CCUL Headlines: Industry Insight

How credit unions help credit unions

Wednesday, September 23, 2020   (0 Comments)
Posted by: Marc Rapport, Callahan & Associates
Share |

Helping each other concept header

Three financial institutions live their cooperative principles by providing tactical support so smaller shops can focus on mission.

The credit union movement doesn’t just share a set of cooperative principles, the notion of working together for the common good is ingrained in the relationships many of these member-owned financial institutions have with one other.

Kate Laud, President and CEO, Opportunities Credit Union
Kate Laud, President and CEO, Opportunities Credit Union

The Montana Credit Union League outlines each of the seven cooperative principles on its website. For the sixth principle — cooperation among cooperatives — the league says: “Credit unions serve their members most effectively and strengthen the cooperative principles by working with other cooperatives through local, state, regional, national, and international structures.”

That cooperation takes many forms, such as providing grant money to help a smaller credit union serve an underserved community, supporting charitable causes from the local to the global stage, and joining together through trade groups to advocate for the credit union industry on Capitol Hill and in state capitals.

Another way they do it is by providing in-kind help through sharing back-office assets and highly developed core competencies that can help smaller shops with less resources. Credit unions in Vermont, North Carolina, and Washington state share how that’s happening within their walls.

 

VSECU And Opportunities Credit Union

For the price of an employee, Opportunities Credit Union ($49.9M, Winooski, VT) gains the expertise of a cooperative nearly 20 times its asset size in performing mission-critical functions such as balancing accounts and reporting on discrepancies.

Rob Miller, CEO, Vermont State Employees Credit Union
Rob Miller, CEO, Vermont State Employees Credit Union

That’s the result of a management services agreement the 6,000-member CDFI officially created on Jan. 31, 2020, with 69,000-member Vermont State Employees Credit Union ($931.1M, Montpelier, VT).

“We hired one of the accountants at Opportunities to work at VSECU, so the money they saved there pays the fee for our services to them,” says Rob Miller, CEO at VSECU for the past six years. “It’s essentially revenue neutral for everyone.”

At Opportunities, the employee was part of a staff of about two dozen. At VSECU, she’s one of 180. In her role as a member of VSECU’s finances and accounting reporting group, she supports Opportunities as well as her new employer. However, as one part of Project Impact, she is not solely responsible for Opportunities.

“By creating this partnership, an institution rather than an individual completes some of our functions,” says Opportunities president and CEO Kate Laud, who joined OCU last fall after a long career in banking and finance, most recently as associate vice president of finance and administration with the UVM Foundation. “This reduces our risk while freeing up staff resources to use on more-strategic work.”

According to Laud, VSECU and Opportunities will continue exploring opportunities to partner in other areas, such as compliance and operations.

“We might have an opportunity to collaborate in ways that continue to decrease our reliance on single staff members while broadening VSECU’s impact in Vermont,” the CEO says.

That also could include collaborating on financial counseling services, loans programs, and more.

“Looking forward, we’ll seek other ways to align our resources to elevate our collective social impact,” Miller at VSECU says.

 

BECU And Express Credit Union

For more than a decade, BECU ($24.8B, Tukwila, WA) has been helping Express Credit Union ($15.6M, Seattle, WA) fulfill its mission of serving unbanked and underbanked residents of Washington state.

Martin Vallen
Martin Vallen, Director of Financial Health Programs, BECU

“As part of BECU’s commitment to financial wellbeing, we work with ECU to provide safe and affordable access to financial products and services by initiating member referrals and paperwork for those who might benefit from its services,” says Martin Vallen, director of financial health programs at the nation’s fourth-largest credit union.

In 2018, the smaller shop took its relationship with BECU to another level by placing a branch inside BECU’s largest financial center — its headquarters building in suburban Tukwila.

The small office is branded as ECU and staffed with one of its community tellers. This enables ECU to open and service accounts there for people who don’t qualify for BECU membership.

“Based on data analysis projecting over 80% of those referred would qualify for ECU’s services, BECU employees can confidently offer a safe, affordable banking alternative for those we are unable to serve,” Vallen says. “Being able to walk interested individuals to an Express representative immediately is also of value.”

When the Express representative is not available, BECU staff still can make referrals and interested parties can open a membership electronically, Vallen says.

Express CEO Paul Baudin says common issues for people who need ECU include extremely low credit scores and unpaid collections, particularly medical collections.

