WEBVTT 00:00:00.000 --> 00:00:03.980 So if you live in Southern California, your mortgage 00:00:03.980 --> 00:00:06.799 might actually secretly be funded by the ghost 00:00:06.799 --> 00:00:10.519 of a 1990s paper company. Right. Or maybe your 00:00:10.519 --> 00:00:14.109 car loan is backed by a like a totally defunct 00:00:14.109 --> 00:00:16.329 collective of mobile homeowners. Yeah, exactly. 00:00:16.489 --> 00:00:18.350 Because, I mean, usually when you picture your 00:00:18.350 --> 00:00:20.750 local bank or your credit union, you just see 00:00:20.750 --> 00:00:24.329 this quiet, slightly boring building on the corner. 00:00:24.410 --> 00:00:26.649 Oh, totally. You just walk in, deposit a check, 00:00:27.129 --> 00:00:29.750 maybe get a lollipop if you're lucky, and you 00:00:29.750 --> 00:00:31.989 leave. Right. It feels completely static, like 00:00:31.989 --> 00:00:34.030 it just, I don't know, sprouted out of the concrete 00:00:34.030 --> 00:00:36.149 one day, fully formed, complete with a drive 00:00:36.149 --> 00:00:38.530 -through ATM and a stack of auto loan brochures. 00:00:38.710 --> 00:00:41.649 Yeah, we tend to view these local financial institutions 00:00:41.649 --> 00:00:44.539 as perma - like these unchanging fixtures of 00:00:44.539 --> 00:00:46.359 the neighborhood landscape. We just walk past 00:00:46.359 --> 00:00:48.619 them every day. Exactly. And we assume they have 00:00:48.619 --> 00:00:51.179 always been exactly what they are right now, 00:00:51.640 --> 00:00:53.600 operating under the same name and serving the 00:00:53.600 --> 00:00:55.759 exact same purpose. Well, today we are going 00:00:55.759 --> 00:00:58.039 to completely shatter that illusion, so welcome 00:00:58.039 --> 00:01:01.460 to the deep dive. Our mission today is to explore 00:01:01.460 --> 00:01:04.540 the hidden, surprisingly dramatic history of 00:01:04.540 --> 00:01:06.560 local finance. It's a lot more dramatic than 00:01:06.560 --> 00:01:08.920 you'd think. Oh, it really is. We're focusing 00:01:08.920 --> 00:01:11.500 our lens on a single source today, which is a 00:01:11.500 --> 00:01:14.040 timeline detailing the history of Southland Credit 00:01:14.040 --> 00:01:16.959 Union. Right. We're going to unpack how a tiny, 00:01:17.260 --> 00:01:19.840 almost incredibly fragile financial experiment, 00:01:20.359 --> 00:01:22.680 one that was started by just a few volunteers 00:01:22.680 --> 00:01:25.200 during the absolute depths of the Great Depression, 00:01:25.819 --> 00:01:30.310 somehow snowballed into a one point $3 billion 00:01:30.310 --> 00:01:34.879 modern financial institution. It completely upends 00:01:34.879 --> 00:01:37.159 our assumptions about how modern banking footprints 00:01:37.159 --> 00:01:39.540 are actually built, you know? Yeah. Because this 00:01:39.540 --> 00:01:41.680 isn't just a dry corporate history of a bank 00:01:41.680 --> 00:01:43.879 slowly accumulating assets over the decades. 00:01:43.939 --> 00:01:46.480 Not at all. It's this fascinating window into 00:01:46.480 --> 00:01:49.079 how hyper -niche micro communities, and I mean, 00:01:49.079 --> 00:01:51.420 we are talking about everyone from internal revenue 00:01:51.420 --> 00:01:54.780 service agents to Marine Corps personnel banded 00:01:54.780 --> 00:01:57.260 together, collided, and merged over the last 00:01:57.260 --> 00:01:59.900 century, really, just to survive an increasingly 00:01:59.900 --> 00:02:02.500 ruthless economic landscape. It's wild. OK, let's 00:02:02.500 --> 00:02:03.989 unpack. this and wind the clock all the way back 00:02:03.989 --> 00:02:06.590 to very beginning. So the year is 1936. Right 00:02:06.590 --> 00:02:10.129 1936. Kick your Los Angeles in the absolute thick 00:02:10.129 --> 00:02:12.530 of the Great Depression. The traditional banking 00:02:12.530 --> 00:02:15.830 system is just in shambles. Thousands of banks 00:02:15.830 --> 00:02:18.229 have failed nationwide. Yeah, it was a disaster. 