[00:00:00] Tony Hernandez: You have the American Banker Association, you have the National Banker Association. You have the independent community, bankers, associ of America. You have the commercial banks, you have the leagues, and there’s multiple, you have the, I’m sorry, the, uh, the, the State Level Bankers Association. You have all these other voices.

[00:00:15] Tony Hernandez: It never confuses Congress. Banks tend to get what they want. And so why, why do we think there should only be one per credit union? So, I, I disagree with the, uh, um, with, with, you know, there can be Only One.

[00:00:31] Narrator: Welcome to 22 minutes in lending your Go-to podcast for insights on all things lending from lending practices, regulatory updates.

[00:00:40] Narrator: How to enhance lending efforts and more. In each episode, Vince Passione connects with industry leaders to discuss the latest trends and happenings around the lending industry. Let’s dive in to the latest in lending.

[00:00:56] Vince Passione: Welcome to 22 Minutes in Lending. I’m your host, Vince Passione, and today I’m excited to be joined by Tony Hernandez.

[00:01:02] Vince Passione: The president, CEO of the Defense Credit Union Council. Tony leads the Principal Trade Association dedicated exclusively the credit union serving our nation’s military and veterans, representing tens of millions of members worldwide. Before joining DCUC, he served a distinguished career in the United States Air Force, retiring as a full colonel, and holding multiple senior leadership and command roles.

[00:01:22] Vince Passione: Tony, it is great to have you on the podcast and welcome, and thank you for your service.

[00:01:27] Tony Hernandez: Thank you, Vince. It’s a, it’s a pleasure being here. Uh. You know, uh, just to kind of tell a lot of things at what we’re doing, but, you know, just a great, uh, partnership with, uh, with you guys and, uh, you know, happy to do it.

[00:01:39] Vince Passione: Well, Tony, most listeners, I’m sure they have met you and seen you speak before. Certainly I have. But how about sort of a quick introduction of your journey from the military over the credit union system?

[00:01:48] Tony Hernandez: Sure. You know, I, uh, um, you know, I was a finance officer when I came in the Air Force. They were, uh.

[00:01:55] Tony Hernandez: Uh, the Air Force was, was having a pilot reduction. You know, they were, they were banking pilots, not the banking that that we talked about, but they were taking people that had their wings and putting them in support roles ’cause they didn’t have enough airplanes for them to do on. And so, um, I had a pilot slot and I was gonna be an Air Force pilot and so I took, I got a degree in finance, corporate finance, and, uh, you know, when they, when my pilot slot got eliminated.

[00:02:24] Tony Hernandez: They were like, what do we do with this guy? So made me a finance officer. So, um, and which, which was fine. I mean, uh, um, you know, it’s very detailed, you know, very, uh, you know, think of, think of Green Shade, you know, uh, you know, the green shade accountants that, that do this stuff. Uh, I’m not that guy. I can do it, but that’s not my type.

[00:02:44] Tony Hernandez: And so, uh, you know, I I, I, I didn’t struggle with it. I mean, I got, I made. I got several distinguished graduate stuff and, uh, and, and progress to the career field. Uh, earned my, uh, you know, uh, earned my, uh, my master comptroller badge. And, uh, ended up becoming, you know, all culminated with me being the CFO or the Director of Finance, financial Management and comptroller, which is a CFO equivalent.

[00:03:09] Tony Hernandez: Um, but because I was a comptroller, uh, you know, uh, um, the Military Banking Pro program falls under the financial management. And so I was familiar with the program, but my journey, uh, wasn’t typical because, uh, you know, and I’ve told a story in many audiences. Uh, my wife worked for DCUC for 16 years before I Oh, I realized that.

[00:03:30] Tony Hernandez: Okay. Yeah. So, so she preceded you there? She did. Um, you know, and, and, and you know, how that came about was that I, I was a captain newly assigned to the Pentagon. And, uh, the office. I worked, I was, I started off as a comptroller policy analyst. I ended up, uh, becoming the comptroller War planner for the entire career field during nine 11.

[00:03:51] Tony Hernandez: And then later on I worked, uh, I worked, uh, standing up, you know, uh, um, uh, strategic Command, Northern Command. And I was, I was a policy, I was a, I was a budget analyst for, uh, for these new, uh, these new commands. But anyway, uh, the office, I started out in the Air Force banking officer, walked down to my cubicle.

