ACU Finds Creative Ways Of Filling Out Product Line

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Frank Michael, CEO of the $19-million Allied Credit union here, doesn't believe that small credit unions are in danger of being eaten by the larger credit unions.

Instead, he's found larger credit unions have been supportive of his credit union's efforts to meet member needs in spite of its limited resources.

"Five years ago we made a decision to move offices. We had two, one in San Francisco and one in Stockton," he told The Credit Union Journal. "We decided to consolidate the ops in Stockton, but we didn't want to abandon San Francisco. We wanted an employee in San Francisco, so Ed Callahan, (CEO) at Patelco CU, a $2-billion CU, donated 1st floor space for two years. It was prime space and he gave it to us for the employee, and donated resources as well as the space."

"I hear that a lot of large credit unions are only out to merge, but I don't believe that. Here in California the large are doing all they can to help the smaller ones," reported Michael.

Meanwhile, Michael said he has also found creative ways to provide a full menu of services to members by forming a CUSO with three other credit unions. The trio shares resources, the cost of new programs and operations, data processing and home banking, and are now forging ahead into other technologies.

Michael even believes credit unions such as his have some advantages over larger credit unions, including a lack of decision-clogging bureaucracy and the resulting ability to be more nimble.

"We'll never be leaders and innovators but we can be very quick followers," he noted. Michael estimated he knows up to 20% of the credit union's membership by name, and added, "If so, what must they do specifically; if not, I will know 100% of the profitable members.That knowledge is part of the credit union's vision, which Michael defines as, "Vision is who are we serving? What will we offer, and how will we offer it?"

What it offers to those members is in part the result of partnerships, such as the CUSO.

Michael said he came into a credit union career by something of a "non-traditional" route.

"I worked for the federal government in the Social Security Administration," he explained. "I was in mid-management when one of my fellow coworkers who worked for their (credit union's) credit committee asked me to serve on the board of directors. Then the CEO left and the board asked me to step in and be CEO; they recognized I didn't like the structure of the government work.'

On the product and service front, Michael said, "Our rule of thumb is to avoid fees as much as possible. We do risk-based lending, and we use our strong capital to subsidize the costs of operations."

The credit union has a capital ratio of 16% and is 72% loaned out.

Allied Credit Union uses the San Diego-based Symitar as its data processor, offers home-banking through an in-house solution, offers credit cards through Certegy, offers mortgages and manages all its web services in-house. We're competitive across the board," he said.

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