00:02:18.449 --> 00:02:21.250 And if you're a regular working class person 00:02:21.250 --> 00:02:24.210 doing physical labor, getting a fair loan from 00:02:24.210 --> 00:02:26.789 a traditional commercial bank is practically 00:02:26.789 --> 00:02:29.189 impossible. Absolutely impossible. Right. So 00:02:29.189 --> 00:02:31.930 in that unforgiving environment, our timeline 00:02:31.930 --> 00:02:34.629 shows that Southland Credit Union was established 00:02:34.629 --> 00:02:37.699 specifically to serve the employees of the Los 00:02:37.699 --> 00:02:40.039 Angeles County Flood Control District. Which 00:02:40.039 --> 00:02:42.379 is such a specific group. So specific. And it 00:02:42.379 --> 00:02:46.580 was started by just seven volunteers. Just seven 00:02:46.580 --> 00:02:49.539 individuals taking on the responsibility of managing 00:02:49.539 --> 00:02:52.280 the financial needs of their coworkers during 00:02:52.280 --> 00:02:55.780 literally one of the most volatile economic periods 00:02:55.780 --> 00:02:58.039 in American history. I mean, I just marvel at 00:02:58.039 --> 00:03:00.340 the sheer audacity of those humble beginnings. 00:03:00.800 --> 00:03:03.000 You know, you have these folks out there dealing 00:03:03.000 --> 00:03:05.659 with Los Angeles flood control, digging channels, 00:03:05.900 --> 00:03:07.900 pouring concrete, managing water infrastructure 00:03:07.900 --> 00:03:10.460 for the county. More labor, yeah. Exactly. And 00:03:10.460 --> 00:03:13.759 then on the side, they are running this localized 00:03:13.759 --> 00:03:16.379 financial cooperative. It's incredible. To me, 00:03:16.460 --> 00:03:19.139 it feels less like the foundation of a billion 00:03:19.139 --> 00:03:23.180 dollar financial empire and more like a, well, 00:03:23.379 --> 00:03:25.960 like a modern day crowdfunding campaign. Oh, 00:03:25.960 --> 00:03:27.569 that's a good way to look at it. It's like a 00:03:27.569 --> 00:03:29.789 group of coworkers simply passing a hat around 00:03:29.789 --> 00:03:32.810 the break room to create a localized mutual aid 00:03:32.810 --> 00:03:35.430 fund because literally nobody else is going to 00:03:35.430 --> 00:03:37.550 look out for them. Right. And what's fascinating 00:03:37.550 --> 00:03:41.330 here is that that concept of mutual aid is the 00:03:41.330 --> 00:03:44.349 defining mechanical difference of a not for profit 00:03:44.349 --> 00:03:47.289 community chartered institution. OK. How so. 00:03:47.610 --> 00:03:49.990 Well in 1936 you couldn't just walk in off the 00:03:49.990 --> 00:03:52.310 street show a driver's license and open an account. 00:03:52.409 --> 00:03:55.530 Right. You had to be a verified part of that 00:03:55.530 --> 00:03:58.719 specific flood control workforce. It operates 00:03:58.719 --> 00:04:01.560 on a closed -loop system of peer trust. Oh, I 00:04:01.560 --> 00:04:03.620 see. When you are lending money to the person 00:04:03.620 --> 00:04:05.680 you stand next to in a trench for 10 hours a 00:04:05.680 --> 00:04:08.080 day, the risk model changes entirely. Because 00:04:08.080 --> 00:04:10.500 you actually know them. Exactly. The default 00:04:10.500 --> 00:04:12.439 rate is going to be incredibly low because you 00:04:12.439 --> 00:04:14.080 are trusting each other with your collective 00:04:14.080 --> 00:04:17.290 livelihoods. Wow, yeah, it's an enforced social 00:04:17.290 --> 00:04:19.209 accountability. You aren't going to default on 00:04:19.209 --> 00:04:21.910 a $50 loan when the guy who approved the paperwork 00:04:21.910 --> 00:04:24.290 is sitting across from you in the cafeteria eating 00:04:24.290 --> 00:04:26.110 a