[00:04:10] Tony Hernandez: He said, Hey, there’s this, uh, army colonel that just took, took over president CEO of a scene called Defense Credit Union Council.

[00:04:18] Vince Passione: That was Artie.

[00:04:19] Tony Hernandez: That was Artie. Okay. And, uh, you know, Artie was a retired, uh, retired Army colonel and, uh, he needed to hire a part-time bookkeeper. Well, my wife Jennifer was a controller for a Fortune 500 company.

[00:04:32] Tony Hernandez: And, uh, you know, part-time work. She got the job and, uh, you know, and, and off she went. And I, I didn’t, I didn’t, I was familiar with it. I met Artie, kind of, kind of understood what they did, but didn’t really, didn’t really go to, you know, do much until the credit union when I was a comp told her squadron commander at McCort Air Force Base near Seattle.

[00:04:53] Tony Hernandez: Um, we had a, we had a, uh, uh, honorary commanders right? And both of them were from the credit, one was from the credit union and one was from the bank. And we worked that banking program. Well, the credit union won the United States Air Force Distinguished Credit Union of the Year for 2005. And so, uh, that award, and we still do it today, is recognized at the DCUC annual conference.

[00:05:20] Tony Hernandez: So that was my first time going to A-D-C-U-C annual conference in uniform, you know, to watch our credit union get recognized. And then I took the pictures. And then what that started is I started, you know, becoming Jennifer’s plus one at all the DCUC conferences. And I was always taught by my mentors to, uh, you know, dress up, uh, every day is your interview, shake hands.

[00:05:43] Tony Hernandez: And, and you know, our conferences are all CEOs and directors, so these are the people that I definitely want to make sure they know my name whenever I get ready to retire. When that day came, um, DCUC created a, uh, a, uh, chief operating officer position, and I applied for it and got it. Um, here’s the, here’s the rub, Vince.

[00:06:05] Tony Hernandez: Uh, and I tell this, you know, um, you know, ’cause I’m still living and breathing today. Um, when I started DCUC, uh, Jennifer can no longer work at DCUC because she was my wife and I’m a, I’m the number two guy there. And so I asked Artie, I said, uh, well. I get it, you know, but who, who gets to tell Jennifer? He goes, sounded like a good job for the COO.

[00:06:30] Vince Passione: So, so did you, did you, oh, that, that sounds harsh. I mean, did you give her good severance package at least?

[00:06:40] Tony Hernandez: Well, well now, now she gets to, now she gets to travel with me. So it worked out pretty good. But I’ll tell you. That was a long drive home and it wasn’t, you know, it wasn’t like the apprentice where I go, you’re fired.

[00:06:52] Tony Hernandez: You know, it was more like, sweetheart, you know, dear, can we sit down? Can you put the frying pan down?

[00:07:01] Vince Passione: No loaded weapons in the house, I hope. There you go. That’s great. That’s great. And then a year

[00:07:06] Tony Hernandez: later I became the CEO and then everything else that’s happened ever since then. So I’ve been the CEO for, uh, for eight year, eight and a half years going online. So we, we met

[00:07:17] Vince Passione: probably five, I think it was five Gacs ago.

[00:07:21] Vince Passione: Yeah. Uh, and I think Jennifer was with you at that GAC when we first started our conversation and you told me about, so the mission and my recollection is probably about 180 defense related credit unions and probably well over close to 50 million members. Um, so pretty big and asset wise, probably, you know, over $500 billion in assets.

[00:07:40] Vince Passione: Did I miss anything about the membership base and the way you look at your

[00:07:44] Tony Hernandez: members? Yeah. When you, when you met me, we were still a pure, um, military, uh, um, you know, niche, uh, in the trade association. You know, when I became the CEO in 2017, that’s when we separated from cuna, in fact, uh, DCUC, defense, credit Union Council.

[00:08:04] Tony Hernandez: We were a CUNA council in 1960. I

[00:08:07] Vince Passione: I didn’t realize that part of the

[00:08:08] Tony Hernandez: story. Yeah. And, and that’s why we kept the name ’cause it’s part of our history and people rec, you know, um, people can remember that and relate to it. Um, but we were a niche organization, um, you know, council and when, and then we separated, which made us our own independent trade association.

