Ex-CEO Takes Lead With Small CUs
ALEXANDRIA, Va.-William Myers is the new director of NCUA's Office of Small Credit Union Initiatives. As the former CEO at Alternatives FCU, a highly successful CDCU in Ithaca, N.Y., Myers said he is keenly aware of the many issues small CUs are struggling with today.
Credit Union Journal caught up with Myers a few weeks into his new role and asked about the direction of his office, and how he and his staff will help small credit unions address their current challenges and prosper in the coming years.
CUJ: What would you say is the main role of your office?
Myers: This office works for small credit unions. There is always a concern from CUs that examiners are pushing them in one direction or another. But the Office of Small Credit Union Initiatives is different. Instead of identifying problems, we are helping credit unions solve identified problems, a substantially different role than the rest of the agency. Our function is to make sure small credit unions survive and thrive versus watching out for problems, which is a supervision function.
CUJ: Do you think the Office has always been perceived in a positive light by small credit unions, and what was your own perception when you ran Alternatives FCU?
Myers: I do believe the image has always been positive, and that is the way I looked at the Office when I was a credit union CEO. But I know examiners say things people don't always want to hear, and it is hard to separate that out from someone who now says, 'OK, we have heard these things and now we will help you fix them.' Those roles can get mixed together.
CUJ: Do you have any changes planned for the Office?
Myers: Coming from the credit union side I know this office has to be an efficient operation. You learn that when you are at a credit union, where you know it is not about hand-crafting each product, it is about getting the product right and then mass producing it. There is a science to understanding how to automate processes, and we will make sure the processes in this office are as efficient as they can be. In the loan process we will set our own internal deadlines about how quickly we will respond to loan applications. And with grants, we will make sure we ask only the questions we need to know the answers to. By limiting questions we can turn grant applications around quickly.
On the technical assistance side, for some of the training we currently do on-site we will experiment with webcast and webinar formats. Based on how well those work, that could allow us to change topics more quickly.
We are starting to look at using a more powerful array of partnerships. We have a loan fund, a grant fund, 15 field staff, and a training staff. But partnering more robustly with others who are doing similar work will allow us to extend our efforts. For example, we initiated a series of board-level training on financial literacy that was well received. We are looking this year at doing board governance literacy-you know how to read the financials but now let's talk about how to manage the manager. Because that work is so similar to work being done by the National Cooperative Business Association we are starting to develop a partnership with them to jointly develop that program.
CUJ: What about help in keeping up with the compliance burden?
Myers: One of the ways small credit unions will survive is by sharing back-office staff. The shared service center concept credit unions have used for backup and extending branch services can be applied to compliance needs. Instead of each small credit union training its own compliance officer, they could buy on a subscription basis those services from professionals in the field. We will work with credit unions to help make them aware of the compliance options that are out there as alternatives to full-time staff.
CUJ: A number of small CUs have told Credit Union Journal that NCUA examiners are not in tune with the special needs and characteristics of small credit unions. Have you heard that criticism and will you work to help change that?
Myers: Most of the examiners of small credit unions are the newest examiners. When they first hit the field they take on the smaller CUs first. This office has an opportunity to provide additional training about small credit unions to those examiners, and we will do that. Also, each region has subject matter examiners who are developing skills in working with small credit unions, and we plan to assist in training them. This gives us a hands-on way of training the people who are in contact with small credit unions. Part of our job, too, is to make sure the written direction (that comes down from the NCUA board on the special needs of small credit unions) is completely and clearly understood across the entire examiner field.
CUJ: "Too big to fail" are words heard often during the last three years. But "too small to save" is a growing concern among small CUs. How will you address that?
Myers: We have been working on business models for small credit unions-both statistical models to understand when they succeed and when they don't, and also conceptual models. One of the models is a savings club. You can have a small half-million-dollar CU that is associated with a civic organization and only offers a single type of savings and single type of consumer loan. We have seen a lot of credit unions be successful and endure for long periods of time like this--many over 50 years. It is a successful model. We are thinking that what happens is small CUs face transition points, and if that same savings-club-type credit union now chooses to offer cash services, Visa cards, checking accounts, mortgages, etc., and becomes more complicated, perhaps it can't survive at a half-million dollars. Our field work says that if you are to support a checking account it is hard to do it unless you are over $2 million in assets, and there are other factors . . . Absolutely credit unions can be successful and very small as long as they offer services that are manageable, don't cause compliance issues, don't require big outlays of capital, and accounting is easy.
CUJ: How then will you help small CUs grow and prosper?
Myers: I think it is not clear sometimes to small credit unions that when they take the step forward, that step requires a level of growth and sophistication they don't currently have. So part of our efforts will be to train and make credit unions aware of the success they have at a small size, and if they chose to stay there more power to them. But if they want to take a step forward they will need to understand the necessity of advance planning to be successful. As I mentioned, we are looking at a series of models that have worked for small credit unions as they have advanced in size, and will share those models so small credit unions will recognize what the additional requirements and next steps for success are as they become larger.
CUJ: Is NCUA going to expand the Office of Small CU Initiatives, and more importantly, pay more attention to it?
Myers: In hiring me I think they know they know they will have to pay more attention-a little more punch in terms of a greater budget, we have not gone there yet. But in terms of clarifying what this office is supposed to do and doing it with much more visibility, and speaking more clearly about the role of small CUs in the financial system, yes, I think that is what we are prepared to do.
CUJ: Does your hiring mean small CUs will have a greater voice within NCUA?
Myers: I would hope that is true and I would also hope that small credit unions will have a bigger voice with me. I am interested in hearing what small credit unions are encountering. I look forward to running this office, and if your readers have ideas about small credit unions they should reach out to me at firstname.lastname@example.org.