sandwich. You'd never hear the end of it. No, 00:04:26.189 --> 00:04:30.649 you'd be shunned. But OK, that hyper local, highly 00:04:30.649 --> 00:04:34.149 exclusive club design begs a massive logistical 00:04:34.149 --> 00:04:37.439 question. Right. How on earth does a break room 00:04:37.439 --> 00:04:42.199 side project run by seven guys managing LA floodwaters 00:04:42.199 --> 00:04:46.680 eventually evolve into a $1 .3 billion entity 00:04:46.680 --> 00:04:50.139 serving two massive populous counties? Well, 00:04:50.160 --> 00:04:52.939 simply put, they had to figure out how to legally 00:04:52.939 --> 00:04:55.620 let more people into that proverbial break room. 00:04:55.639 --> 00:04:58.600 Right. And that requirement sparked what can 00:04:58.600 --> 00:05:01.500 really only be described as a decades long administrative 00:05:01.500 --> 00:05:04.079 identity crisis. Not just intense. To understand 00:05:04.079 --> 00:05:06.139 how that The single -passed hat turned into a 00:05:06.139 --> 00:05:08.120 billion -dollar vault. We really have to look 00:05:08.120 --> 00:05:10.519 at the incredibly complex bureaucratic gymnastics 00:05:10.519 --> 00:05:13.139 they started executing, particularly in the 1990s. 00:05:13.399 --> 00:05:15.079 Here's where it gets really interesting, because 00:05:15.079 --> 00:05:17.339 the administrative whiplash in their historical 00:05:17.339 --> 00:05:19.459 timeline is just staggering. Let's track the 00:05:19.459 --> 00:05:21.300 legal uniforms they kept trying on. Let's do 00:05:21.300 --> 00:05:23.980 it. OK, so in 1944, they secure a state charter 00:05:23.980 --> 00:05:26.560 and officially change their name to Los Angeles 00:05:26.560 --> 00:05:29.139 County Civic Center Credit Union. Which makes 00:05:29.139 --> 00:05:31.439 logical sense. Right. They are expanding outward 00:05:31.439 --> 00:05:33.779 from just flood control to broader municipal 00:05:33.769 --> 00:05:37.709 Exactly. Then in 1981 they moved their corporate 00:05:37.709 --> 00:05:40.850 office out of Los Angeles and over to Downey. 00:05:41.050 --> 00:05:44.149 Still tracking smoothly. But the 1990s is where 00:05:44.149 --> 00:05:46.910 the legal maneuvering goes into absolute overdrive. 00:05:46.930 --> 00:05:50.750 Oh gets chaotic. Total chaos. In 1994 they suddenly 00:05:50.750 --> 00:05:53.189 decide to get a federal charter. They changed 00:05:53.189 --> 00:05:56.910 the name to Southland Civic Federal Credit Union. 00:05:57.269 --> 00:06:00.009 Big federal move. Right. But then just five years 00:06:00.009 --> 00:06:03.589 later in 1999, they abruptly throw the car in 00:06:03.589 --> 00:06:06.149 reverse, convert back to a state charter, drop 00:06:06.149 --> 00:06:08.689 the federal from the name, and become Southland 00:06:08.689 --> 00:06:11.649 Civic Credit Union. Just a total 180. Yeah. And 00:06:11.649 --> 00:06:14.350 finally, in 2002, they dropped the civic entirely, 00:06:14.790 --> 00:06:16.990 settled on simply Southland Credit Union, and 00:06:16.990 --> 00:06:19.490 moved the headquarters to Los Alamitos. Going 00:06:19.490 --> 00:06:21.569 from a state charter to a federal charter and 00:06:21.569 --> 00:06:23.449 then retreating back to a state charter just 00:06:23.449 --> 00:06:26.850 five years later is a massive operational upheaval. 00:06:27.019 --> 00:06:29.339 I am just picturing the poor mid -level managers 00:06:29.339 --> 00:06:32.620 dealing with that. Oh, the logistics alone. Ordering 00:06:32.620 --> 00:06:35.160 new letterhead, swapping out the signage on the 00:06:35.160 --> 00:06:38.319 building, rewriting every single internal policy 00:06:38.319 --> 00:06:41.379 document, and filing mountains of compliance 00:06:41.379 --> 00:06:43.980 paperwork every few years. It's a nightmare. 