The Job Is Never Done

After gaining 11 branches and numerous financial relationships from a local bank, Royal Credit Union hit the ground running.

 
 

When you have industry regulators clamoring to ask you questions, you know you’ve set the bar high. Yet this was exactly the reception Royal Credit Union ($1.2B, Eau Claire, WI) executives received when they presented at a recent NASCUS meeting in California.

“They asked more questions than I’ve had anywhere, and were very interested,” says retiring CEO Charlie Grossklaus, who will be succeeded by incoming CEO Rudy Pereira in 4Q11. “We actually ran out of time.”

After completing an ambitious acquisition of bank branches, assets, and customers under Grossklaus’ leadership in mid-2010, Royal has had little time for patting itself on the back. Expectations and goals established last year extend far beyond the acquisition, and there are still members to be reached, products to be utilized, and work to be done.

Although many procedures were not fully enacted until the acquisition solidified, Royal entered these new communities with a decided course of action. One priority involved the new “face” of RCU: its acquired front-line staff.

“We began introducing our culture to the staff immediately and have not let up,” says Rachel Risberg, vice president of operations. “The majority of the post-acquisition phase was spent on supervisor training and expectations and training for employees determined by their struggles and observations.”

A frequently utilized employee support tool in the post-acquisition months was Royal’s “Eddie” database, an access point containing acquisition/transition information, product comparisons, member mailings, anticipated questions, to do lists, office hours, and product changes.

“This base was also supported by our team of leaders, trainers, mentors, and buddy branches,” Risberg says. Provided with ample tools, support, and knowledge, the acquired staff was confident in its sharpened performance from the get go.

“We heard many comments about the smiles and laughter of the staff; how they were in the lobby looking to interact and answer questions,” Risberg says. The staff’s behavior resonated with new membership.

“One challenge has been regaining the trust that was lost in the previous acquisition,” says regional director of branch operations, Paula J. Kolbeck, referring to Anchor’s previous buyout of branches and members from S&C Bank years earlier. That acquisition did not go smoothly. The credit union knew that if this acquisition was not managed properly, then memories of the past could dampen the current experience for both employees and members. Addressing the first group proved integral in addressing the second.

“With the short announcement time [of the acquisition] and interpretations of account and fee disclosure, some members may have been looking for negative aspects to the change,” Risberg says. But efforts to maintain a happy and capable member-facing workforce helped douse any negative member reactions. “Royal staff was indispensible in helping the credit union communicate and explain the value of these changes,” she says.

Royal not only stemmed attrition following the acquisition, it also recruited some former Anchor customers, says Mark Willer, Royal’s COO. The credit union anticipated a 10-20% runoff; instead, it suffered only minimal losses and posted a net gain of roughly 2,000 new members in just a few months.

Attitude and excitement can take a credit union far, but long-term success requires insight into the products and services that matter to members.

“We entered many markets that have no credit union presence, which provided opportunities that are beyond measure,” Kolbeck says.

But new markets also bring a heavy burden of education and the need to develop knowledge about financial products. To address this, the credit union introduced a New Member Challenge in 2010 that encouraged staff to ask for the business right away.

One promotion, “Discover RCU,” introduced the benefits of a holistic relationship by bundling services; another expanded product lines and relationships the credit union did not gain in the acquisition, such as credit cards.

Already, these campaigns have yielded dynamic results. As of 3Q11, the credit union has seen annual loan growth of 4.52%.

“Our greatest potential going forward is still in the consumer lending area, and the credit union is exploring that market now through low minimum certificates and our Kids Club,” Riseberg says.“We were asked before we even had regulatory approval to open up a School Sense Site at one of our elementary schools, and it officially opened this fall.”

“This is the key to our success,” Willer says. “RCU’s business model is entering smaller rural communities and becoming very involved in community activities.”

This grass roots positioning resulted in RCU being named “New Business of the Year” in one of the new communities it serves.

For all its tenacity, RCU has made it clear that each move, from pre-acquisition to post, is carefully calculated. “Wisconsin is not a state of boom and busts, so we avoid extremes,” Grossklaus says.

Although the credit union will focus on internal development for the time being, there is unlimited potential ahead.

“We were still getting calls from other banks asking if we’re interested,” Grossklaus says. “We must have started something big.”

Update: Others institutions have since taken up the torch and spotted their own opportunities to bring cooperative values to banking customers, including United Federal Credit Union ($1.3B, St. Joseph, MI) and its recently approved acquisition of Griffith Savings Bank.

This article was originally published in the 3Q 2010 edition of Credit Union Strategy and Performance (CUSP). Subscribe today for online access to this and newer issues for more tips and insights.

 

 

 

Dec. 5, 2011


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