Vision Without Vigilance: Hanscom FCU’s Report Card

This report card examines Hanscom Federal Credit Union’s (HFCU) performance under President & CEO Peter Rice from 2022 through early 2025, a period bookmarked by impressive highs and a troubling decline. Our blog readers will see how a year of record profitability in 2023 gave way to sharp deterioration in 2024 and 2025, with mounting losses, weakened asset quality, and governance concerns. The analysis breaks down what went right, what went wrong, and why HFCU’s current trajectory raises serious questions about leadership priorities, member impact, and institutional stability.

I. Executive Report Card Summary: The Dual Trajectory (2022-2025)

Peter Rice assumed the role of President & CEO on January 31, 2022, succeeding David P. Sprague at his retirement, who had led HFCU for 25 years. At the time of transition, HFCU had approximately $1.8 billion in assets. The Board’s mandate was to leverage Rice’s senior-level experience and “forward-thinking ideas” to drive organizational change, sustained growth, and improved member experience.

Over the subsequent three years, the credit union’s performance shows a stark divide:

2023: A year of exceptional profitability and strong results.
2024–Q1 2025: A period of sharp decline in core financial health and asset quality.

HFCU embarked on two major capital-intensive initiatives:

The development of a proprietary gamified financial wellness platform (“WealthTrek”) via a strategic partnership with Alkami Technology.
A controversial $50 million all-cash acquisition of Peoples Bank (MD) announced in December 2024.

The credit union’s overall performance presents a paradox: on one hand, leadership showed capability in strategic vision. On the other, the institution’s financial stability rapidly deteriorated, indicating failures in risk oversight and fiduciary discipline. The result is a report card that gives credit for vision and execution but a critical grade for maintaining the core institution’s safety and soundness.

II. Leadership Mandate & Initial Execution (2022–2023)

In 2023, HFCU reported net income of $23.2 million and a return on assets (ROA) of 1.23%, surpassing many peer credit unions. Member experience was strong: HFCU achieved a high Net Promoter Score (NPS), a customer experience metric organizations use, along with positive feedback from participants in the credit union’s wellness programs.

However:

Much of the 2023 success likely reflected the momentum and disciplined practices established under former CEO David Sprague’s leadership. Organizational performance at this scale typically reflects strategies set in motion years earlier; large institutions don’t change course overnight.
This robust year may have masked emerging risks. Leveraging high profitability may have encouraged more aggressive underwriting or higher-yield lending, increasing risk exposure.
Focus on maximizing results in 2023 appears to have overshadowed prudent attention to risk controls, setting the stage for trouble.

III. Analysis of Financial Erosion & Asset-Quality Degradation (2024–Q1 2025)

A. Severe Contraction in Profitability

In 2024, net income shrank to $2.3 million, a collapse of ~90% vs. 2023’s $23.2 million.¹
ROA fell from 1.23% (2023) to approximately 0.13% (2024).
In Q1 2025, earnings were $0.952 million (annualized approx. 0.21% ROA) — a further ~66% decline from Q1 2024.
This sustained earnings decline shows the stress isn’t transitory but structural.

B. Asset-Quality Crisis: Net Charge-Offs (NCOs)

For Q1 2025, HFCU reported $10.8 million in net charge-offs, representing a 642% increase over Q1 2024’s ~$1.5 million.
While the industry experienced elevated delinquencies in 2024, HFCU’s spike far outpaced system averages, indicating institution-specific underwriting/portfolio issues.
Such deterioration undermines the core balance sheet and member value.

C. Regulatory Rating Downgrade

HFCU’s long-persistent CAMELS composite rating of “1” (top tier) was downgraded to a “2” in the last year, ending more than 20 years of “1” status.
This downgrade reflects the National Credit Union Association‘s (NCUA) supervisory concern about the institution’s safety and soundness versus mere growth lag. The downgrade signals elevated risk exposure and weakened controls.

D. Capital & Funding Dynamics

Though Q1 2024’s net worth ratio was ~11.57% and risk-based capital ~12.72% (both adequate by regulatory thresholds), the underlying deterioration in earnings and asset quality raises concerns about future capital adequacy.
Increase in borrowings and negative growth in core shares/loans further stress liquidity and funding flexibility.

E. Strategic Investment Amid Fragility

The acquisition of Peoples Bank ($50 million cash) and investment in a digital platform (WealthTrek) occurred precisely when earnings plummeted and asset quality was weakening. This suggests misaligned capital allocation, leveraging high risk when prudence demanded preservation.

IV. CEO Report Card Summary by Category

Category	2023 Performance (Peak)	2024-Q1 2025 Performance (Current)	Assessment (Grade)
Profitability & ROA	Excellent (1.23% ROA)	Critically Weak (~0.13% ROA)	C-
Asset Quality	Strong (implied by 5-Star rating from Bauer)	Failing (642% NCO increase)	F
Strategic Innovation	Strong (WealthTrek/Alkami)	High-Risk Execution (capital strain)	B+
Strategic Expansion	N/A (prior)	High-Risk ($50M cash deal)	D
Mission & Community Engagement	Excellent (NPS, charitable giving)	Maintained commitment	A-
Governance & Control	Historically strong	Weak (internal dissent, regulatory concerns)	D+

Overall Grade: D+ (Needs Immediate Corrective Action)
Despite the impressive peak in 2023, the dramatic collapse in asset quality and profitability, combined with governance and capital allocation failures, severely undermine HFCU’s stability. The grade reflects that the institution is now in a high-risk position, requiring urgent remediation.

V. Immediate Recommendations for Remediation

Stabilize Asset Quality:
- Conduct an independent review of underwriting and collection practices.
- Increase loan‐loss reserves to align with the current NCO run-rate (~$10.8 million/quarter).
- Halt discretionary growth or acquisition activity until the loan portfolio is stabilized.
Preserve Capital & Earnings:
- Defer non-essential expenditures.
- Redirect free cash flow toward strengthening net worth and improving earnings before re-investing in large initiatives.
Re-Evaluate Strategic Expansion:
- Reassess whether the $50 million acquisition of Peoples Bank is appropriate given current financial stress.
- Ensure projected synergies and risk mitigation have been thoroughly vetted.
Strengthen Governance & Controls:
- Commission an independent governance review to address internal dissent (“Hanscom Loyal” complaints) and regulatory matters.
- Reinforce senior leadership experience and oversight capability — not just in innovation, but in core risk and operations.
Re-Align Strategic Innovation with Financial Reality:
- While the WealthTrek/Alkami initiative aligns with the mission, the timing is misaligned with the institution’s financial capacity.
- Sequence transformation investments to follow stabilization, not drive it.

VI. Conclusion

The tenure of Peter Rice at HFCU is defined by a striking dichotomy: a year of outstanding financial performance and strategic vision in 2023, followed by a dramatic unraveling of the institution’s positive financial history throughout 2024–Q1 2025. While the mission focus and innovation agenda have merit, the catastrophic decline in profitability, spike in charge-offs, and poor timing of high-cost strategic initiatives bring into question the leadership’s prioritization of growth over stability.

Given the current state, HFCU stands at a critical inflection point. Without immediate corrective action on asset quality, capital preservation, governance, and strategic discipline, member value and institutional viability are at meaningful risk.

¹Financial data for Hanscom Federal Credit Union is publicly available through the NCUA Credit Union Online Call Report Portal. To view HFCU’s quarterly performance, search for Hanscom Federal Credit Union (Charter #9095) and select the desired reporting period under “Financial Performance Reports.”