00:06:44.180 --> 00:06:46.459 To me, that doesn't look like a board of directors 00:06:46.459 --> 00:06:49.040 being indecisive. That looks like an organization 00:06:49.040 --> 00:06:51.800 desperately trying to exploit a regulatory loophole 00:06:51.800 --> 00:06:53.899 so they can break out of their original civic 00:06:53.899 --> 00:06:56.959 center borders. You've isolated the exact mechanism 00:06:56.959 --> 00:06:59.439 driving this behavior. It really all comes down 00:06:59.439 --> 00:07:01.000 to the mechanics of what are called field of 00:07:01.000 --> 00:07:02.980 membership rules. Okay, field of membership. 00:07:03.779 --> 00:07:07.339 Right. State charters and federal charters operate 00:07:07.339 --> 00:07:09.800 under entirely different regulatory frameworks 00:07:09.800 --> 00:07:14.040 governed by completely different agencies. Historically, 00:07:14.319 --> 00:07:17.680 federal charters had incredibly strict rigid 00:07:17.680 --> 00:07:20.339 rules about who could actually join the credit 00:07:20.339 --> 00:07:23.100 union. you literally had to share an undeniable 00:07:23.100 --> 00:07:25.600 common bond. Like what kind of bond? Like working 00:07:25.600 --> 00:07:27.699 for the exact same corporation or belonging to 00:07:27.699 --> 00:07:30.360 the same union or living in a very narrowly defined 00:07:30.360 --> 00:07:32.379 specific neighborhood. Okay, so it's like trying 00:07:32.379 --> 00:07:34.399 to play Major League Baseball, but realizing 00:07:34.399 --> 00:07:37.220 you're still legally registered as a Little League 00:07:37.220 --> 00:07:39.720 team. You have to keep aggressively changing 00:07:39.720 --> 00:07:41.939 your legal status just to be allowed onto the 00:07:41.939 --> 00:07:45.160 bigger field. Exactly. And the rules of that 00:07:45.160 --> 00:07:47.399 field were shifting beneath their feet in real 00:07:47.399 --> 00:07:51.230 time. In the late 1990s, the traditional commercial 00:07:51.230 --> 00:07:54.449 banking lobby was furious that these tax -exempt 00:07:54.449 --> 00:07:56.509 credit unions were growing so large. Oh, I bet 00:07:56.509 --> 00:07:59.670 they were. Oh, yeah. They sued, and the courts 00:07:59.670 --> 00:08:01.930 started heavily cracking down on federal credit 00:08:01.930 --> 00:08:03.990 unions that were getting too broad with their 00:08:03.990 --> 00:08:06.009 membership criteria. So they were getting boxed 00:08:06.009 --> 00:08:08.230 in. The federal regulators were essentially forcing 00:08:08.230 --> 00:08:11.410 these institutions to stay small. So by flipping 00:08:11.410 --> 00:08:14.829 back to a state charter in 1999, Southland was 00:08:14.829 --> 00:08:17.310 strategically dodging those strict federal limits. 00:08:17.610 --> 00:08:19.310 That makes so much sense now. Yeah, the California 00:08:19.310 --> 00:08:21.649 State Charter generally offered much more flexibility 00:08:21.649 --> 00:08:24.089 and a much looser interpretation of how you could 00:08:24.089 --> 00:08:26.170 actually define your community. So all those 00:08:26.170 --> 00:08:29.170 boardroom meetings, the endless paperwork, the 00:08:29.170 --> 00:08:31.589 continuous rebranding from the hyper -specific 00:08:31.589 --> 00:08:35.570 L .A. County Civic Center to the vague, all -encompassing 00:08:35.570 --> 00:08:38.190 Southland. It was all prep work. It was laying 00:08:38.190 --> 00:08:40.429 the tracks for a massive train that was coming. 00:08:40.909 --> 00:08:43.210 They were building the legal scaffolding required 00:08:43.210 --> 00:08:45.409 to start absorbing people who had absolutely 00:08:45.409 --> 00:08:47.570 nothing to do with Los Angeles county government. 