Do Two-Thirds of Credit Unions Really Lack Relevancy Today?
Hard to ignore the "insight" [SAFE CU CEO Henry] Wirz has about the future of credit unions and the deterioration of the credit union brand ("Movement Can't Afford To Wait For Failure Before Consolidating," Credit Union Journal, Nov. 27). He concludes that boards and management fail to act in the best interest of their member/owners by not realizing and admitting to the fact that they are no longer relevant and should merge to save the credit union movement the embarrassment and loss of market share.
Numbers don't tell the whole story.
Which is it? In one ear I am hearing that the billion-dollar credit unions account for 80% plus of market share and assets while small credit unions account for such a small portion that they have no chance to compete. Yet, Mr. Wirz states that we can "say goodbye to market share" due to the small credit union failures coming down the road at us. Failures of small credit unions are not deteriorating the Credit Union Brand.
First of all, the membership of the small CUs is just that, small. Small in number of members, small in impact. Secondly, one must only recall the great recession and the stabilization charges we are paying to the NCUA for failed large credit unions, not small credit unions. Albeit, they were corporate credit unions, the boards consisted of many, if not a majority, of CEOs/executives from large credit unions. Such board positions were once coveted positions to enhance personal resumes, reputations and influence. Is that acting solely in the best interest of the members. Seems to me that could be considered differing interests. Those differing interests also bore severe cost to our members and helped some small credit unions move down the road to failure and merger. I think those corporate credit unions had "positive member growth and good statistics," Mr. Wirz, and that qualifies them as relevant in your opinion.
Scale equals relevance. Really, Mr. Wirz? It's a good thing our founding leaders of the credit union movement didn't believe that was our only relevance to the American public. I'm not sure we would have ever got the movement going with that type of belief. Perhaps you should get to know a few small credit unions better before you generalize to that extent. I am sure they can tell you more intimate, member centric stories that reinforce their relevancy than you can gather from your large, relevant size credit union.
Two-thirds of all credit unions are "not meeting their members' needs." Really, Mr. Wirz? I beg to differ with you. No credit union is the same and member needs are not the same; therefore relevancy cannot be boiled down to "positive member growth and good statistics" as you claim. You focused on that 1.07% ROA as a relevancy factor and in the very next line discuss our not for profit status and purpose to serve members. Which is it? My members don't want to hear how much money we make. They want to hear what we are doing to help them and their families with their financial wellness. Likewise, credit unions invest a lot of money in their communities without expecting a 1.07% ROA in return. Again, numbers don't tell the whole story.
Really, Mr. Wirz, your article reads like a call to merge or look like a fool if you don't, small credit unions. According to you, management and board members are greedily holding on those high paying positions that credit unions under $50 million can afford to pay. Definitely this lacks logic.
One would logically have to conclude otherwise and believe that the management and board are bringing value to a community of members that might otherwise be ignored by a credit union basing their relevancy on positive member growth and ROA in excess of 1%. Thank you, small credit unions. Not all of us believe you lack relevance.
Sundie Seefried is the CEO of Partner Colorado CU.