HVFCU Forms Cost-Control Committee

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The latest initiative at the $1.9-billion Hudson Valley FCU in Poughkeepsie, N.Y., is the creation of a cost-control committee, in which it is looking to draw upon the insights of front-line staff and others below the senior management level for process improvement.

HudsonValley has more than 500 employees, who were given a presentation that included skits as part of the kick-off effort to teach employees the kinds of ideas it is seeking.

Moreover, it includes on its Intranet a means to make suggestions. As part of that it is exploring an incentive program for staff on cost-containment ideas. It may be working: in the first week, McCourt said it had received approximately 50 suggestions.

One CU at CUNA Mutual's Discovery Conference that also has such a program in place reported that it launched its effort with great fanfare and response from employees was initially strong, but quickly tailed off.

Separately, McCourt said Hudson Valley has rolled out an Asset/Liability Committee (ALCO)/board education initiative in large part to ensure that financial performance is not being measured in a vacuum, and that board members understand the financial causes and effects. The goal, she said, is to mitigate board resistance to change, and transform micro-management into strategic management.

She said the credit union believes it is closing the gap with the monthly education sessions in educating the board on the effect of all decisions on the bottom line. "We're moving to organization and department profitability. What we're seeking to gain is (the board's) buy-in in helping us to help our members."

The ALCO meets each month at Hudson Valley FCU. Controller Michelle McCourt said her ALCO's meeting objectives and reports reviewed include promotions and investment updates, financial performance measurement, quarterly investment portfolio and insurance rate risk review, annual policy reviews, annual budget approval, and new product/service offerings.

Hudson Valley, noted McCourt, who began her career as a teller, is facing the same challenges as most CUs, including narrowing margins, capital adequacy and financial performance. Hudson Valley's most recent data show it's operating with a 1.21 ROA, has net worth of 9.66% and a loan-to-share ratio of 76.73%. Its member needs include a greater physical presence, in which it trails member demands. "We're hearing from members that they want even more personal performance than we already provide," said McCourt.

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