00:08:48.190 --> 00:08:50.889 Without locking down that perfectly flexible 00:08:50.889 --> 00:08:54.210 state regulatory structure. They never could 00:08:54.210 --> 00:08:57.990 have legally justified the relentless wave of 00:08:57.990 --> 00:09:00.029 acquisitions they needed to build their asset 00:09:00.029 --> 00:09:02.230 pool. They needed that flexibility. Right. They 00:09:02.230 --> 00:09:04.990 found their regulatory escape hatch and they 00:09:04.990 --> 00:09:07.440 immediately utilized it to grow. Which launches 00:09:07.440 --> 00:09:10.120 us perfectly into the wildest, most fascinating 00:09:10.120 --> 00:09:13.100 era of this timeline. The Pac -Man era. Yes. 00:09:13.539 --> 00:09:17.559 From roughly 1989 through 2024, they go on an 00:09:17.559 --> 00:09:20.779 absolute spree. I look at this as the era of 00:09:20.779 --> 00:09:22.740 hyper niche mergers. That's a great name for 00:09:22.740 --> 00:09:24.620 it. Because once they had that flexible structure 00:09:24.620 --> 00:09:26.600 in place, they started playing Pac -Man across 00:09:26.600 --> 00:09:29.159 Southern California. And the list of groups they 00:09:29.159 --> 00:09:31.820 absorbed is the most eclectic, almost bizarre 00:09:31.820 --> 00:09:34.360 mix of human beings you could possibly imagine. 00:09:34.559 --> 00:09:38.129 It really reads like a sweeping cross -section 00:09:38.129 --> 00:09:41.360 of the entire California economy. I'm just going 00:09:41.360 --> 00:09:43.379 to read some of these off because it's nuts. 00:09:43.820 --> 00:09:46.700 In 1989, they merged with the Mobile Homeowners 00:09:46.700 --> 00:09:50.279 Federal Credit Union. In 1991, they absorbed 00:09:50.279 --> 00:09:52.899 the Graphic Arts Credit Union and Saints Federal 00:09:52.899 --> 00:09:56.500 Credit Union. By 1996, they bring in Sunrise 00:09:56.500 --> 00:09:59.220 First Federal Credit Union, which was set up 00:09:59.220 --> 00:10:01.519 exclusively for the employees of the Simpson 00:10:01.519 --> 00:10:04.240 Paper Company. Paper Company workers. Yeah. And 00:10:04.240 --> 00:10:07.440 then in 1999, they absorbed the Los Angeles Internal 00:10:07.440 --> 00:10:09.940 Revenue Service Employees Federal Credit Union. 00:10:10.029 --> 00:10:13.460 I mean Pivoting your membership base from paper 00:10:13.460 --> 00:10:15.759 company workers and mobile homeowners to federal 00:10:15.759 --> 00:10:18.519 IRS agents is a staggering cultural leap for 00:10:18.519 --> 00:10:21.080 any institution. But it keeps going. They take 00:10:21.080 --> 00:10:23.860 in Famco Federal representing Ameron employees, 00:10:23.919 --> 00:10:27.120 which is now National Oil Well Virgo. In 2009, 00:10:27.259 --> 00:10:30.259 they swallow Cityside Federal Credit Union, which 00:10:30.259 --> 00:10:33.059 formerly operated as the Los Angeles Times Federal 00:10:33.059 --> 00:10:35.340 Credit Union. So now you have newspaper reporters 00:10:35.340 --> 00:10:37.799 in the mix. Oh, well. In 2012, they absorbed 00:10:37.799 --> 00:10:41.360 Santa Monica City employees. they bring in Patriots 00:10:41.360 --> 00:10:43.940 Federal Credit Union out in Tustin, capturing 00:10:43.940 --> 00:10:46.320 legacy military personnel from the Marine Corps 00:10:46.320 --> 00:10:49.279 Air Station El Toro. Every single one of those 00:10:49.279 --> 00:10:52.879 legacy institutions had its own insular culture, 00:10:53.440 --> 00:10:56.720 its own board of directors, and its own deeply 00:10:56.720 --> 00:10:59.299 ingrained way of doing business. OK, wait. I 00:10:59.299 --> 00:11:01.200 have to push back on this entire strategy, though. 00:11:01.240 --> 00:11:03.840 OK, go for it. Think about the defining characteristic 00:11:03.840 --> 00:11:06.820 of a credit union. The entire reason those flood 00:11:06.820 --> 00:11:09.519 control workers started this experiment in 1936. 