Beginning in 1936, Robert J. Handy laid the foundation of Seattle-based PEMCO Financial Services, which does more than $1 billion in business annually. Born in Minnesota in 1901, Handy traveled to Puget Sound in 1923 and began teaching in local public schools while selling insurance on the side. He founded the Seattle Teachers' Credit Union in 1936, which was merged with the Washington Teachers' Credit Union in 1952, renamed Washington School Employees Credit Union in 1963 and again renamed School Employees Credit Union of Washington in 2002. Handy also created major insurance agencies as well as Evergreen Bank (originally Teachers State Bank), and he pioneered computerized financial services for credit unions. He died in 1984 and was succeeded by Stanley O. McNaughton (1921-1998).
An Accidental Educator
Born in Long Prairie, Minnesota, on January 6, 1901, Robert John Handy displayed no early interest in or aptitude for finances. The eldest and only boy of four children born to local dentist John Paul Handy and his wife Maude Baer, Handy's doting mother kept him out of primary school to protect his health. Handy dabbled with short wave radio, chemistry, and later, journalism.
He served in the Army Reserve Officers Training Corps during World War I and in 1923 traveled to Tacoma and Seattle in hopes of finding a seaman's berth. He couldn't secure a merchant marine ship, and tried for a reporter's job at the Seattle Post-Intelligencer. Failing that, Handy signed on for an Alaska training cruise with the Naval Reserve. On the voyage, he met Fred Rantz, a school superintendent based in Idaho, who persuaded him to go into teaching. He found employment in Sumner and later at Seattle's Broadway High School, where he guided the student newspaper to national honors.
In 1928, Handy married Virginia Showalter, whose father, Dr. Noah David Showalter, ran the Cheney Normal School for teachers, antecedent of Eastern Washington University. (Virginia Showalter died in 1939. Handy married Virginia Carver in 1951; five years after her death in 1964, he married Marjory Sapp Swanson.)
Surviving the Depression
Handy took a post at Franklin High School in Seattle and began selling insurance to help make ends meet as the Great Depression deepened. At the suggestion of a loan officer at the Seattle Teachers' Credit Association, which offered teachers emergency financial aid, Handy began researching credit unions, newly legalized in Washington in 1933. Credit unions operated like savings and loan associations, except that customers were limited to members of particular organizations, professions, or other specific classes.
Convinced that a credit union would allow teachers to help each other through the Depression, Handy recruited a number of fellow educators and University of Washington professors (including his old friend Fred Rantz) to form the Seattle Teachers' Credit Union. It received its state charter on May 1, 1936. Handy was so broke he had to borrow $5 from Frank Hamack, a teacher and STCU trustee, to pay the filing fee.
Handy arranged short-term credit with the University National Bank and arranged to use the safety deposit vault anteroom of the Seattle First National Bank branch at 4th Avenue and Pike Street in Seattle for a temporary "office" when not teaching. He later shared office space with the local recruiter for Whitman College and later still camped out in the downtown Seattle Public Library. In 1938, Handy finally rented a cubbyhole in the Central Building at 3rd Avenue and Marion Street.
Despite these makeshift quarters, the STCU proved popular with local teachers. Handy promoted the credit union with a flood of flyers and newsletters and could claim 933 members and $100,000 in assets by its third anniversary. In 1939, he hired the credit union's first employee, Gladys Walker Johnson, while earning only $25 a month himself.
Handy was a financial innovator from the outset. In 1939, he created a Teachers' Benefit Fund, dubbed the "coffin club," by which teachers could help insure each other's credit union loans. During World War II, he leveraged war bonds to build up credit union assets. In 1946, he gained the leisure to quit teaching so he could concentrate on business.
Handy correctly anticipated that consumer demand would soar in the post-war economy and that insurance needs would grow apace. He organized the Public Employees Mutual Insurance Company (PEMIC) in 1948 to sell life and auto insurance, followed by the Public Employees Mutual Casualty Company (PEMCO) in 1950.
Meanwhile, Governor Arthur Langlie urged Handy to create a new credit union to serve teachers statewide. The Washington Teachers' Credit Union was chartered in 1949. Three years later, it absorbed the original Seattle Teachers' Credit Union.
Handy's enterprises had grown large enough by 1949 to warrant their own headquarters, but state law then prohibited credit unions from owning real property. Handy personally financed the construction of a new building at 325 Eastlake Avenue in Seattle's Cascade Neighborhood, and then sold the property to a new service organization, the Teachers' Credit Cooperative (later assimilated by PEMCO Corporation).
At the same time, Robert Handy personally managed all of the credit union and insurance business with the aid of only four part-time assistants. He finally hired a full-time accountant, Robert C. Ketcham, in 1952. That same year, he negotiated an agreement with the Washington Education Association to offer "preferred" rates to its members, while PEMCO began serving the general public for the first time. In 1955, Handy hired Gladys McLaughlin. For nearly three decades, she served as both his personal assistant and a key policy maker.
By 1961, the Washington Teachers' Credit Union had assets of more than $10 million and was second in the state only to the Boeing Employees Credit Union. To help modernize his financial and insurance operations, Handy retained Stanley O. McNaughton, a former Seattle University economics instructor and Safeco Insurance Company consultant. Although the two men had very different personalities and their management styles sometimes clashed, they proved to be an effective team. They also became good friends when McNaughton contracted polio shortly after being hired in August 1961, and Handy maintained his salary through a long recuperation.
Division of Labor
Handy and McNaughton divided the load in the 1960s. As McNaughton later recalled, Handy told him "You take the insurance. I'm a credit union guy, and I love the teachers." Ironically, the former insurance salesman didn't "believe in it" and never bought any coverage for himself. (McNaughton succeeded Handy as president of PEMCO in 1970.)
The credit union was renamed the Washington School Employees Credit Union in 1963 to reflect its broader membership. The following year, it and insurance operations occupied a new office building, now the north wing of PEMCO Financial Services (the south wing was finished in 1983). Robert Handy himself moved in later that year, taking up residence in a small executive apartment (dubbed "the pad") after his second wife died. He moved out in 1969 when he married Marjory Sapp Swanson.
Promoting Credit Unions
In 1965, Handy incorporated two philanthropic organizations, the Teachers' Foundation and the PEMCO Foundation to help support public education and community services. Meanwhile, the Washington School Employee's Credit Union membership passed 40,000 to make it the state's largest. Handy's fellow credit union executives recognized his many contributions with their 1972 "Award of Honor and Appreciation," but he was far from finished.
As early as the 1930s, Handy advocated for the rights of credit union members to draw checks on their accounts, an idea that commercial banks fought tooth and nail, and to enjoy the same protection as bank depositors. He achieved the latter in 1975 with creation of the Washington Credit Union Share Guaranty Association, which insures credit union deposits much like the FDIC. The following year, state banking laws were amended to allow credit union members to write check-like "share drafts" against their accounts.
Handy and McNaughton recognized that they needed one more piece to fulfill their vision of one-stop financial services, a bank. Unfortunately, they picked 1969 and the beginning of the crippling "Boeing Bust" aerospace recession to begin seeking a state charter. Despite the stagnant economy and vociferous protests by established banks, Teachers' State Bank won its charter in 1971 and opened the following year. A new name, Evergreen Bank, was adopted in 1980. Three years later, Robert Handy broke ground for its Eastlake Avenue headquarters. It proved to be one of his last official acts.
Handy sensed his own failing powers and predicted that he would die, as both his grandfather and father had, one week short of his 84th birthday. He passed away in Palm Springs on December 30, 1984, precisely as he had foretold.