UNCASVILLE, Conn. (10/11/13)--Three 2012 Community Credit Union of the Year award winners walked their peers through a presentation Thursday to illustrate the "best practices" that led their credit unions to the winners' circle.
The three speakers agreed that the best practice for any credit union is to stay true to the credit union philosophy. But each also dug down into the particulars that have helped their credit unions succeed. The presentation was a Thursday morning breakout session at the Credit Union National Association's annual Community Credit Union & Growth Conference.
Dan Cumbee, president/CEO of $235 million asset Dakotaland FCU, Huron, S.D., said his credit union's success is written in its history. It became a designated low-income credit union (LICU) in 1997, gained a community charter in 1998, and, because of its LICU status, has had access to secondary capital since 1999 and a waiver from the 12.25% member business lending (MBL) cap since 2005.
Cumbee said that access to secondary capital is a "great tool to manage growth." Federal law restricts most credit unions' capital formation to retained earnings. CUNA actively advocates for supplemental sources of capital for credit unions as a tool to manage growth. Among the steps to success recommended by Cumbee were:
Remove limitations on your credit union as much as possible. For instance, expand your field of membership. "Otherwise," he said, "you are just limiting your own future."
Become LICU-designated, if you can. He said there is no "downside" to the designation, and it is a route to escape capital restrictions and the MBL ceiling.
Consider Federal Home Loan Banks for term borrowing. Dakotaland has been an FHLB borrower for at least 10 years, and Cumbee recommended it as a tool for mortgage lenders to lengthen their liabilities to match their assets."
Cumbee said most of all a credit union should remember its mission: service to members.
Also during the Best Practices session, Amber Scott said that in 2007 her credit union took a look at its mission statement--something she said no one really understood--and honed it. The mission the credit union accepted was to "exceed member expectations." Scott is vice president of marketing at 1st MidAmerica CU, in Bethalto, Ill.,, which won honorable mention in the $250 million-$500 million asset category in the Community Credit Union awards.
She said that 1st
MidAmerica then employed member and employee feedback to determine what are the strengths contained within the credit union brand. It found:
Service and trust; and
"Next we identified gaps in our brand," Scott said. They were:
New youth products;
A mortgage program for those approaching retirement years; and
Scott said her credit union met these challenges and more. MidAmerica also offers popular educational seminars to members and nonmembers in its community, among many other community outreach efforts.
MBLs were among the topics of the session's final speaker, CEO Steve Schmitz of First Community CU, Jamestown, N.D., the largest credit union in the state with $450 million in assets.
Schmitz said from 60% to 65% of his credit union's loan portfolio is in MBLs--possible because of flexibility in its 1939 charter that was grandfathered in.
"MBLs are very profitable, but expensive if you have losses. So invest wisely in expertise," he said. He also said a credit union entering or expanding an MBL program must prepare and execute a plan ("NCUA will demand it," he reminded) and be proactive in loan management.
Schmitz said his credit union's sales culture is built on a "needs-based model."
"We ask our employees to see what members need and then to ask them for their business," he said. He also counseled his credit union peers to "hire the right people" for sales, manage them well, and track results.
"Also," he admonished credit unions, "embrace change. It is the only sustainable model."