The View From A Former CU Exec Turned Banker

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Can the credit union model be used in the banking industry? No, I'm not talking about another one of these charter conversions. Rather, can the lessons one person learned during a credit union career be transferred to an industry where cooperation and the best interests of the customer are not typically hallmarks.

One person believes so.

Steve Tolen exited Mid-States Corporate FCU in September of 2001. He had been president of Indiana Corporate (IndiCorp) for four years and prior to that had been a consultant working with NCUA and was known for taking some out-of-the-box views and challenging a staid credit union community that didn't always appreciate being challenged or people who are outside that box.

"My vision of what IndiCorp could be was not shared by some others, especially in Illinois," is all Tolen will say now of his depature.

Rather, he is focused on making a success of Symphony Bancorp, of which he is president and which is a holding company for Symphony Bank in Indianapolis. "After being dismissed from Mid-States I immediately determined I much prefer to be at a financial institution where the board has a financial interest in the well-being of the institution," Tolen said. "To do that I explored the banking industry and the formation of a financial institution that could be the best in class. It could be all that a bank could offer to its clients integrated with all the best of the mission of credit unions when it comes to excellent service."

Tolen said he joined with a number of other analysts in exploring the bank start up, performing a market study, researching technology and looking at "a lot of options." He called the chartering process a "very arduous task. There are a lot of documents and procedures and background checks. It added up to several pounds of paper. It took about a year."

But the paper that really matters in any bank start up is the green kind, and Tolen said that 16 people, including himself, pledged equity of $15 million as capital. Symphony Bank opened in mid-summer.

"We've opened one branch of about 10,000 square feet, which is unusually large for a new bank. But we are in one of the wealthiest counties in the U.S," explained Tolen. Actually the bank is just across the street from the county line of Hamilton County on the north side of Indianapolis, but south of Carmel. "We wanted to offer the look and feel of a place where there is extraordinary service," he continued. "We started from scratch in hiring the right people who have a heart for service. Our parking spaces are a foot and a half wider than average. Our drive thru is a foot and a half wider than average. We have two ATM lanes, one for SUVs (hence the extra width) and one for compacts."

For a bank called Symphony, early marketing has been pianissimo, relying instead on PR to help build a chorus of support. It's also an orchestra of one, as in one branch, just the type of limited access that many credit unions claim is their biggest obstacle. But Tolen doesn't agree, saying, "Part of the success that credit unions have had against banks has been the result of the spirit of service you see at credit unions that has all but disappeared from the banking industry." That spirit of service, he believes, will help overcome the single location. The bank offers online banking and access through a national ATM network.

"I think we have established what we hope will be a standard for service in the banking industry," Tolen said. "I have been driven by the idea of creating as close to perfect a banking experience as we can."

When asked how close the bank is to achieving that "perfect banking experience," Tolen answered, "Very."

Now that he's a banker, has Tolen so switched sides that he is fighting the credit union tax exemption? "Most of the larger credit unions today are run very similarly to a bank," he responded. "The distinction is blurring. But I have no problem with the tax exemption."

These days Tolen said he is focused on looking forward, not back. He said he stays in touch with a few "trusted former associates" but otherwise pays little attention to credit unions. He does offer that the "opportunity afforded me by the Indicorp board was extraordinary. We created a better model."

In fact, he still sounds a bit like a credit unionist, adding, "our marketplace was being totally absorbed by the big box banks that tell people what it takes to deal with them. We've listened, and people are responding."

Sometimes events in the news can beat a newspaper columnist to the punch. For quite some time I've been meaning to address the issue of credit union donations to charity-not the small fundraisers, but the large, often six-figure donations to various causes. Should a credit union make any large donation to any cause? I've often wondered whether that money shouldn't be returned to the member (which is why the CU was organized) and let the members decide if they want to make a donation. But I was beat to the punch by some members of UniWyo FCU, who have objected to the $1 million it has pledged to the Unviersity of Wyoming. Over a four-year period, the donation comes out to about $77.12 per member. For a family of four, that's a pretty hefty $308.

Members complained that while they may be elected, the board made the contribution without consulting with the owners of that money. The CU's chairman observed, "we really did learn we needed a better mechanism to poll members' opinion."

What's your opinion?

Frank J. Diekmann is Editor of The Credit Union Journal. He can be reached at fdiekmann cujournal.com.

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