00:11:10.159 --> 00:11:13.220 It was built on tight -knit, closed -loop community 00:11:13.220 --> 00:11:15.840 trust. Right, the break room. Doesn't mashing 00:11:15.840 --> 00:11:18.889 all of these radically different hyper specific 00:11:18.889 --> 00:11:22.009 groups into one giant corporate pot completely 00:11:22.009 --> 00:11:24.590 destroy that original purpose. Well, I mean, 00:11:24.710 --> 00:11:27.409 an IRS agent has absolutely nothing in common 00:11:27.409 --> 00:11:29.009 with a guy rolling paper at the Simpson Paper 00:11:29.009 --> 00:11:31.769 Company or a journalist at the L .A. Times. They 00:11:31.769 --> 00:11:32.970 don't know each other. They certainly aren't 00:11:32.970 --> 00:11:35.470 passing a hat around the same break room. No, 00:11:35.470 --> 00:11:37.929 you're right. From a purely romantic historical 00:11:37.929 --> 00:11:40.590 standpoint, that dilution of the original local 00:11:40.590 --> 00:11:43.470 bond is exactly what happened. The break room 00:11:43.470 --> 00:11:45.990 intimacy is entirely gone. But if we connect 00:11:45.990 --> 00:11:48.649 this to the bigger picture. Looking at the harsh 00:11:48.649 --> 00:11:51.450 economic reality of the late 20th and early 21st 00:11:51.450 --> 00:11:54.570 centuries, this Pac -Man strategy of absorbing 00:11:54.570 --> 00:11:57.610 diverse groups wasn't about abandoning community 00:11:57.610 --> 00:12:00.470 principles. Then what was it about? It was the 00:12:00.470 --> 00:12:03.110 only mathematical way to survive. The entire 00:12:03.110 --> 00:12:06.490 banking industry was undergoing a massive technological 00:12:06.490 --> 00:12:10.179 arms race. Ah, okay. You are talking about the 00:12:10.179 --> 00:12:13.980 shift from physical branch banking to ATMs, online 00:12:13.980 --> 00:12:17.179 portals, and mobile apps. Exactly. Think about 00:12:17.179 --> 00:12:19.879 the staggering overhead required for modern banking 00:12:19.879 --> 00:12:23.799 infrastructure. Today, Southland's 70 ,000 member 00:12:23.799 --> 00:12:26.360 owners expect a full spectrum of financial products. 00:12:26.500 --> 00:12:28.909 They want the app. They demand a seamless iOS 00:12:28.909 --> 00:12:31.049 and Android mobile app. They want sophisticated 00:12:31.049 --> 00:12:33.889 30 -year fixed mortgage lending, zero liability 00:12:33.889 --> 00:12:35.850 debit cards, and military -grade cybersecurity 00:12:35.850 --> 00:12:37.909 to protect their digital deposits. It is not 00:12:37.909 --> 00:12:40.730 cheap. Not at all. A tiny 500 -member credit 00:12:40.730 --> 00:12:42.909 union that only serves the employees of a single 00:12:42.909 --> 00:12:45.210 paper company or just a collective of mobile 00:12:45.210 --> 00:12:47.549 homeowners simply does not have the capital to 00:12:47.549 --> 00:12:50.169 build that tech. Yeah, I guess a 500 -member 00:12:50.169 --> 00:12:52.750 credit union certainly can't afford to hire a 00:12:52.750 --> 00:12:56.090 dedicated full -time cybersecurity team. They 00:12:56.090 --> 00:12:58.850 would be bankrupt in a month. They would slowly 00:12:58.850 --> 00:13:01.470 bleed out. Their members would inevitably close 00:13:01.470 --> 00:13:03.269 their accounts and move their money to a Chase 00:13:03.269 --> 00:13:05.809 or a Bank of America simply for the convenience 00:13:05.809 --> 00:13:08.049 of being able to deposit a check from their smartphone. 00:13:08.350 --> 00:13:11.230 Right. Convenience always wins. So these micro 00:13:11.230 --> 00:13:14.309 communities faced a brutal existential choice. 00:13:15.350 --> 00:13:18.559 Maintain their extreme exclusivity. and slowly 00:13:18.559 --> 00:13:22.379 die, or pool their resources. By bringing the 00:13:22.379 --> 00:13:24.759 newspaper reporters, the Marines, the IRS agents, 00:13:24.860 --> 00:13:27.059 and the paper workers under one massive roof, 00:13:27.820 --> 00:13:30.179 Southland achieved the economy of scale necessary 00:13:30.179 --> 00:13:33.360 to fund that billion -dollar tech infrastructure. 