Credit Unions Pioneer Innovative Operational And Governance Strategies | Multiple Brands, One Mission | Need Expertise? Take Expertise. Got A Branch? Give A Branch.
The goals and trials each credit union faces can, at times, seem extremely personalized and unique. But a wider vantage point shows that those in your community, in your state, and across the nation face many of the same issues ─ it’s just how institutions choose to address them that varies.
This commonality means that increasingly, credit unions can look beyond the walls of their own facility for answers to issues like changing regulation, lack of leadership expertise or volunteerism, and limited operational or technology resources. The opportunity to cooperate, whether financially reciprocated or returned in a trade of assets and knowledge, is a primary tool to compete in a divisive, for-profit market.
Look to these various examples to see where relationships at your own credit union can be enhanced and better partnerships drafted.
Leagues And Associations
If a credit union is not gaining valuable insights ─ and sharing their own ─ from a league or association setting, the gathering represents little more than a social club. Networking is important, but look for actionable ways to leverage this pooled knowledge and benchmark contributions to make sure everyone is returning their fair share.
The Faith Based Credit Union Program (FBCUP) was established by The National Federation of Community Development Credit Unions as a way for religiously affiliated credit unions, predominantly serving low-income neighborhoods, to support and enhance one another through cooperation.
These institutions span the nation ─ making up nearly half of total CDCU’s total members ─ and face their own set of unique challenges that other credit unions do not, including smaller memberships and assets, limited operation hours, staff, and product suites.
Chaired by an advisory committee of 10 CEOs, FBCUP provides resources and training for low income designation from the NCUA, CDFI certification and grants, basic operations, balance sheet management and accounting, marketing, technology, regulatory compliance, and other issues small credit unions usually face alone.
Another faith based credit union association in Illinois uses volunteer resources from its more than 20 credit unions and 290 members to research and share advancements in data processing systems, possible CD investment options, and even website templates to help members develop a basic online presence, according to a release.
Similar affinity networks exist for Latino, and Youth oriented credit unions, but credit unions who do not fit within the constructs of a low income or other existing organization are more than capable of creating their own.
Almost every credit union in the nation has some experience with a CUSO, either as a owner, selling services to generate income, or as a user, taking advantage of the scale and specialization the model provides to offer complex products and services.
But don’t limit a CUSOs ability to help your credit union to the list of services on their menu. Some are willing to partner on new ventures, dramatically reducing what the service might cost as a turn key purchase. Approaching the vendor as a group of credit unions could lower costs even more.
CUSO have even proven a potential HR resource for governance and expertise when unavailable from traditional channels. When Presidents Federal Credit Union ($11.4M, Cleves, OH) was unable to find a CEO for its vacant leadership position, it turned to the CUSO run by Emery Financial Credit Union ($147M, Cincinnati, OH) with whom it had a shared branching relationship, to fill the gap.
“We had great difficulty finding a new CEO after the position was vacated in August of 2011," said John Neyer, Presidents' board chairman in a release. "The right candidate eluded us, so our options were either to merge with another credit union or enter into a management agreement. The company now serves as our CEO while we continue to exist and function as Presidents FCU."
On the institutional level, one credit union’s quandary may help another reach it’s goal, as was the case with Eagle Federal Credit Union’s ($92M, Baton Rouge, LA) recent acquisition of a branch, members, loans and other assets from Pelican State Federal Credit Union ($192M, Baton Rouge, LA).
Pelican State acquired a branch and membership from hard-hit Chalmette Refinery Federal Credit Union after Hurricane Katrina, and kept financial operations ongoing at that location. But in the long run, the move was at odds with Pelican State’s priorities.
Thankfully, that location and membership did meet the needs of another cooperative with a similar background, plentiful experience integrating new members, and the desire to serve more of the New Orleans area, Eagle FCU.
While the credit union held a larger branch presence in areas like Baton Rouge, Eagle did have one existing branch in nearby Jackson Barracks area and was looking to expand its presence there. The purchase of assets from Pelican State became a solid option to meet everyone’s needs cooperatively.
“The opportunity to approach and serve several key groups in the area meshed perfectly with our business plans and will provide an immediate and positive impact on our balance sheet,” says Ginger Manint, CEO of Eagle.
A new location would normally cost Eagle about $10,000 plus the cost of equipment like teller stations, vaults, and security. Instead, the credit union didn’t need to set up a new office, staff training was minimized, and signage only needed to be updated, instead of created from scratch, Manint says. Pelican even assisted in communicating the change and sent out membership applications on behalf of Eagle.
“I can’t think of a better way to enter a market,” Manint says.
All Star Individuals
If the solution to a task or problem isn’t found cooperatively in league, CUSO, or credit union channels, you may need to go directly to the source by approaching talented individuals within the movement.
Perhaps the most unique of these cases is that of Jon Hernandez, who serves as concurrent CEO of three institutions ─ Mattel Federal Credit Union (29.5M, El Segundo, CA), City of Downey Federal Credit Union ($8.2M, Downey, CA), and CalCom Federal Credit Union ($58.5M, Torrence, CA).
Hernandez started as CEO of what was then Licomto Credit Union (it later became Calcom) and then began leading first one, then two other institutions who had trouble locating a suitable CEO.
“I figured if I could act as CEO for two credit unions, I could do it for three,” he said in an interview with Credit Union Executives Society. “I have the heart for small credit unions, and I felt like if I could continue to take care of them, and be able to take care of myself, and be able to keep the balance that I was seeking, then I felt like this was my place to be.”
Hernandez didn’t stop there. In 2002, driven by examples of collaboration between his own credit unions, Hernandez expanded this outreach to create a resource solution for sharing branch facilities, technology and leadership among multiple institutions.
This unique case depended heavily upon having the right leader, the right market, and the credit unions participants. But ongoing challenges like getting and retaining quality leaders, employees, and volunteer board members means that collaboration of individual talent may become a more common occurrence in the future cooperative system.