How CUs Found Economies Of Scale In TEACUP

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ERIE, Penn.-Eleven small Pennsylvania CUs have formed a working group to help each other grow.

Called The Erie Area Credit Union Partnership (TEACUP), the group formed a year ago when the CUs recognized that they simply can't offer the services and convenience necessary to battle larger financials, according to Steve Tessmer, CEO of the $12-million Tri State Rail FCU. He said the arrangement has also helped with compliance.

"We're building economies of scale," said Tessmer. "We hope together we can afford to deliver many services we could not alone."

In addition to general expense reduction, TEACUP is looking at securing a building with a drive-through that four credit unions can share, as well as other efforts to collaborate on data processing systems, staffing, and telephone systems. It's too soon to measure results, Tessmer said, as TEACUP has completed phase one of its collaborative plan.

First on the list was establishing a joint website ( and individual websites and logos for credit union that needed them. The initial objective is to build greater awareness of the 11 credit unions, which range in assets from below $5 million to just under $20 million. The joint website lists all 11 CUs and links to each of credit union's own site. "Collectively we were able to negotiate a very good contract to get the websites," Tessmer explained.

Next on the agenda is joint financial education and marketing. One aspect of the arrangement that works better than small CUs partnering with a large credit union is there is no fear of being absorbed by the larger player. "That is a concern," Tessmer said. "Small credit unions are more willing to work with one another."

TEACUP meets once a month at Tri State Rail FCU, and compliance is often a topic of discussion. "It's helpful hearing from other credit unions that have had the examiner stop in. We learn what is on the examiner's mind and helps us prepare."

The group shares compliance policies and templates, and is considering hiring a shared compliance officer.

TEACUP has been successful, but Tessmer acknowledged it takes work to keep the team together. "It takes leadership, and sometimes no one wants to lead. That has been the most difficult aspect."

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