[00:08:26] Tony Hernandez: And it was about the time when I met you about five years ago when we were asked by uh, uh, the veteran, uh, the Department of Veteran Affairs to help the military banks with what they call the Veteran Benefit Banking Program. And that was something we had talked about for a while because, you know, each National Defense Authorization Act specifies a fiscal year end strengths for the military.

[00:08:50] Tony Hernandez: You add up the Army, Navy, air Force and Marine Corps, and now Space Force, it’s about 1.2 million members of the military in uniform on active duty. Um, and so, uh, um, that’s, that was the size of the market or who we were serving. But when you look at the veteran market, it’s 18 million veterans exactly.

[00:09:11] Tony Hernandez: Every zip code. And because they’re in every zip code, and we, and we got this from the va. It stands to reason that there’s at least one veteran in every single credit union across the United States. And so the DCUC board allowed us to open up the membership, um, to all credit unions. And that’s, you know, started off a little slow.

[00:09:31] Tony Hernandez: And then over the last two years, we’ve really taken off. So now we’re about 225 member credit unions. Um, about, uh, about 45 million members, and then the 500 million that, uh, or 500 billion in assets, the collective assets, collective memberships, you know, where we’re at. And we’re looking to add a whole lot more.

[00:09:52] Tony Hernandez: Our goals are to, are to grow to a third of the industry and then half of the industry. And then, you know, uh, who know, who know, who knows where, where we go from there. So we’re getting very big, very fast. Plus the industry. The industry’s coming down too, right? All the consolidations. Yeah. Um, so we’ll, we’ll meet ’em pretty, em pretty, pretty close.

[00:10:12] Vince Passione: Tony. I was, I wanna take it back a little bit ’cause I, I thought this comment about the council was interesting. I never, I did not, as I said, I didn’t realize that you were a council in Una and there are, so was that something you initiated? That they initiated to sort of separate it

[00:10:25] Tony Hernandez: out? So what happened there were, there were a lot of credit unions on military bases that had problems with the Pentagon.

[00:10:32] Tony Hernandez: You know, uh, with, uh, with regulations, ’cause military credit unions on base fall under the, you know, it’s, it’s the, it’s the DOD financial management regulation. And there’s, you know, there’s only one bank and one credit union and enforcing that ’cause everybody wanted to be on base, which you could only have one of each, um, you know, how you can solicit, how you can interact with the military, you know, different programs.

[00:10:56] Tony Hernandez: So it’s almost like a, like, like another regulator. And, uh, in 1963, they were still forming the policies. And so, uh, um, at the time there was 400 military bases and about 400 member, uh, DCUC or defense credit unions. And so they formed this council, um, to, to ban together so that they could go in, um, collectively into the Pentagon and, and, uh, advocate for better regulations or clearer guidance and clearer regulations.

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[00:12:10] Vince Passione: Now, Tony, as you, as you sort of expand the mission of DCUC, how does the core, I think there are 128 or 130 defense related. Credit affiliated credit unions, how, how did they react to it? Is it good news for them that your mission is now a bit broader representing the broader community? Or do they feel like, well, wait a minute, there are some very specific needs that we don’t address.

[00:12:36] Vince Passione: We’re

[00:12:36] Tony Hernandez: not abandoning what we’re doing, the things we do for, uh, for military and veteran communities because that’s a nonpartisan issue. You walk into a Democrat office on Capitol Hill and they sure love their veterans. Yep. Walk into a Republican, they love their veterans or an independent, you know, and we, uh, we get a lot of meetings that others can’t because of who we represent.

[00:12:58] Tony Hernandez: And we partner with a lot of organizations. And by the time this thing airs, the letter will be out there. But we just, uh, we’re looking to sign a, uh, joint letter with the American Legion on Veteran Business Member Lending. ’cause they see that as important for, for their, their membership as well. And so, you know, more hasn’t dropped dropped yet, but we look to deliver that to congress on, on member business lending.

