In September of last year we featured an $8 million dollar credit union serving 900 florists out of a house in Roswell, New Mexico. The title of the piece was “Merger Should be The Last Resort – Collaboration is Key.” This month we sat down with Kenn Bell, President/CEO of The Florist Federal Credit Union to hear his story of how the CUSO model is so vital to his success.
We are excited to debut the Partner Connection Sessions at the 2016 NACUSO Network Conference for stories like Kenn’s. these sessions are the 6th cooperative principle in action: Cooperation among cooperatives. Our goal is to bring like-minded people together in the spirit of collaboration and innovation to help credit unions to not only survive, but to thrive. We hope you’ll join us. Now here’s Kenn’s amazing story.
PART ONE: Life Story and Experiences
Where did you grow up and what was it like living there? Where did you go to school?
I was born in Pendleton, Oregon but grew up in both Washington and Oregon. My father changed jobs a lot, so it’s hard to nominate a specific “best” town, but I consider Portland my home town. I graduated from Grant High School and eventually from Portland State University. I have returned there many times, and of course, 2 of my four grandkids live there.
I want to hear the story of how you came to work with credit unions. What attracted you to work for The Florist Credit Union.
When I returned to college after a 5 year separation to discover the world and travel, my interest was in economics, which lead to an interest in finance. With my BA in business administration, I started work at a finance company. My immediate boss was a guy who took great pleasure in charging high fees and penalties for early payoffs. He would sometimes table payoffs so his branch looked better and where he could win trips and other prizes. His office did well because of what I felt was an inhumane way of generating income. The general tone of the company didn’t appeal to my core values. And, I believed there was a better way to conduct business.
I believe and continue to believe that measure of a great country is what they can do for the least of its citizens. I came to believe that the credit union model is the model most akin to my personal values. When I was 35 years old I applied for a job at Mid Oregon FCU in Bend. I really enjoyed working for that credit union. After 7 years, I was encourage to apply at a bank, and went to work for Siuslaw Bank, a Lane County community bank, to learn about the commercial side of banking. Unfortunately, the mission of the bank was “to improve the value of stock to stockholders”. It was hard to embrace that as my mission, but since the bank was family owned, it made sense, just not for me. The experience I had and the things I learned were invaluable. But eventually I made it back to my credit union family, with renewed energy, a ton of new experiences, and a real commitment to our mission.
I became the CEO of Ochoco FCU in Prineville, was for a time the VP of Commercial Services at Oregonians in Portland, and now I’m the manager (90%) and CEO (10%) of The Florist Federal Credit Union in Roswell NM. I drove into town on January 18th, 2010, a day well remembered, because with the exception of Ruidoso, Roswell, New Mexico is nothing like Oregon (maybe a little around Burns Oregon).
What would you say most motivates you to do what you do? What are you most excited or passionate about?
First of all, working for a small credit union, you wear many hats and have the opportunity to make decisions quickly. Nothing frustrates me more than when I have to interact with a large bank or credit union where it can take forever to get something simple done. Often times, you are on hold for long periods when you call them. I fully and completely understand why, but it can be frustrating when employees are not empowered for simple decision making. As a small credit union, with three (LOL) staff, we can make decision quickly.
Probably the best way to describe why I am so passionate about being at a small credit union can be compared to giving blood. I have given 14 or 15 gallons of blood over my lifetime, not for any gain, but because I like helping people. When I give blood, I have no idea who I’m helping, I’ve never gotten a thank you card from a recipient and that’s just fine. Giving a gift means that you require nothing in return. Here, at The Florist FCU, when we give someone a loan, or help them out with a financial problem, we do it to help. We don’t expect a thank you, but we know we’re doing the right thing and in our own way, improving and potentially “saving lives.”
As an associational credit union supporting the florist industry, our members tend to be low income. They are designers and drivers. They make from $10 – $12 an hour, and are often single parents or the sole bread winner. As such, they often don’t have great credit scores, so we have had to change up our model for lending. We don’t just look to the credit score, but rather, what other things does that credit report and application tell us about our member. It’s a different model than I was accustom to, but it works well for us. And we give free advice all the time to help improve our member scores. We have a VISA program where we provide a small credit line when needed. We make loans to fund deposits, and we take those deposits as security, for the sole purpose of a low cost solution to improving scores. We are not for charity, but there are so many things we can do to help, and so we do.
Who were your mentors along the way? People who deeply influenced who you are, what you believe in and what you’re committed to in your work and life? Tell us about them.