00:13:33.720 --> 00:13:36.659 They traded intimacy for survival. They sacrificed 00:13:36.659 --> 00:13:39.600 the exclusivity of the 1930s break room to ensure 00:13:39.600 --> 00:13:42.100 that all of those individual members still had 00:13:42.100 --> 00:13:44.240 a not -for -profit financial home that could 00:13:44.240 --> 00:13:46.559 actually offer them modern conveniences. Man, 00:13:46.700 --> 00:13:49.600 it is a harsh adapt or die ecosystem. You either 00:13:49.600 --> 00:13:51.639 merge your tiny neighborhood fund into a larger 00:13:51.639 --> 00:13:54.120 regional network or you cease to exist entirely. 00:13:54.480 --> 00:13:56.639 But as we look at the tail end of the timeline, 00:13:57.019 --> 00:14:00.159 This shotgun approach to mergers just grabbing 00:14:00.159 --> 00:14:03.519 whatever eclectic group of workers needs a lifeline. 00:14:03.820 --> 00:14:06.620 It sharpens into something much more calculated. 00:14:06.639 --> 00:14:09.460 It really does. In the late 2010s and 2020s, 00:14:09.460 --> 00:14:12.799 they stop absorbing random paper companies and 00:14:12.799 --> 00:14:16.220 execute a highly targeted push into one specific 00:14:16.220 --> 00:14:18.720 critical sector, which is health care. Yeah, 00:14:18.720 --> 00:14:21.200 the overarching strategy clearly matures here. 00:14:21.200 --> 00:14:23.700 They recognize that the medical field offers 00:14:23.700 --> 00:14:26.799 a uniquely stable demographic profile. Let's 00:14:26.799 --> 00:14:29.480 look at the board. In 2014, they bring in Westside 00:14:29.480 --> 00:14:31.740 Employees Federal Credit Union, capturing the 00:14:31.740 --> 00:14:33.840 staff at St. John's Health Center in Santa Monica. 00:14:34.019 --> 00:14:36.820 Right. Three years later, in 2017, they merged 00:14:36.820 --> 00:14:39.500 with Harbor Federal Credit Union, bringing in 00:14:39.500 --> 00:14:42.000 the massive workforce of Harbor UCLA Medical 00:14:42.000 --> 00:14:44.360 Center. Another huge one. And the absolute crown 00:14:44.360 --> 00:14:47.940 jewel happens in 2024, merging with Allied Health 00:14:47.940 --> 00:14:50.659 Care Federal Credit Union. That single move brought 00:14:50.659 --> 00:14:52.879 in health care workers across Long Beach Memorial 00:14:52.879 --> 00:14:55.100 Medical Center, St. Mary Medical Center, and 00:14:55.100 --> 00:14:57.620 St. Francis. Medical Center in Linwood. Focusing 00:14:57.620 --> 00:15:00.039 intensely on health care is just brilliant from 00:15:00.039 --> 00:15:02.659 a risk management perspective. Well, medical 00:15:02.659 --> 00:15:05.179 professionals, nurses, and hospital administrative 00:15:05.179 --> 00:15:08.409 staff generally have highly stable jobs. They 00:15:08.409 --> 00:15:10.990 have predictable income trajectories and they 00:15:10.990 --> 00:15:13.690 operate in an industry that is essentially recession 00:15:13.690 --> 00:15:16.090 proof. Oh, that makes total sense. People always 00:15:16.090 --> 00:15:18.710 need hospitals. Right. So by systematically building 00:15:18.710 --> 00:15:21.250 a massive footprint within the regional medical 00:15:21.250 --> 00:15:24.470 community, Southland anchors its billion dollar 00:15:24.470 --> 00:15:27.649 asset pool with some of the most reliable borrowers 00:15:27.649 --> 00:15:29.929 in the modern economy. So what does this all 00:15:29.929 --> 00:15:33.000 mean? They took that flexible state charter they 00:15:33.000 --> 00:15:36.240 fought so hard for in the 90s, proved they could 00:15:36.240 --> 00:15:38.659 manage the complex integrations with the IRS 00:15:38.659 --> 00:15:41.320 agents and the newspaper staff, and then use 00:15:41.320 --> 00:15:43.740 that operational muscle to