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Collaboration is key to small CU survival panelists say
WASHINGTON (3/19/12)--Collaboration was the theme at Sunday's small credit union roundtable, as Drew Egan of the Michigan Credit Union League & Affiliates and CU Corp and credit union CEO Jon Hernandez shared their own methods for boosting credit union cooperation in their states at the Credit Union National Association's (CUNA's) 2012 Governmental Affairs Conference (GAC).

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Jon Hernandez (left) describes how southern California credit unions have banded together to reduce costs and improve their own operations (CUNA Photo)
Also, Bill Myers, director of the National Credit Union Administration's (NCUA) Office of Small Credit Union Initiatives, told the session's attendees that the OSCUI itself is looking for ways to foster greater collaboration among small credit unions.

He said the agency is looking into devising a less burdensome examination format for smaller credit unions, and focusing more closely on the types of risks that are more prevalent at small credit unions. Examinations for smaller credit unions could ultimately be separate and far simpler than examinations for larger credit unions, he said.

The Michigan league's Egan detailed the league's shared branding initiative, which aims to bring credit unions of all sizes in that state under shared branding and cooperative advertising to create greater value for Michigan credit unions. The goal is to help increase awareness of the credit union brand, with a particular emphasis on reaching out to potential members between 18 and 35 years of age.

Noting that credit unions "have always known that [they] are better when [they] work together," Egan said the collaborative project will also help with product development, and develop ways to enhance the member experience across the credit union landscape. The initiative also aims to improve back-office collaboration for credit unions, and Egan said greater back-office collaboration could ultimately serve as an alternative to mergers for smaller credit unions.

Egan said the league plans to begin working on the integrated marketing approach with 70 credit unions within the next few months, and will work to gradually spread the program throughout the state. Egan said the program will also work with credit unions that initially sign on for the joint-marketing project to determine if they are interested in deepening their collaborative work.

The model used in Michigan can be used across the country, he said.

Hernandez, CEO of three credit unions in Southern California (Mattel FCU, CalCom FCU and City of Downey FCU), discussed the Southern California Credit Union Alliance (SCCUA)--a forum for collaboration and cooperation focused on helping small credit unions thrive by reducing operating costs and sharing best practices. The SCCUA is comprised of more than 60 member credit unions with a combined 115 branches and combined assets of around $7 billion. The SCCUA credit unions serve a combined 716,000 members.

The SCCUA has held events as varied as strategic planning sessions, staff training sessions, and a "credit union Olympics" to boost collaboration. These collaborative efforts bring together not only credit union executives but credit union staff as well. SCCUA members have shared offices, ATMs, and even employees, with four of the member credit unions banding together to hire a shared compliance officer, Hernandez said.

This type of employee sharing can create substantial salary and benefit savings, and member credit unions are also considering sharing investment, business loan, and mortgage officers, as well as marketing and business development staff and other positions, he said. Data processing, call center, and collections personnel could also be shared, and Hernandez also cited an example of shared branching between South Carolina Postal CU and City of Downey CU as a mutually beneficial situation that has been developed through his SCCUA work. Both Egan and Hernandez said collaboration between small credit unions is vital for survival.

CUNA senior staff Kathy Thompson and Ryan Donovan also addressed the session on compliance and legislative issues, respectively, and CUNA President/CEO Bill Cheney welcomed all at the roundtable to the GAC. Allied CU President/CEO Frank Michael and Robert Hoel, professor emeritus for the College of Business at Colorado State University, also appeared at the roundtable. The session was moderated by CUNA Vice President of Economics and Statistics Mike Schenk.


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