Three CUs, NCUA Share Best Practice Strategies
Three credit unions and one NCUA board member shared their own best practices with other CUs during a California league-hosted webinar.
The participants shared ideas on a successful checking program for members with troubled financial histories, how three CUs have banded together to share management and backoffice services, how one large credit union is participating in its communities, and how NCUA has sought to spread the word on best practices.
The panel of speakers consisted of: Heri "Eddie" Garcia, training and development manager of WestStar CU in Las Vegas, Jon Hernandez, CEO of three small credit unions in the greater Los Angeles area-City of Downey FCU, Mattel CU in El Segundo and South Bay Health Services CU in Torrance-Sharon Hockensmith, planning and development project manager for Pasadena-based Wescom CU, and Debbie Matz, NCUA board member.
Carl Stewart, CEO of Water & Power Community CU here, served as moderator. Stewart is the chairman of the California League's diversity committee.
#1: Getting A Second Chance
Garcia led off with a description of WestStar's "Second Chance Checking" program. He noted the CU's FOM is important to the decision to launch the product. Founded as Howard Hughes Employees CU, it expanded to serve Nevada's gaming employees in 1975. Today, WesStar has 300 SEGs in Las Vegas and Reno and 33,000 members.
"Some of these people don't have the best financial history," he said. "Second chance checking is for anyone who has been reported to ChexSystems. It started in 2001, and we charge $10 per month. People can transfer to a regular checking account if they stay in good standing for one year."
According to Garcia, the primary reason for a shaky financial history is lack of financial education. WestStar tries to help by offering classes on managing a checking account. Participants receive a 22-page book with explanations of various transactions. Garcia said the concepts discussed range from the very basic to the advanced.
"People worry we will talk down to them, but we make sure they are comfortable," he said.
The first class was in September of 2001. WestStar now offers four classes per month, two in the morning and two in the afternoon to meet the flexible schedule needs in a 24-hour city. Average monthly attendance is six members.
"Fifty-six percent of attendees have converted to regular checking accounts since we started the classes," he said. "Our goal is to help individuals develop a strong financial foundation. We don't want them paying $10 a month for the rest of their lives."
#2: Small CUs Combine Resources
Being president and CEO of one credit union is hard enough, but to run three credit unions requires a lot of help.
Hernandez said the secret is the "shared resources solution," which means small credit unions share a management team, marketing expenses, an information technology (IT) staff and other aspects of CU life. What makes it all the more interesting, he said, is each of the three credit unions is quite different.
"We share a president, vice president, collection manager and IT consultant. Each person shares office space at the different credit unions," he explained.
Why share? Partly because 202 credit unions in the U.S. merged from January to August of this year, said Hernandez.
"The shared resources solution allows small credit unions to share resources in order to preserve their identity, not merge, and continue education and training of staff, management, and volunteers."
Marketing costs are spread among the participating CUs, who share generic promotional themes and receive group discounts on the cost of production. They share IT security and maintenance, as well as staff during emergencies.
Hernandez said the process starts with an assessment of all key aspects of a CU: personnel, financial condition, products and services, and delivery services technology.
"All of this is transparent to members because it is internal. But, they get better dividends and rates because of the money saved," he said.
#3: Money Where Their Mouths Are
"Wescom employees help people in need through giving and volunteerism," she said. "Employees sign up for automatic payroll deductions for as little as $2.50 per check. Of our 450 employees, 63% contribute to WeCare through their paychecks. This effort raises more than $1,800 every two weeks, plus the credit union matches dollar-for-dollar the money raised."
Staff members also donate tangible goods to drives and volunteer their time, Hockensmith added. WCU conducts home purchase and ownership seminars for first-time homebuyers, along with financial literacy workshops, and it hosts kids club and Smart Savers club for children.
In addition, she said, Wescom partners with the Federal Home Loan Bank and helps other CUs by supporting the California League's Shapiro Group, a program designed to assist smaller CUs in California and Nevada.
"We are not different from many credit unions," said Hockensmith. "We believe we are merely representative of many credit unions in the industry."
#4: An Archive Of Best Practices
For the past several years NCUA board member Debbie Matz has championed the PALS (Partnering and Leadership Successes) workshops, which have been held around the country. (More information and much of the information shared at the workshops can be found at www.ncua.gov.)
"PALS provides a centralized resource website for accessing credit union best practices from around the nation," she explained. "Credit unions contributed their best practices in several categories."
Matz believes the website encourages CUs of all sizes to offer innovative programs. She hopes it will get credit unions to network.
"Many credit unions have great programs they think are just part of doing business. But, other credit unions might be interested," she said. "This is an opportunity to show lawmakers in [every] state what credit unions are doing to serve their constituents. It demonstrates the credit union difference, and may help keep the tax exemption."
The Webinar is archived at www.ccul.org.