MADISON, Wis. (5/27/15)--As community financial institutions credit unions face plenty of challenges in competing with the scale of big banks. But one way credit unions create their own competitive advantage is by cooperating among themselves.
Perhaps the best example of that is shared branching.
One unique example of cooperation and shared branching is provided in an arrangement between West Virginia Central CU and Telbec FCU, with additional assistance provide by OCUL Service Corp. (OSC), the Ohio Credit Union League's services company, and CO-OP Shared Branching.
A significant slice of West Virginia Central CU's membership is located in the Beckley, W.Va, area, but the credit union didn't have a branch in the region and couldn't justify investing in brick and mortar there. Instead, the credit union approached Telbec FCU, which is located in Beckley, about joining OSC's Shared Branching network. For the smaller Telbec FCU, shared branching represented a significant investment.
"Just to get their feet wet, we offered to pay their servicing fee for the first three years," Cindy Turner, West Virginia Central senior vice president, told News Now.
In addition, OSC and CO-OP Shared Branching discounted the startup fees, licensing fee, monthly fees, and provided free policy and procedure training to the Telbec FCU staff.
“It's been a huge value to our members in the Beckley area," Turner said. "Not to mention, they have access to 5,000 credit union branches across the country, and Telbec members share the same benefit."
The arrangement has worked favorably for Telbec FCU as well, according to Jodie Lacy, the credit union's manager. "It's providing us with non-interest income and it allows our members to have the many benefits of shared branching," she told News Now.
"It's a unique, great credit union story--a classic example of cooperation and collaboration that separates credit unions from banks," added Marty Auxter, OCUL Service. Corp. business consultant. "Banks just don't do this."
At Credit Union 1, Rantoul, Ill., President/CEO Paul Simons makes his credit union available for smaller credit unions that need assistance through his larger organization’s infrastructure.
“We have 25 branches and over 300 employees,” Simons said. “I’ve got enough people, especially in accounting and branch services, that it’s not a strain on us to help other credit unions if the need arises."
Simons said he makes his staff available to help smaller credit unions with accounting, lending or collections issues.
“Generally what we try to do--especially if they have a problem with their general ledger or balancing their corporate account--is to help get them back where they need to be, then serve as a sounding board for them in the event they have a problem with a specific issue in the future,” he told News Now.
Credit Union 1 makes deposits in smaller credit unions to help bolster their liquidity. It also serves as a disaster recovery site for three credit unions in the event of an emergency.
“When I say disaster recovery, I mean a place they can relocate to in one of our branches in the event a disaster occurs,” Simons told News Now.
“It’s mainly to satisfy the need if they have to identify a site for the regulator. I think any credit union would do that for another credit union if a disaster hit,” he said. “Credit unions are well-known for helping other credit unions in tough times. This would be something in writing that says, ‘Yes we will provide access to one of our locations if a disaster occurs.’”
State leagues also report that large credit unions assist their smaller counterparts whose resources are stretched thin.
When one small credit union in Missouri was struggling to pay annual Missouri Credit Union Association (MCUA) and CUNA dues, three larger credit unions chipped in to meet the obligation, MCUA Senior Vice President Liz Adams told News Now.
A similar situation has taken place in Montana. For the last eight years, a larger credit union has anonymously paid the Montana Credit Union Network (MCUN) and CUNA dues for a smaller credit union.
“In addition to paying their dues, the ‘angel credit union’--that’s what the CEO of the smaller credit union has dubbed them--also pays for the Internet connection and offers to pay the registration cost of the league annual meeting for the smaller cooperative,” MCUN President/CEO Tracie Kenyon told News Now. “Trust me, it’s one of the best phone calls that I get to make to let them know that their ‘angel’ continues to watch over them."
(This story is part of News Now's continuing series, "The CU Effect," which gives readers a fresh and in-depth look at how credit unions make a difference in the world every day. Look for the next installment June 10.)