Big Challenges Confronting Small Credit Unions

The entire CU movement is building a broad base of support to help small CUs survive and thrive.

March 01, 2012
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Augmenting visibility

In Michigan, the collaborative spirit is fueling an effort to create a shared storefront brand among credit unions, led by the Michigan Credit Union League. “The idea is to create a strong, Desjardins-like brand for credit unions of all sizes in Michigan,” says Dave Adams, the league’s president/CEO.

Small credit unions especially will benefit from shared branding, Adams notes, because they often lack marketing dollars. In a survey the league conducted before launching the shared-branding consortium, 44% of respondents said they’d consider this kind of joint effort. That figure rose to 69% among credit unions with less than $100 million in assets.

“People are intrigued with the concept,” Adams says, “and show a willingness to give it a try.” CUcorp, a league subsidiary, is subsidizing the expenses of adopting a shared brand.

Even with shared branding, participating credit unions keep their own name and culture. But participants must adhere to predetermined quality standards for member service, signage, and products. Collaboration also could include offering common products, such as Save to Win and Invest in America, that have proved popular among Michigan credit unions.

Adams points out that shared branding is only one of the league’s initiatives to support small institutions, which comprise nearly half its 319 affiliated credit unions. Other efforts include dues reductions and rebates and free strategic planning facilitation. It also purchases copies of CUNA’s Credit Union Environmental Scan for all small credit unions.

Shared branding gets underway this year with a pilot project in Jackson, Mich. Plans are to have one or two more pilots in place soon in other parts of the state. “It takes pioneers to get this rolling,” Adams says. “We hope to hit a good critical mass of credit unions within the next five years.”

Bridging gaps

Small credit unions often find it difficult to toe the regulatory line, and it’s no secret that resentments can surface. People who run small credit unions sometimes feel examiners simply don’t “get” how their institutions differ from larger ones.

Meanwhile, NCUA faces a difficult balancing act: fulfilling its duty to ensure the financial soundness of the entire credit union system, while also seeing to it that small credit unions remain viable.

The agency’s OSCUI attempts to deal with this dilemma. “Our office jumps into the breach,” says OSCUI Director Bill Myers. “We don’t have examination authority. We’re here to offer assistance and advice to small credit unions” and thus help them stay on examiners’ good side.

Myers is no stranger to the challenges small credit unions face. He founded Alternatives Federal Credit Union, Ithaca, N.Y., in 1979 and led the institution until 2007.

During his tenure, the credit union grew to a $50 million institution serving 8,700 mostly low-income members. It now has $72 million in assets. He also recently served as interim CEO at Santa Cruz (Calif.) Community Credit Union, where he reorganized staff, redesigned the product portfolio, and refocused the credit union’s mission.

OSCUI’s services fall into four main categories:

  1. One-on-one help;
  2. Loans and grants;
  3. Partnerships and resources; and
  4. Training.

Myers reports that his office trained about 5,000 credit union staff and board members last year. The 2012 schedule includes a full-day workshop to be presented at 20 different sites nationwide.

“We cover the issues we hear about from the field—the issues that are most important to small credit unions and where examiners see them slipping,” Myers says.

One-on-one help comes in the form of OSCUI’s economic development specialists, who have extensive credit union experience. “Our office has the largest consulting group inside the industry for small credit unions, and we’re free,” Myers says.

He also believes OSCUI gives small credit unions an opportunity to be heard when, for example, NCUA makes decisions about its examination process or designs new regulations. “This office has all the elements to be a strong voice for small credit unions throughout the movement,” he says. “Not that I expect that voice to carry every single day, but it will be part of the decision making.”

Next: Speaking up

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