Small CU, Small Balances & A Big Idea
Alhambra CU has found a way to protect members from ever falling below the minimum required balance on their share account-which puts their membership in jeopardy-and, at the same time, educate them about their rights and responsibilities as owners of a financial institution.
The $20-million credit union has simply set up new sub-accounts, or "Membership Share Accounts," for each member, which it has funded by transferring $25 in shares from their regular savings account.
"With today's electronic environment, having the members' $25 share in their regular savings account was causing problems," said Mary Shipe, CEO of ACU. "Members were making transactions that were taking accounts below that $25 minimum."
This put their membership in jeopardy and forced staff to send letters explaining the situation. By putting the money aside, she said, the CU eliminated any question for the member or the staff, about the status of membership.
"It has been a very positive experience and a tremendous learning tool," Shipe said. "Instead of always having to figure out their balance minus the $25, they now know what they can spend."
The added bonus of the process, she said, was that members started asking questions about why the $25 share was needed by the CU in the first place.
"As our members began to receive their statements showing the new account, the questions came rolling in," she said. "This created just the opportunity we were looking for."
Shipe said in anticipation of the members' reactions, staff had been trained and was prepared.
"They became quite proficient in explaining the cooperative structure of credit unions, the principles of member ownership, and the concept of 'one member, one vote.'"
Through the process, she said, staff became more enthusiastic supporters of the credit union difference and more passionate in their stance that CUs should not be taxed.
"It was nice walking through the lobby of the credit union and hearing them explain why members should become more actively involved," she said.
In light of ongoing challenges within the industry, including threats to its tax exemption and members' rights in a charter conversion, Shipe said, her board and staff feel very strongly about their responsibility to educate members about the CU difference and urging their support of pro-credit union legislation.
"In our case, we found the best way to start is with the basics."
One Lesson Learned
Shipe said the only downside to the task was that it took about a year to add 2,500 sub accounts for existing members. Since the undertaking, all new member accounts-about 1,300, so far-automatically get the subaccount and an explanation of its purpose.
"If we had to do it again we would do it more quickly," she said. She said her staff of 15 had to take on the challenge "when they had time," making the transfer process very slow.
While members were notified about the additional account via the credit union's newsletter and notices printed on their statements, she said, very few actually read the information.
"People are usually in a hurry and don't read that stuff," she said, adding that most simply marched up to a teller and started asking questions-not always positive ones, either.
"It was not an easy process," she said. "Certainly not as easy as I thought it would be."
She said many members wanted to know "Why did you take money out of my account?"
One very irate charter member was among them, she said.
"He had long since forgotten about the $25 share and what it meant," she said. "Once I explained it to him, he loved the idea."
Shipe said the sub-accounts do earn dividends at the same rate as other share accounts.