Workers Federal Credit Union of Littleton, Mass., is one of the nation’s oldest, formed in April 1914 on the eve of World War I.
Although its net worth has remained well above the amount needed to be considered well-capitalized, it began losing money after the Fed began raising interest rates in March 2022.
Workers is among many credit unions that invested heavily in long-term bonds during the era of low rates. And that strategy contributed to many of the eight losses exceeding $10 million in the three months ending Dec. 31.
Workers ($2.5 billion in assets, 123,161 members) lost $61.7 million in the fourth quarter, or a -9.81% return on average assets, compared with -1.38% ROA a year earlier. It was the third largest loss among the eight credit unions.
The effective federal funds rate was at or below 0.2% from July 2009 through November 2015 and ranged from 0.24% to 2.42% until COVID-19 was declared a pandemic in March 2020.
At that point, the Fed lowered rates to near zero. They stayed there until inflation caused the Fed to start raising them in March 2022, reaching a high of 5.33% in August 2023 and remaining at that peak until the Fed began cutting rates last October. In January the rate stood at 4.33%.
Workers' unrealized losses on held-to-maturity investments deepened from $4.5 million at the end of 2021 to $110.5 million in June 2023.
In July 2023, the board hired Jay Champion as interim president/CEO. Champion was previously president/CEO of the $2.2 billion Westerra Credit Union in Denver.
Champion, who was named president/CEO last June, told CU Times that the big fourth-quarter loss at Workers mostly stemmed from a large sell-off of those underwater bonds in early December, realizing $56 million in losses but reducing its unrealized losses to $31 million.
“We felt like it was the right time to divest these bonds and be able to put it back to work in north central Massachusetts,” he said.
The credit union also had a small operating loss, in part because of its low net interest margin (1.26% in the fourth quarter, compared with 3.78% for the Top 10 credit unions).
“This really will improve our net interest margin over time by moving out of those bonds at less than 2.5% and putting it back into loans at today’s rates,” he said.
And Workers still has more bonds to divest, so further, but smaller losses are likely through the rest of this year and perhaps into 2026.
“We do have a path back to profitability,” Champion said.
And he noted that the credit union’s net worth ratio still stood at 10.85% at the end of 2024 — well above the NCUA’s 7% threshold to be considered “well-capitalized.”
The credit union was one of the first formed in the United States as the movement spread south from Canada into New England.
“We’re 111 years old. We think we’re one of the 10 oldest in the country,” he said. “So we’re not going anywhere. “
READ MORE: Eight Credit Unions Lose $351 Million in Q4
Contact Jim DuPlessis at [email protected].
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