[00:13:22] Tony Hernandez: So we won’t give that up. What, uh, what, what, what they see now is as we’ve taken on a, a wider, uh, uh, aperture and, and our advocacy efforts, and we advocate for industry-wide with a veteran flavor ’cause that gets us in the door. And so, uh, um, now that we’ve taken on a wider advocacy role, we’re very active and we’re fast, quick and efficient, and we’ve been getting results because of.

[00:13:49] Tony Hernandez: Who we are and who we represent. Um, now we’re giving credit unions a choice. Do I continue to pay for, you know, 50 staffers and you know, all this other stuff? Or do I pay for DCUC and turn the money to build their own credit union? Hire their own governmental affairs person or. Right. Or build out their AI team.

[00:14:10] Tony Hernandez: And so now we’re offering them a real choice in the industry.

[00:14:13] Vince Passione: Well, you, you’re going down the path to my next question. So, you know, we just saw not too long ago, right? Two trade associations, national Trade Associations merge. Everyone’s like, pal, long time coming. This is great. Now all we have is one organization representing credit unions nationally and, and on the hill.

[00:14:30] Vince Passione: And now here comes DCUC and you’re expanding the mission of DCUC. So how does that play and, and how does, how does America’s credit Union look at this?

[00:14:40] Tony Hernandez: Well, and not, not too favorably. You know, last question. Surprise, right? I mean, I mean, I, you know, I think if you want, you know, you definitely want hate to use the word, you know, um, you know, monopoly, right?

[00:14:51] Tony Hernandez: You want, you know, you don’t want any competition. But that’s kind of what we’re doing, is we’re providing competition. And, you know, in any free market economy, competition’s good because it helps the consumer. Right now, we give people a choice, um, but we also, uh, give them a second opinion. And we see, you know, for, for the most part, we see the same things that America’s credit union, where we can collaborate, we will.

[00:15:17] Tony Hernandez: And I think that’s important and I think it’s good for us to add our voice and our credibility and our, uh, our, uh, our, our reputation on Capitol Hill. Um, but sometimes we see things differently. You know, I have a, have a, have a difference. We have a different perspective. And, uh, sometimes that’s healthy in trying to, um, trying to triangulate, you know, what an industry position is.

[00:15:40] Tony Hernandez: And so that’s more how I see our role. Not so much, you know, as, as, as opposing what the other, you know, what, what the leagues or what America’s credit unions or other national trade associations are doing, but offering another choice. And I think you get a healthier, uh, um, I think you get a healthier position.

[00:16:00] Tony Hernandez: The more we can challenge folks or, or, or find that, uh, you know, find that, uh, that, that sweet spot. You have the American Banker Association. You have the National Banker Association. You have the independent community, bankers, associ of America. You have the commercial banks, you have the leagues, and there’s multiple, you have the, I’m sorry, the, uh, the, the State Level Bankers Association.

[00:16:20] Tony Hernandez: You have all these other voices. It never confuses Congress. Banks tend to get what they want. And so why, why do we think there should only be one per credit union? So I, I disagree with the, uh, um, with, with, you know, there can be only one, you know, kind of a, kind of a Highlander, uh, um, yeah, petition, you know, we’re 10% of the cost of, uh, of what C was or, or what the, what America’s credit unions right now, and then you add on the lease so it’s not cost prohibitive.

[00:16:50] Tony Hernandez: Um, you know, especially for the small car, you’re talking a couple hundred bucks, you know, when you get down to that level. Um, and so they get that choice. They get actionable information from us. Um, what we are trying to do since I’ve become CEO, is really focus on member value. And so we’re a 10th of the price.

[00:17:10] Tony Hernandez: We’re twice the value, right? And, and, and we’re proving it. So if you, you know, our, our goal is, is that kind of a lost leader, right? Um, the credit unions see all the stuff DCU C’s doing, and we are only a fraction of the price. What’s in it for them is, uh, they get that 90% to put back into their credit union.

[00:17:30] Vince Passione: Now, Tony, any examples of where you, you’ve actually worked with America’s credit Union on some of the advocacy issues on the Hill?

[00:17:37] Tony Hernandez: Yeah, we work with them. In fact, we’re working with America’s credit unions right now. Um, there was a, uh, letter that came out, uh, on December 2nd, um, to 21 credit unions, uh, on their over overdraft and non-sufficient fund fee policy.