swallow a massive 00:15:43.740 --> 00:15:45.600 chunk of the Southern California health care 00:15:45.600 --> 00:15:47.320 sector. Yeah, that's the playbook. Which brings 00:15:47.320 --> 00:15:49.840 us to their modern footprint today. They currently 00:15:49.840 --> 00:15:52.399 operate 11 branches. They serve any resident 00:15:52.399 --> 00:15:54.799 across Los Angeles and Orange counties. And they're 00:15:54.799 --> 00:15:59.159 sitting on $1 .3 billion in total assets. It's 00:15:59.159 --> 00:16:02.360 massive. systematically blanketed the map geographically 00:16:02.360 --> 00:16:04.620 and demographically. They even went out of their 00:16:04.620 --> 00:16:08.259 way in 2011 to acquire a specific physical branch 00:16:08.259 --> 00:16:11.279 in Garden Grove from a community bank just to 00:16:11.279 --> 00:16:14.039 plug a hole in their physical coverage. The overarching 00:16:14.039 --> 00:16:16.580 journey is really a master class in institutional 00:16:16.580 --> 00:16:20.820 evolution. They morphed from an incredibly exclusive 00:16:20.820 --> 00:16:24.500 club for one specific flood control job site 00:16:24.500 --> 00:16:28.019 into a sprawling regional powerhouse. Yeah. The 00:16:28.019 --> 00:16:30.299 70 ,000 member owners today aren't just holding 00:16:30.299 --> 00:16:32.840 basic checking accounts. They are interacting 00:16:32.840 --> 00:16:35.460 with an institution built on the merged assets, 00:16:35.759 --> 00:16:38.919 the struggles and the mutual trust of dozens 00:16:38.919 --> 00:16:41.899 of forgotten, highly specific local communities 00:16:41.899 --> 00:16:44.720 spanning nearly a century. It fundamentally changes 00:16:44.720 --> 00:16:47.120 how you view the landscape of your own neighborhood. 00:16:47.340 --> 00:16:50.100 We really want you the listener to think about 00:16:50.100 --> 00:16:52.419 where your own money sleeps at night Absolutely. 00:16:52.600 --> 00:16:55.039 Whether you bank with a giant multinational corporation 00:16:55.039 --> 00:16:58.120 or a small local branch down the street, that 00:16:58.120 --> 00:17:00.779 seemingly mundane quiet credit union on the corner 00:17:00.779 --> 00:17:03.279 with its drive -through and its mortgage brochures 00:17:03.279 --> 00:17:05.940 likely has a wild hidden history encoded into 00:17:05.940 --> 00:17:08.859 its DNA. It's rarely as simple as it looks. Your 00:17:08.859 --> 00:17:11.420 local branch might literally be built on the 00:17:11.420 --> 00:17:15.579 absorbed remnants of legacy military bases, defunct 00:17:15.579 --> 00:17:18.940 factories, or hyper niche micro communities that 00:17:18.940 --> 00:17:21.769 don't even exist anymore. You know, this raises 00:17:21.769 --> 00:17:24.529 an important question. It forces us to consider 00:17:24.529 --> 00:17:27.710 a rather profound reality about the future of 00:17:27.710 --> 00:17:31.509 finance. What's that? If incredibly niche, tight 00:17:31.509 --> 00:17:34.450 -knit groups, like a cooperative solely for the 00:17:34.450 --> 00:17:36.809 employees of a single paper company or an air 00:17:36.809 --> 00:17:39.430 station, eventually have to merge into billion 00:17:39.430 --> 00:17:42.569 -dollar entities just to afford a mobile app 00:17:42.569 --> 00:17:46.569 and survive, is the era of the truly small, neighborhood 00:17:46.569 --> 00:17:49.009 -specific financial institution completely gone 00:17:49.009 --> 00:17:51.880 forever? Wow. It's a heavy, fascinating thought 00:17:51.880 --> 00:17:53.559 to chew on the next time you drive past your 00:17:53.559 --> 00:17:55.680 local branch. Thank you for joining us on this 00:17:55.680 --> 00:17:58.019 deep dive into the surprisingly dramatic world 00:17:58.019 --> 00:17:59.700 of local finance. We'll catch you on the next 00:17:59.700 --> 00:17:59.880 one.