LANSING, Mich. — Lake Trust Credit Union is set to relocate its headquarters to Brighton, Mich., about 45 miles to the east, but it's the CU's planned new corporate facilities that some observers say could have lasting implications on how other credit unions design their management offices.
Lake Trust President and CEO David Snodgrass told Credit Union Journal the purpose of the move is largely to consolidate operations at the $1.6 billion institution, which was formed in 2010 as the result of a merger between NuUnion CU and Detroit Edison CU.
Since that time, he said, the credit union has been operating with three different administrative offices spread between Lansing and Detroit, about 90 minutes to the east.
"Managing it across that geography, with parts of the team in the same department 100 miles across from one another, it's difficult enough to be effective and efficient when you're all in one building, so that just made the challenge even greater," said Snodgrass.
Snodgrass explained that the decision to relocate to Brighton was largely based on where employees live and trying to minimize the impact of travel as much as possible. "The existing locations were not a size that would support the combined organization," he said, adding that "a location like Brighton... gives the vast majority of our employees a manageable commute."
Lake Trust plans to build a 100,000- square-foot, LEED-certified HQ facility which is expected to cost in the neighborhood of $30 million. In spite of that price tag, Snodgrass said the credit union expects to save about $7 million in operating costs over the course of 20 years through this consolidation.
The savings start by only paying for utilities at one building rather than three, he said, adding that the new building will also be significantly more energy efficient. Additionally, the credit union will no longer have to incur the costs of paying for employees to shuttle back and forth between meetings spread out among its three current facilities.
The new HQ will also allow Lake Trust to grow from 240 employees at its corporate offices to 350. Snodgrass said those staff additions won't come all at once, but represent an expansion across the board, rather than in one particular area of operations.
"We've allowed ourselves some slack, so to speak, in the facility for growth in areas we might not even imagine today," he said. "There are whole entire lines of business we have the opportunity to enter and provide services to our members that we don't today." That includes areas such as insurance, investments and other tangential financial services beyond just deposits and loans, he said.
Credit Union Campus?
Lake Trust's new facility is planned to be an open-space set-up similar to the "Google Campus" model, including open work spaces, a fitness center, porch and patio, walking trails around the perimeter for employees and the public, a cafeteria, and community rooms that can be used by the public.
Andrea Simler-DeGolier and Jeff Boehmer, retail design and concept development and regional VP with Cincinnati-based design firm DEI, respectively, noted that Lake Trust could well be a trend-setter with the new corporate set-up.
There's a slow-moving trend toward more open, campus-style settings, said Simler-DeGolier, noting that this trend is part-and-parcel with the shift to more of an open, hospitality-style environment at branches, such as roving tellers armed with iPads instead of a traditional teller line. Boehmer concurred, but noted that it may take some time before these trends are widespread at corporate facilities in credit union land.
"It's going that way, but in the financial industry it's going to take a long, long time before anybody really goes at it in the way that Lake Trust is," he said. "To ask bankers and credit union people to give up private offices and meeting rooms and stuff like that, I think there's a long, long way to go before that's the norm as opposed to the trend-setter."
Lake Trust's Snodgrass said the new headquarters is part of an attempt to make the credit union's organizational culture more collaborative and innovative, but Boehmer noted that there could be recruitment benefits as well.
"One thing we've seen is that [this design strategy] appeals to younger demographics," said Boehmer. "You're able to attract the best and brightest... and usually the companies that have gone to this model, that's what they're trying to chase."
Ultimately, he said, it could be a winning strategy for the movement — particularly since so many CUs have taken forward-thinking approaches to branch design and e-services.
"Credit unions could really distinguish themselves from their banking counterparts by showing that they're on the cutting edge of not just delivery methods from a retail setting, but also corporate centers trying to attract, employ and retain that younger demographic," said Boehmer.
Not About the Competition
With its current Lansing headquarters, Lake Trust is in the middle of a highly competitive credit union market that also includes Michigan State University FCU, LAFCU, Case CU, Astera CU and more. But Snodgrass insisted that relocating the headquarters is "really about practicality and logistics," and is not expected to have any impact on the credit union's overall retail strategy.
"Though our headquarters is moving, we're making further sizable investments and plan to in the Lansing area and other markets across the state," he said. "this is really a headquarters decision primarily around efficiency and logistics and the effectiveness of our operation."
Snodgrass said the new headquarters facility is merely the launching pad for Lake Trust's larger retail growth strategy. He noted that the CU's charter and retail footprint are currently "out of whack, in the sense that we have a community charter that serves 35 counties in Michigan, and we have only begun to adequately cover those 35 counties — and there are some we haven't even touched yet in terms of our retail presence. It's all hinging upon a strong core operation foundation."
Snodgrass said once the new HQ is finalized, the credit union plans to launch a new retail strategy to capitalize on driving growth in both membership and products and services throughout that 35-county charter, including eventually adding new branches (though no new branches are planned at this time).
Lake Trust's new headquarters is expected to open in fall 2015.