[00:17:54] Tony Hernandez: And, uh, you know, we’ve, uh, we’ve teamed up, uh, well, we started working, you know, doing different things in a different way, different way of, of getting it. But I think, I think it’s serving those that are affected and it’ll serve the rest of the industry. But one thing we said yesterday is for those that are going to respond and let’s have kind of the same general content in it, because I think that if we can show a coordination and, and unity in the same story.

[00:18:21] Tony Hernandez: That becomes a more powerful, uh, email response. I gotta imagine that

[00:18:26] Vince Passione: that carries over to America’s credit unions, right? That you’ve gotta coordinate the message,

[00:18:29] Tony Hernandez: right? Well, yeah. Yeah. So I, uh, you know, so I contacted, uh, Scott Simpson yesterday that came out in our meeting that we had with mm-hmm.

[00:18:35] Narrator: With

[00:18:36] Tony Hernandez: 21.

[00:18:37] Tony Hernandez: And, and, uh, we agreed to work that out together. I said, you don’t need A-D-C-U-C version. You don’t need an America’s credit union. And then each of the leagues, you know, you don’t need a different league version either. And so, uh. We’re gonna work together on that. And that just happened last night, you know, uh, um, and I think that’s gonna be really good.

[00:18:53] Tony Hernandez: Plus, uh, um, what we’ll be able to capture from this is the next time Congress comes down with something like that, I think we’re gonna have a very good response strategy. You know, uh, uh, one of the things that we’ve learned in DCUC is the minute that it goes public, you know, a letter like that. Um, you need to have an op-ed ready to go.

[00:19:16] Tony Hernandez: And the reason why you do that is because if a larger media outlet picks up the story, they’re gonna go Google it. Wouldn’t you rather have a credit union narrative at the top of that Google search rather than waiting a couple days or, or not not doing anything. Sure.

[00:19:34] Vince Passione: So talking about getting a bigger voice on the hill.

[00:19:36] Vince Passione: So I saw your, your letter to Russell Voight at the CAPB about the Credit Union Advisory Council, and you were pretty bold. You actually offered, I think, to pay, I dunno if it was to pay all of the, the, the obligations to cover it, but, but give us a little background on that. The, the benefit of, of the CUAC and then.

[00:19:53] Vince Passione: You know, why you went so far as to say, Hey, we’d actually pay for this.

[00:19:57] Tony Hernandez: Sure. Um, um, one, there isn’t a credit union voice. I think the letter also said that, you know, um, there’s plenty of, of former bankers on, you know, and, and treasury, uh, you know, positions and OCC. Yeah. And on Capitol Hill and advising the different financial services or banking committees.

[00:20:17] Tony Hernandez: Where’s the credit union voice? You know, yeah, we have NCUA, but there’s only so much that can do. And there was this credit Union Advisory Council under CFPB, you know, that had CEOs that were on it. And so, you know, most, most of those meetings occurred in the virtual world, right? And so what does it cost to put on a teams meeting, you know, or, um, and using a government site to do it.

[00:20:41] Tony Hernandez: Nothing, you know, uh, what it cost us to host that an hour of our time when we do it. And then administrative, you know, we would, we’d offer to help capture minutes and, and, and, and do all that stuff. That stuff’s easy to do. So, you know, when, uh, when CFPB was hosting it, you know, I don’t know if they wanted to fly people in or host it in theirs.

[00:21:02] Tony Hernandez: I thought it was, I, I didn’t think it was a strong argument saying, well, we’re gonna do away with it because it costs too much.

[00:21:09] Vince Passione: Yeah.

[00:21:09] Tony Hernandez: You know, we’re just saying, Hey, it doesn’t cost much, especially in this day and age. And if you’re worried about it, we’ll cover it. Um, and you know, yeah, it was a little bold for us to do that, but who else is doing it in the industry?

[00:21:21] Tony Hernandez: Absolutely. That’s what’s doing

[00:21:23] Vince Passione: well. That’s all Tom, we have for today. Tony, thank you so much for joining us, and thank you as always. To our listeners, if you haven’t yet, be sure to subscribe to him. Never miss an episode. And we’ll see you back here at our next 22 minutes in lending.

[00:21:36] Narrator: Thank you for listening to the 22 minutes in Lending podcast.

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