A year after it won its hard-fought campaign to convert from a credit union, ViewPoint Bank in Plano, Tex., has found the transition to a mutual savings bank, and then to a public thrift, anything but easy.
The $1.5 billion-asset ViewPoint rebuilt itself from the inside out: a new name with a new business model being executed by new executives who are overseen by new regulators.
"It was very extensive and challenging," said Gary Base, ViewPoint's president and chief executive officer. "I knew there would be a transition, of course, but it was more difficult and challenging than we ever expected.
"I believe every credit union thinks they are similar to banks, but as far as within themselves regulatory-wise, they aren't."
But Mr. Base wants to set bankers straight on one thing: The exemption from federal income taxes does not allow credit unions to offer better rates.
"Our loan rates have not increased nor our deposits rates lowered," he said. "That is all driven by competition."
Roughly 30 credit unions have flipped to bank charters in the last decade or so, but ViewPoint, formerly Community Credit Union, and the $1.1 billion-asset OmniAmerican Bank of Fort Worth, formerly OmniAmerican Credit Union, were the largest ever to do so.
Their conversions, both announced in mid-2005, were also highly controversial. The National Credit Union Administration rejected their conversion applications on grounds that their members did not fully understand the implications of a charter switch because disclosure notices were improperly folded.
After a court battle, both organizations finally prevailed, and changed their charters Jan. 1, 2006.
Mr. Base joined Community Credit Union in June 1987 and rose to the top job. He said the hybrid credit union, serving a wide member base, wanted to convert to a bank charter so it could increase its lines of business and have access to capital.
The credit union, founded in December 1952, focused on consumer lending. Automobile loans made up about 60% of its portfolio, which also included mortgages, real estate, and business services. A thrift must have 65% of its assets in real estate, so ViewPoint needed to revamp its portfolio.
"We have completed that transition, and it was quite an accomplishment," Mr. Base said, noting the portfolio shift started before the conversion was complete. "We were consumer-based and very, very heavy into auto financing. So we discontinued our indirect auto financing … and we reinvested those dollars in anticipation of the change into real estate loans produced or purchased in the marketplace."
ViewPoint went public in October, raising $116 million, and is now ready to grow, Mr. Base said. He would not give a growth goal but said the capital would be used to build branches, add personnel, and perhaps pursue acquisitions. (OmniAmerican's board last month approved a plan for the company to convert to a publicly traded mutual holding company. No timetable has been set.)
Mr. Base appears to be actively seeking a buyout target. He attended the Bank Director's Acquire or Be Acquired conference in Phoenix in late January, which typically attracts bankers looking to sell or buy.
He declined to discuss ViewPoint's acquisition strategy.
One new objective is to gain commercial accounts, which has entailed changing the company's culture, teller training, and core operating system. When it was a credit union, its members' deposits were captured at the teller line — one item at a time. But that would not work for commercial deposits, which require a proof-of-deposit system capable of capturing large amounts of checks.
"We didn't have deposit operations," Mr. Base said. "That doesn't exist in a credit union. We had to establish it and get leadership for it."
The new deposit system freed tellers to cross-sell, and that meant coaching them on all the new products, said Bob Stevenson, the managing director of the consulting services division for Sheshunoff Management Services in Austin.
"And with that, the whole technology and operational aspects of the bank and its culture would have to change," he said. "They were a more retail-type entity — consumer loans, home equity lines, and mortgages. Now they have the ability for commercial loans. It's a whole new market they are going after that they haven't gone after in the past."
Entering new businesses required bringing in people with relevant experience. The bank created several new positions and filled them with veteran bankers like Jim Parks as vice president and chief of operations; Rick Robertson, executive vice president of retail banking; Frank J. Briggs, senior vice president of business banking; Tracy Marshall, vice president management operations; and Dan Green, senior vice president of mortgage lending.
ViewPoint was fortunate to be hiring when mergers had unsettled the Dallas-Fort Worth market and many bankers were out for new jobs, said John Blaylock, an associate director with Sheshunoff & Co. Investment Banking in Austin.
"There has been a lot of disruption, and a lot of people in the marketplace looking for employment," he said. "It is a good time for someone moving into new lines of business to find some good people."
