Cooperation Must Survive, But A New 'Animal' Will Emerge
HARBOR, Ore.-Stan Baron, CEO of Chetco FCU, recently announced his retirement. Mr. Baron spent 40 years in credit unions, the last 20 as CEO, overseeing growth in assets to $370-million from $100 million. Below Mr. Baron shares his thoughts on his career, management lessons learned, and what may be ahead for credit unions.
Credit Union Journal: How did you become involved with CUs?
Baron: A college professor, in whose accounting class I met my future wife, called me six months following graduation and asked if I would be interested in working for a credit union. I was not familiar with the term credit union, but out of respect for the professor I interviewed for the position and was hired.
About three months into my tenure with the credit union I wasn't feeling the passion. It was the Christmas season and a custodian from the local high school came in for a loan. He was of small stature and held his fedora (when was the last time you heard that word?) in his hands and politely told me his story. He said he had six children and had been saving for three years so his children could have at least one Christmas with presents other than clothing and necessities. He had planned to buy the types of gifts children long for at Christmas. However, the transmission on his car failed and the repair cost all he had saved. He said he knew I could not give him the $300 he saved, but anything I could lend him would be better than looking at the sad faces of his children on another Christmas morning. I was so moved by his story I went to the check register and wrote a $300 check. When I handed him the check his eyes filled with tears, as did mine.
We shook hands, he turned and began to leave my office. He stopped, turned and said, "Why did you help me"? I said the first thing that came to my mind. I said, "If one day I am in need of financial assistance, I hope to be treated in a similar manner."
The sense of satisfaction I experienced was overwhelming. I went home that evening and told my wife, "I now know what I wish to do for the rest of my life." That was 40 years ago and my passion for this wonderful industry has not waned one iota.
CUJ: What is the biggest challenge in generating and managing growth?
Baron: In my humble opinion several challenges exist: Building capital in anticipation of growth is one way to keep the "wolves" from the back door; Identifying the regulator's appetite for growth; Coordinating loan demand with deposit growth while attempting to match off maturities. Essentially, growth should never be pursued for growth's sake. Growth should be a by-product of constant product and process improvement.
CUJ: Among Chetcos hallmarks is it's active in schools and financial literacy. That's also the subject of some debate in CUs. Why such strong support for such programs and is there ROI?
Baron: Approximately 76% of Americans do not balance their checkbook monthly. Why? They were never taught how. Our interaction with school branches and financial literacy provides youngsters with the basics of financial understanding. How to balance a checkbook. The wise use of credit card debt. The necessity of saving "something" every pay period. Identifying need from want. The more financially sophisticated our young members become the more financially sophisticated adults we retain as members. A large portion of consumer loan losses result from the lack of financial management skills. Chetco did not pursue these programs from an ROI perspective. We pursued them because we are a community credit union and it is our obligation to educate our members for the mutual benefit of each.
CUJ: What advice would you have for a new credit union CEO just starting out?
Baron: Work for a bank! Just kidding. He/she should surround themselves with the highest level of talent available. He/she should desire every subordinate to strive to become CEO. Take none of the credit, but all of the blame. Never lose sight of the reason the credit union was created.
CUJ: What are your thoughts on the future of credit unions? Will there be one?
Baron: The type of "credit union" in which I began my career is virtually dead and buried. During my 40-year career I have observed the evolution of today's credit union and it in no way resembles the credit union of the 60's and 70's. The typical credit union member today refers to our institution as the "bank." The term credit union has lost its identity. Members don't really care what we are called so long as they receive the service to which they are accustomed.
The fallout from our country's most recent economic catastrophe will forever change the financial services landscape. The regulatory environment will not be receptive to the "average" credit union. Credit union executives will need to be highly educated, experienced, institutional centric and think like bankers, while projecting the credit union spirit.
In my opinion, the future of the credit union industry is in dire condition. Whatever "animal" evolves out of the dust of the financial landscape will hopefully retain the cooperative spirit and philosophy, but I don't believe it will be a credit union as we know it today.