Seattle-based PEMCO Financial Services is a family of companies and enterprises, not a single corporation, encompassing Evergreen Bank, PEMCO Insurance, and PEMCO Corporation, and associated with the member-owned School Employees Credit Union of Washington. Its history began in 1936 when Robert J. Handy (1901-1984) founded the Seattle Teachers' Credit Union (now School Employees Credit Union of Washington). PEMCO grew dramatically under the leadership of Stanley O. McNaughton (1921-1998). It is now (2000) guided by Stan W. McNaughton (b. 1950) and ranks as one of the state's largest locally-owned financial and insurance groups.
Born in the Depression
During the depths of the Great Depression, Franklin High School instructor Robert J. Handy tried to make ends meet by selling insurance. He became convinced that teachers should pool their finances through a member-owned credit union. Handy recruited a group of fellow educators to found the Seattle Teachers' Credit Union, which secured its state charter on May 1, 1936.
While continuing to teach, Handy guided the Credit Union through World War II. By 1946, it served more than 1,300 members, and Handy took over its management full-time. In 1948, he created the Public Employees Mutual Insurance Company (PEMIC) to offer fire insurance. The following year, Handy chartered the Washington Teachers' Credit Union. (It absorbed the original Seattle unit in 1952 and changed its name to Washington School Employees Credit Union in 1963. In 2002 the name was again changed to School Employees Credit Union of Washington.)
Returning to Insurance
Because credit unions were not then permitted to own real estate, in 1949 Handy personally financed the credit union's first office building at 325 Eastlake Avenue in Seattle's Cascade Neighborhood. Three years later, he established the Teachers' Credit Cooperative to take over the property and develop additional office space. The Cooperative was later absorbed by PEMCO Corporation.
In 1950, Handy organized the Public Employees Mutual Casualty Company (PEMCO) to sell liability insurance. PEMCO and PEMIC began offering discounted insurance to teachers in 1952 under an agreement with the Washington Education Association (this coverage is now handled by PEMCO Insurance Company, or PIC). Separate companies were necessitated by differing regulatory requirements for specific forms of coverage, which spawned a bewildering tangle of enterprises.
Enter Stan O. McNaughton
By 1954, the Washington Teachers' Credit Union was the state's third largest with assets of more than $2 million and 4,000-plus members. Handy, who had personally managed the credit union and insurance operations over the previous 18 years, began to add executive staff, including Gladys McLaughlin, Robert C. Ketcham, and Ralph Jones. In 1961, he retained the services of Stanley O. McNaughton, a former Seattle University economics professor and insurance consultant, to help modernize his organizations. Although the two men often clashed, McNaughton became invaluable to Handy and ultimately succeeded him.
With Handy focusing on credit union development and McNaughton guiding insurance, the modern PEMCO "family" began to take shape in the 1960s. In 1963, the PEMCO Corporation was created to offer accounting services and computer support to PEMCO units and outside credit unions, and a new PEMCO Life Insurance Company was chartered. In 1964, PEMCO built the first tower of its Eastlake Avenue office complex (completed in 1983) and began offering life insurance. Despite strenuous opposition from established banks, Handy and McNaughton secured a charter for Teachers State Bank in 1971 (renamed Evergreen Bank in 1980).
Banking on the Future
Meanwhile, the Credit Union grew quickly after opening its doors in 1963 to all permanent school employees in the state, not just teachers and professors. Credit Union membership soared to 40,000 in 1972, making it the largest such organization in Washington. Handy and McNaughton helped to win state approval of the Washington Credit Union Share Guarantee Association in 1975 and legalization of check-like credit union "share drafts" the following year.
In 1977, PEMIC absorbed Public Employees Casualty, while retaining the PEMCO name for promotional purposes. When Robert Handy died on December 30, 1984, Stanley McNaughton was already CEO of the PEMCO group. He reorganized PEMIC as PEMCO Mutual Insurance Company (PMIC) in 1989. PMIC also assumed ownership of the PEMCO Insurance Company, which was chartered in 1972 to offer preferred auto insurance for educators. The PEMCO Life Insurance Company is now wholly owned by PEMCO Corporation, which pioneered the electronic "PowerLink" service, which is in turn owned by senior employees and by PMIC.
Current PEMCO Organization
PEMCO Financial Services is a family of interrelated enterprises, not a legal entity, all based at the PEMCO Financial Center, 325 Eastlake Avenue in Seattle. It also maintains branches in Lynnwood and Spokane, Washington.
The present (2000) structure of PEMCO Financial Services is as follows:
- School Employees Credit Union of Washington: Member-owned, established in 1936 as Seattle Teachers' Credit Union. Washington Teachers' Credit Union was established in 1949, and absorbed the Seattle unit in 1952. The name Washington School Employees Credit Union was adopted in 1963 when membership was extended to all professional school employees in the state. In 2002 the name was changed to School Employees Credit Union of Washington.
- Evergreen Bank: Established as a stock-owned bank called Teachers State Bank in 1971, renamed in 1980.
- PEMCO Mutual Insurance Company (PMIC): Founded in 1989 through a reorganization of PEMCO Mutual Insurance Company (PEMIC), which had absorbed Public Employees Mutual Casualty Company (PEMCO) in 1977, as permitted under new insurance regulations. PMIC is now the primary insurance entity within PEMCO Financial Services.
- PEMCO Corporation: Founded in 1963 as a stock-owned company providing central accounting and technical services, PEMCO Corp. later absorbed the Teachers Credit Cooperative, founded by R. J. Handy in 1952 to own and develop credit union properties. PEMCO developed the "PowerLink" system and remains a regional leader in financial automation and clearinghouse services. PEMCO Corp., in which PMIC owns a 20 percent interest, is now chiefly owned by employees.
- PEMCO Insurance Company (PIC) was chartered in 1972 expressly to offer preferred automobile coverage to educators. It is now wholly owned by PMIC.
- PEMCO Life Insurance Company was chartered in 1963, and is now wholly owned by PEMCO Corporation.
Stan W. McNaughton joined the PEMCO staff in 1986 and became PEMCO's chief executive officer upon his father's death on January 19, 1998. As of 1999, PEMCO and the Credit Union employed more than 1,100 persons and reported nearly $1 billion in assets. The Credit Union lists more than 50,000 members. PEMCO estimates that it serves the financial and/or insurance needs of some 350,000 Washington state households.