Nearly two years after launch, the National Association of Realtors’ "virtual credit union" has enticed less than 1 percent of NAR members to join and continues to operate at a loss, financial reports submitted to the credit union’s federal regulator show.

Although Realtors Federal Credit Union is classified as "well capitalized," the credit union has a new management team in place who must boost membership or cut costs in order to get the startup venture in the black.

NAR announced founding President and CEO Tom Glatt was stepping down on July 30, attributing his departure to Glatt’s wife landing a job in New Jersey.

Last week, NAR announced that Realtors FCU board of directors had named acting CEO Jane Pannier as Glatt’s permanent replacement, and that Chief Information Officer Jesse Boyer had been named chief operating officer, a position formerly held by Alistair Harper.

According to its most recent financial report to the National Credit Union Administration (NCUA), Realtors FCU posted a $2 million net loss for the first six months of the year.

NAR’s $15 million investment in the venture means that Realtors FCU remains well capitalized, with $72.7 million in assets as of June 30.

Pannier declined a request for an interview, but said in an e-mail that consolidation of some senior management positions will result in cost savings.

The senior management team in place now, which also includes Chief Financial Officer Tami Schiavone, "have all been with the credit union since its inception," Pannier said.

Originally brought on board as Realtor FCU’s executive vice president and general counsel, Pannier’s past experience includes stints as a partner with credit union consulting firm The Rochdale Group, and senior compliance counsel for the National Association of Federal Credit Unions.

"Realtors FCU was truly fortunate to receive a large grant from NAR to develop, charter and fund our initial operation phase," Pannier said in an e-mail.

Chartered in November 2008 and based in Rockville, Md., NAR’s credit union has no branch offices, offering services over the Internet, phone and automated teller machine.

The credit union’s virtual business model "is quite different" from those of typical credit unions, Pannier said, relying on "sophisticated technology and a network of outsourced service providers that allow us to offer a wide array of online products and services to our Realtor members on a 24/7 basis."

Expenses add up

Times have been tough for many banks and credit unions, and startups often lose money as they build business. But a comparison of Realtors FCU with several similarly sized credit unions shows it has had higher employee expenses and paid more for professionals and outside services than several of its peers (see chart).

At the end of June, Realtors FCU reported that it paid $1.27 million in compensation and benefits to 18 employees in serving 5,552 members, and also spent $818,599 in professional and outside services. The credit union’s $427,299 in net interest income and $113,640 in member fees did not come close to covering those expenses.

To date, Realtors FCU has paid nearly $2.5 million for professional and outside services, including $1.65 million spent in 2008 and 2009.

Pannier said expenditures for professional and outside services represent payments to "outside service providers that provide the technology solutions for the credit union."

Fannie Mae Federal Credit Union, by comparison, served 5,873 members with three full-time and one part-time employee as of June 30. Expenses for the first half of the year totaled $191,272, including $113,529 in employee compensation and benefits, and $48,870 for professional and outside services. …CONTINUED

The Washington, D.C.-based credit union has only $15.27 million in assets, and made only 41 loans totaling $496,908 in the first half of the year, however. That compares with 312 loans totaling $18.8 million made by Realtors FCU in the first half of 2010.

Realtors Federal Credit Union






$72.7 million


312/$18.8 million

Employee compensation

$1.27 million

Professional/outside services


Fannie Mae Federal Credit Union






$15.27 million



Employee compensation


Professional/outside services


Pitney Bowes Employees Federal Credit Union






$89.6 million


188/$3.3 million

Employee compensation

$1.05 million

Professional/outside services


UPS Employees Federal Credit Union






$30.2 million


157/$1.5 million

Employee compensation


Professional/outside services


PAHO/WHO Federal Credit Union






$179.2 million


163/$8.3 million

Employee compensation


Professional/outside services


Source: reports covering Jan. 1 through June 30, 2010.

Future prospects

In order to stem losses, Realtors FCU must either grow member fees and interest income from loans until they cover expenses, or slash expenses further.

Pannier would not comment on how long she thinks it will take to accomplish that goal. Mike Brodie, the Texas-based real estate broker who serves as chairman of the credit union’s board of directors, did not respond to requests for comment.

W. Robert Hall, a consultant credited in a white paper on his company’s website as being "the organizer and lead subject matter expert" in obtaining Realtors FCU’s federal charter, also declined to comment on the startup’s future prospects.

Since the credit union’s launch, Hall said, "I haven’t been paying too much attention" to its performance, adding that the work he did in developing the company’s business model is proprietary.

According to the white paper, Hall Associates Consulting LLC "played a central role in conducting detailed market research, developing business plans and delivery systems, and structuring products and services focused on self-employed people" for Realtors FCU.

In the white paper, Hall described Realtors FCU as "the first branchless, Internet-based credit union, serving a nationwide (potential membership) of 1.3 million people, offering a robust suite of products and services from the outset, and operating through an extensively outsourced delivery system and third-party services providers.

"We recognized the importance of low-cost funds to support rapid growth and manage other risks on the balance; and we tailored the business model around that key understanding," the white paper said.

Pannier said Realtors FCU is currently approaching $80 million in assets and has more than 5,900 members, or about one in 184 Realtors, according to NAR’s July membership count of 1.09 million.

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