Three Steps for CU Growth

Three Steps for CU Growth

Balanced growth takes many internal and external business facets into consideration.

January 19, 2016

Linda Walker recalls receiving an unexpected call from NCUA that resulted in an excellent growth opportunity.

The agency asked Walker, CEO of $65 million asset Riverdale Credit Union in Selma, Ala., if the credit union would be interested in acquiring the shares of a smaller credit union that had been conserved. Walker agreed, and the NCUA examiner delivered the failed credit union’s member cards, along with a check for its total deposits.

Walker and her staff created accounts for the new members and transitioned them into Riverdale, bringing immediate growth in both shares and loans.

While this situation isn’t common today, using mergers and acquisitions as a growth strategy may not be atypical as competition increases.

In a recent article about the importance of growth, I referred to the 2015 Fiserv Forum panel on growth that was presented with three credit union CEOs: Walker; Lily Newfarmer of $80 million asset Tarrant County’s Credit Union, Fort Worth, Texas; and Sue Commanda of $205 million asset Hudson River Community Credit Union in Corinth, N.Y.

These credit unions have achieved asset and membership growth, through a variety of measures, including member engagement through branches and digital channels, and marketing and business development initiatives.

This article explores other important elements of growth: mergers and acquisitions, staffing initiatives, and peer interactions.

Mergers and acquisitions

While Riverdale’s merger example was positive and successful, Newfarmer had a far less fortunate experience some years ago.

After agreeing to merge with another local credit union, but prior to the merger voting process, Newfarmer was informed that the other credit union had decided to go “in another direction.”

Although Newfarmer was disappointed, she learned from this experience and advises credit union leaders to be upfront and direct—through notarized letters of intent from each credit union—on key merger conditions and priorities. This can help ensure that everyone is on the same page and committed to delivering a mutually successful outcome.

Staffing initiatives

Growing credit unions have significant considerations related to staffing and growth-related investments, such as new branches or technologies.

Hudson River Community Credit Union uses integrated scorecards to evaluate staff performance, setting quantifiable goals that are consistent across the organization.

Hudson River Community added three branches quickly, requiring about 50% of its staff to be dedicated to the new locations. Commanda advises other credit unions to make sure they do not take on too much new staff when they are growing.

Significant growth may require staff changes. Leaders must make sure staff isn’t stretched too thin while not overstaffing locations.

Walker notes that employees sometimes need to find a way to re-energize after the credit union grows and jobs become more complex. At Riverdale, hiring another manager to help with the burden was not a viable option because the credit union needed multiple new tellers.

In order to meet the needs of a growing credit union with limited resources, responsibilities will sometimes need to be distributed among existing managers.

Examining where more staff attention is needed and redistributing responsibilities may allow leaders to keep staff counts steady while reinvigorating and refocusing existing talent.

When Walker took the helm at Riverdale, employee morale was low. She immediately developed a plan of action to ensure strong leadership, employee engagement, and merit-based growth opportunities.

Leaders need to realize that employee morale affects staff performance. Poor morale can negatively impact member interactions and, ultimately, inhibit the credit union’s ability to grow.

For Newfarmer, Tarrant County’s board commitment to invest in new branches, technology, and training at a time when the entire financial services industry was in crisis was not only courageous, but a “game changer.”

From her perspective, leveraging key data to build her case for the investment was key, and the board’s alignment with her vision for their future was vital.

Learning from peers

Walker, Newfarmer, and Commanda believe that collaboration and cooperation with other credit unions is vital.

Forming cooperative working relationships with other local credit unions, regardless of size, is one way to establish and share best practices which can help mitigate the risk of losing members. Networking, particularly at local events, can help credit unions become better known within their communities.

Walker advises credit unions to take care of employees, because this will motivate them to take care of your credit union and its members.

Newfarmer believes small credit unions must think big, and she stresses that simply waiting around to serve your members is not a sustainable strategy.

Credit unions need to be proactive and driven to build relationships with members. “Doing nothing is not an option,” Newfarmer says. “You must do something to position yourself for growth.”

Commanda points to employee passion as a key differentiator in the credit union industry. You want your employees to be focused, engaged and rewarded through measured goals.

“Know where you want to go,” Commanda says. “Quantify, track, and revisit this regularly. That, along with the passion of your team, will set you on the path to stay relevant.”

To facilitate growth, credit unions must evaluate their practices in areas including member engagement through branch and digital channels, marketing and business development, mergers and acquisitions, and staff management.

Balanced growth takes many internal and external business facets into consideration, and is a long-term necessity for successful credit unions.

BARB LOWMAN is senior vice president, account processing solutions, credit union solutions, for Fiserv.