Key To Big CU's Success Is Thinking Small

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EAST LANSING, Mich.-When the internal auditor of Michigan State University FCU showed up late on a Friday and said she needed to talk, CEO Patrick McPharlin wasn't expecting good news. She approached the CEO and said she needed to see him before he went home.

"Generally, that is not good," he said. But sometimes, there are exceptions. The auditor told McPharlin, who has been at the helm of the $1.8-billion CU for the last 10 years, that he had been named NAFCU's CEO of the Year for credit unions above $150 million in assets.

Under McPharlin's leadership, MSUFCU has grown from $500 million in assets to $1.8 billion. During 2009, MSU FCU grew 16%, and ROA is a sound .55 after setting aside money for assessments. McPharlin spoke with Credit Union Journal about winning the award and what he believes has led to his credit union's success.

Credit Union Journal: Did you know you were nominated for the award?
: No. I was stunned to learn I had won. I had no idea.

CUJ: Have you learned from NAFCU why you won?
: I have not. But I hope it is not the credit unions' financial performance numbers. They are very good. But numbers are not how we measure ourselves.

We measure the credit union by the service we provide to members and by how we are helping them. We may be a little backward, but we believe that if we provide the right services with a touch of care, growth will take care of itself. We are not an organization that says we want to be a $4-billion credit union in another 10 years.

CUJ: What are the important factors that drive member service?
: My philosophy is to give employees the tools they need-education/training, respect, and proper treatment-to foster positive attitudes and therefore excellent member service. Members appreciate that, members respond, and it becomes a reinforcing cycle.

I do admit it becomes a greater challenge as the credit union grows to keep the momentum building. But we try to be a $25-million credit union-providing a small credit union level of service-but deliver those services with the resources of a $1.8-billion financial.

CUJ: What is one of the biggest challenges growth presents?
: Managing complexity. It calls for the credit union to invest more into staff, and their development, to ensure skilled employees are ready to take on new roles as the credit union expands.

We just introduced a succession planning program for all the skilled positions in the credit union. We are also in the early stages of instituting a sales and service culture, which will help offset revenue that may be lost due to new overdraft rules and proposed interchange legislation.

CUJ: When did you begin your career with MSFCU?
: I started here 37 years ago as a collections manager. Over the years I have been in charge of almost every credit union area. Before being named CEO, I was VP over lending, collections, the call center, member services, ATMs, and credit cards. Having run so many aspects of the credit union gives me a much better perspective on what's happening today.

CUJ: How do you stay in touch with employees?
: I keep an open-door policy. No one is shy about coming to me to discuss problems and suggestions. I just like being involved with staff-and I play third base on the credit union's softball team.

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