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There are many overachievers in the world, and there are quite a few overachieving small credit unions, but it is hard to match Jon Hernandez-CEO of two CUs-for pure kinetic energy.

The 32-year old Hernandez rarely sits still. Married for 13 years and proud father of one daughter, he balances spending time with his family, running two small credit unions as if they had significantly more assets, sitting on the board of directors at Mattel FCU, his former employer-and still finds time for golf on the weekends.

Oh, and he does volunteer work for the California Credit Union League in his spare time. And he is in Western CUNA Management School, with a 2003 graduation date. And he does all of this with no personal assistant.

"I like what I do," Hernandez told The Credit Union Journal. "I just don't get enough sleep."

Hernandez is used to juggling several responsibilities without letting any of the balls hit the ground. While he was a full-time college student earning a degree in finance at Cal State Dominguez Hills he got married, then later took on a full-time job as assistant manager at Mattel FCU. He had been with Mattel for six years when he was approached by an examiner with the National Credit Union Administration, which was investigating Licomto FCU (the name stands for Little Company of Mary Hospital of Torrance), and where the previous CEO had been terminated for several alleged irregularities.

Ready To Go

"I was 26 years old in December of 1996, and I asked my boss if he thought I was ready to be the CEO of a credit union. He told me he thought I was," recalled Hernandez.

In his first week in charge, he began working in earnest to change the mindset at Licomto. For one thing, many members were several months delinquent in their auto loans, so Hernandez repossessed the vehicles. "The majority of small credit unions won't touch many things big credit unions do. I don't feel that way," he said. "I believe if something would benefit a lot of members, we should try to make it happen."

The key, Hernandez said, is a principle he learned from his father: it is easy to measure what the cost of something is, but harder to measure lost opportunity. "Some credit unions say 'we can't afford that,' but they don't think of the cost of not doing it," he explained.

One of several examples Hernandez cited to illustrate this way of thinking is the use of technology. Hernandez said he is not computer savvy, but he can visualize the way he wants things to work and if his staff can't do it, he hires a programmer to make it happen.

What is important, he insists, is to take advantage of technology-use it and don't be afraid of it.

"We are investing in technology to try to maximize what we can do with our limited resources," he explained. "We want to offer our members same-day loan processing, so we are creating software in-house so a member can apply online and get immediate approval. Many big credit unions are doing this already, but most small credit unions don't."

Trading Punches With The Big Boys

About three years ago, Hernandez recalled, a new CU moved into Torrance and offered a 6% dividend on CDs-far above the then-average rate of 4.5%. Despite his CU's limitations, Hernandez said he searched for a way to compete.

"The new credit union wanted to make a name for itself, so it offered this great rate. I matched it, but I limited the time to 66 days before the rate returned to the previous rate and terms. That way it was convenient for members to just keep their money with me."

It worked so well, and attracted so much new money that the next time the credit union made a special rate offer it had to cap the deposit amount and term. Still, Hernandez said, it was important for Licomto to face up to the competition, but at the same time tailor the response to something it could handle.

"And it makes the members pay attention to the monthly e-mail and flyers we put out," he added.

Training Day

One of his pet projects is training. Hernandez said he delegates a lot of work to his staff, so it is important for them to be ready to handle a variety of situations. Licomto invests significant time and money on training, sending staff members to two to three seminars each year.

"Many small credit unions are unable to do this, because they have limited budgets and a limited staff," he said. "The California league has many educational programs, and I like to take advantage of them."

Hernandez said he gives his staff "ownership" of their duties. They know their own work schedule, and they are aware of everyone else's work schedule as well in an effort to maximize accountability.

"I have a 'screen door' policy with my staff," he said. "Before they knock on my door with a question about a problem, they first have to come up with their own solution. I don't know the members as well as they do, so I want to hear what they think."

Many times, the staff person has an excellent solution that Hernandez hadn't thought of, he said. Because Licomto benefits from grants supplied by the California league that allow his staff to afford to attend educational seminars, Hernandez does volunteer work for the league and sits on the advisory board of the Shapiro Group, which assists small CUs in California. He said this volunteer work leads to networking opportunities that benefit his CUs.

"I get great tips from the CEOs and other professionals that I meet. Not just what to do, but what not to do. I learn from other people's mistakes," he said.

Adding A Second CU

In January of 2002, the former CEO of Copley LA FCU, an 830-member, $3.8-million CU that serves Copley- owned newspapers in Los Angeles, approached Hernandez to see if he would be interested in taking over as manager of a second CU. Hernandez, who had been looking for just such an opportunity, jumped at the chance.

"Copley has always had a part-time manager, because it can't afford to hire a full-time CEO."

The two credit unions are located approximately one-mile apart. Hernandez spends the majority of his time at Licomto, but stops by Copley for two to three hours, three to four times per week.

The first week after he took over as CEO of Copley, it was robbed. Then he discovered a staff member was embezzling. "Copley only had only two employees, and the one who was robbed left, and I had to terminate the one who was embezzling, so I had no employees," he said.

Hernandez said he had to straighten out the books, cut the dividend rate, renovate the facility and improve security. "It didn't even have cameras," he recalled.

Sustaining Growth

According to Hernandez, CUs in Licotmo's peer group average 13% asset growth per year. Licomto, in contrast, enjoys 29% growth.

When Hernandez took over as CEO, Licomto had $4.8-million in assets. In six years, it has grown to $10.8 million. "When you have tremendous growth, the biggest issue is sustaining it. That's why we are looking to expedite the loan process and bring it online, we want to make it as efficient as possible," he said.

In addition, Hernandez said Licomto matches and beats interest rates offered by competitors, and it sells both gap and mechanical breakdown insurance. It also participates in the Credit Union Direct Lending program (CUDL) to make sure it doesn't lose auto loans to dealers.

Looking Forward

Hernandez said the biggest challenge he currently faces is winning NCUA approval for expanded membership eligibility for Licomto. The CU filed for a name change to reflect this possible new direction. The new name will be South Bay Health Services FCU. "We want to be able to offer membership to all workers in the same industry-nurses at other hospitals for example," he said. "We don't want to be a community credit union, we still want our niche, the health services industry."

As for Copley, Hernandez said 2002 was dedicated to fixing problems, and 2003 will be the year the CU starts to grow.

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