also serves on the CU's board.

By far, RFCU's biggest operational expenses are associated with the technology necessary to securely and efficiently deliver products and services to members, Pannier said. NCUA June 30 financials showed the CU had $1.1 million in interest income and $113,640 in noninterest income. Noninterest expenses totaled $2.5 million, but after a $54,086 NCUSIF stabilization expense, RFCU had a net income loss of $2 million.

Employee compensation and benefits were the highest costs under noninterest expenses at nearly $1.3 million year-to-date, followed by professional and outside services at more than $800,000, NCUA data showed. Glatt previously told Credit Union Times that RFCU partnered with 30 vendors to make the virtual CU a reality.

According to NCUA Call Report data, RFCU earned slightly more than $800,000 from interest income, investments and other sources. Pannier said like most CUs, its goal is to invest primarily in quality loans to its members.

“Excess liquidity is also used to purchase loan participations from other credit unions and investments in agency bonds and other securities. All of these assets contribute to our interest income. We also generate fee and other service related noninterest income,” Pannier said.

As of June 30, the CU had 13 delinquent loans that totaled $184,000. It appears the $48,627 in year-to-date charge-offs were all recovered. Loans charged off due to bankruptcy year-to-date were $28,627. With a net worth ratio of 13.93%, RFCU is considered well-capitalized. Overall, the CU had accumulated nearly $65 million in shares and deposits as of June.

The CU is moving forward with adding products and services. Pannier said they are currently working with the NCUA to originate of business loans. RFCU already offers business deposit products such as savings, money market and certificate accounts.

“Given that over 95% of Realtors own their own business, offering these types of services is critical in meeting the needs of our members,” Pannier said.

NAR also has more than 1,400 potential associations, board and multiple listing services that RFCU is looking to tap.

“We plan to remain true to our mission of providing quality services through a virtual delivery format. We are pleased that we have been contacted by other credit unions that are watching our model develop to see if it is a model they can use to provide additional convenience to their members and to reduce the operating costs of maintaining branch offices,” Pannier said.

–[email protected]