“We have developed financial pathways for underserved people to start with a basic savings-only account and pre-paid purchase card,” says Baudin, who was a board director for five years before joining the staff as controller for two years and then CEO for the past three. “By collaborating with our inhouse financial counselors, members can rebuild credit, resolve collections, and advance to the full array of financial and credit services offered by Express.”

Paul Baudin
Paul Baudin, CEO, Express Credit Union

Baudin says BECU has been a committed supporter of Express’s community development mission since the credit union earned CDFI certification and low-income designation in 2009.

The credit union has its own branch in town, and the new site at BECU’s main office — for which the bigger cooperative does not charge and funds the direct costs for the community teller — is an extension of a community teller program that has placed staff at other partner sites, such as a YWCA, for the past decade. According to Baudin, his credit union receives hundreds of referrals annually from BECU.

The work with Express also builds on BECU’s record of cooperation with other cooperatives. 

“BECU has provided philanthropic support to credit unions for many years, particularly small low-income credit unions, whether for programmatic development support, general operations, or in-kind support such as IT and general consulting,” Vallen says.

 

SECU, Latino Community, And Greater Kinston Credit Union

State Employees’ Credit Union ($45.2B, Raleigh, NC) also has a long record of philanthropic and in-kind support of other credit unions, perhaps most notably with Local Government Federal Credit Union ($2.6B, Raleigh, NC).

Launched as a spinoff of SECU in 1983, LGFCU now serves more than 364,000 members itself while running on SECU’s infrastructure that includes a network of 267 branches.

Luis Pastor
Luis Pastor, CEO, Latino Community Credit Union

But SECU provides services, including ongoing mentoring, to several other credit unions, says Mike Banks, regional senior vice president at SECU. The second-largest credit union in the nation has longstanding relationships with two other cooperatives, each with their own specific markets: Greater Kinston Credit Union ($12.9M, Kinston, NC) and Latino Community Credit Union ($536.6M, Durham, NC).

SECU has been providing back-office support and access to systems and equipment to GKCU since 2014 and LCCU since 2000. That was the year LCCU was launched to provide safe banking to a community beset by violent crimes targeting Latino immigrants. The credit union continues to focus on providing responsible financial services to that growing demographic.

“SECU has been a trusted partner since the beginning,” says Luis Pastor, CEO of LCCU. “It provides us with our core system, grants our members access to its expansive network of ATMs, and regularly shares with us its vast amounts of knowledge and experience. We know we can depend on SECU to provide high-quality back-office services, and we’re able to focus our time and energy on developing meaningful relationships with our members. We view our members as family, and fortunately, we have the ability to treat them as family as well.”

Of GKCU, Banks says SECU stepped up six years because the credit union was one of two historically minority credit unions left in North Carolina.

“It had been around for over 65 years, had a great following and member base, and needed help in surviving to continue to serve its low- to moderate-income members,” Bank says.

Both LCCU and GKCU leverage the resources and knowledge SECU provides to fulfill their mission, but Banks points out such partnership goes both ways.

“It’s allowed our employees to see there’s a credit union world out of SECU that operates differently but successfully,” says the 39-year SECU veteran.

 

Less Risk, More Resources, Thought Partners

The common theme in each of these engagements is empowerment. The larger credit union empowers its smaller counterparts to focus on serving their underserved niches with less risk and more resources than they could otherwise muster.

Miller at VSECU says a similarity in mission but difference in scale made for an ideal match with his credit union and Opportunities. In forming the partnership, each institution more fully embraced the seventh cooperative principle — concern for community — which the Carolinas Credit Union League defined as: “Credit unions work for the sustainable development of communities through policies developed and accepted by the members. Credit unions seek to achieve a greater good through responsible corporate citizenship.”

As Vallen at BECU says, “We look to not only be thought partners with other credit unions but also freely share our strategies, learnings, and experiences with those who reach out.”


___

This article appeared originally on CreditUnions.com and is the intellectual property of CALLAHAN & ASSOCIATES. No part may be reproduced, transmitted, distributed, published, or otherwise communicated without the express written permission of CALLAHAN & ASSOCIATES.


Contact Us

NORTH CAROLINA

323 West Jones Street
Suite 200
Raleigh, NC 27603

800-822-8859 Phone
919-573-0474 Fax

SOUTH CAROLINA

508 Hampton Street
Suite 300
Columbia, SC 29201

800-822-8859 Phone
803-732-4268 Fax

More about our locations