BOSTON — Not surprisingly, the net worth of individual credit unions and the industry as a whole received a fair amount of attention during CUNA's America's Credit Union Conference here.
Matt Davidson, VP with the California/Nevada Credit Union Leagues and a former regulator in Ohio, said it's been his experience that credit unions suffering lagging or declining net worth often get there as the result of a slow decline rather than one major event. "I think we need to hop out of our situations and realize when the situation is getting weak and take appropriate action," he said.
Comparing a credit union to a car, Davidson said, "the loans are your wheels, the shares are your fuel, management is your steering, and net worth is your engine. You must take care of your engine.
Davidson, stressing that watching expenses doesn't mean being cheap but instead "frugal," noted that one trait shared by successful credit unions is they kep a lid a lid on expenses. He cited as examples CEFCU in Peoria, Ill, Space Coast CU in Melbourne, Fla., and San Diego County CU in California. "What do they have in common? Low operating expenses," said Davidson. "It's not that they do things cheaply, it's that they do things efficiently."
Davidson quoted Doug Samuels, CEO at Space Coast, for pursuing what Samuels has called a "relentless drive for efficiency."
"To be efficient, you can take a hatchet to expenses, or you can know how much it costs to provide a service," Davidson said. "Decide if that's how you want to spend your member's money." He urged CUs to ensure they have deployed "activity based costing and product profitability management. These help you implement the proper cost accounting to make a decision on a service or a loan."