I’ve always hoped for mentors, but I think that since I got started so much later in life, they were not always available to me. In my career, as in my travels, I’ve learned a lot of what I know, and am where I am, by my own initiative. Yet, we are the sum of those who have come before us. I am eternal grateful for the help along the way. I have met great support people, from the different Corporate Credit Unions I worked with, to my state credit union associations, and especially from the support of my boards and volunteers, and from my family. I guess a person who influenced me a lot, in the way he treated his employees, would be from the retired CEO of the Oregonians Credit Union, Mike Cline. He understood that if an employee makes an error, often times it’s the employee that gets pounded on. But Mike believed that a lot of errors that are made are because of poor training, a lack of comprehensive management policies, or insufficient communication.
In my experience, the last people who take responsibility tend to be senior management. When is the last time you heard a VP say, “That’s my fault for not having clearly defined polices in place”? It’s “safer” to put the blame elsewhere. There are many office bullies, you known them by their authority. But I believe there is no excuse for bad behavior. Always be prepared to apologize for it if it occurs. So before I get upset with a staff member I always try to analyze the situation. It’s amazing, that if I am honest, the blame isn’t far for my own desk. Senior management often times forget who they serve, and I believe it’s the members, the volunteers, AND the staff.
PART TWO: The CUSO Connection
Which CUSO services do you use and why?
Shared branching is critical for us to be successful. We serve members nationwide, so the system has really helped us stay relevant. It is disappointing to see that in some larger credit union and in larger cities, there are no credit unions participating in shared branching. .
What other CUSO services are you considering utilizing?
There are three services we needed that we believe are really important to our members; remote deposit capture, mobile banking and shared branching. We made a big decision this past year to convert our core from an in-house system to an offsite solution to save enough money to bring in those three services. In addition, we have our credit card program with LSC Services (the Illinois Credit Union League) because they are very focused on serving the needs of small credit unions. We appreciate your partnership with them.
We have a very robust ACH program. We are an $8 million credit union but we send and receive about $16 million in transfers each year. It is really pretty amazing. We use Catalyst Corporate for ACH services. Just by the way, we changed core processors, brought on shared branching and remote deposit, and updated our PCs from XP in 2014, to Win7 Pro in 2015, and now Win10 in 2016, without any additional outside help. We are very self-reliant, but are thrilled to share what we know with others.
How did you decide which CUSO services to use?
The cost of setting up shared branching and mobile banking through the old core processor was cost prohibitive. The new core system had these services already plugged in, so it was basically plug and play. Their set up cost was near nothing, unlike the previous system, so there were much lower startup costs.
How might other small credit unions utilize CUSOs to survive and not merge?
So many people think it’s about money, but it’s really about time. We are a staff of 3 people. Imagine a large credit union sending 1/3 of their entire staff away for a training session. Not possible. We are located in Roswell, New Mexico, a 3 hour drive to Albuquerque, 3 hours to Santa Fe, and 3 hours to El Paso. I see events all over our state and throughout the nation that I would love to attend, but I have a hard time justifying not only the cost, but the time spent away from the office, knowing how hard it will be on the other 2 employees.
I support the system of and our affiliation with our state league/association. I think it’s really important to support their legislative efforts and the work they do on all levels. I will continue to support them even though I find it sometimes hard to qualify paying 14% of our net income in dues vs direct benefit to us. I think there is a lot of potential for support from them, and from CUSOs as they develop support in areas such as legal, compliance, and back office.
PART THREE: Reflections and Lessons
Many believe there is not much of a future for a small credit union, why are they wrong?
I can’t say they are completely wrong because it is very hard to find the elements of success at such a small level. I have people coming to me frequently saying “We have all of these products and services so you should merge with us. Look what we can give your members”. In my mind, they have already missed the message. If a CEO came to me and said “We have such a special relationship with our members. We know we can treat your members as well or even better than you are currently,” then I might consider it. The merger view is distorted. You are constantly working to improve services and have a good bottom line but that’s not the most important thing about credit unions, at least in my mind.
What makes us unique as a small credit union, is that we know more members by name, their stories, personally. I know over half of our members and can recognize their voice on the phone. It’s not always about the bottom line, it’s about how you effect and touch your members and improve their lives. The CU Times usually highlights a CEO by the size of their credit union – and what they are doing in their communities. That great, but typically, it’s not about the personal stories of their members, unfortunately.
The NCUA has their Office of Small Credit Union Initiatives and they do good work but it’s a struggle to find someone that wants to work in a small credit union for the pay. I was the marketer this morning, then balanced the GLs, and then fixed a member problem, while making sure our IT structure was working, repossessed a car, initiated small claims. In between that, I ate a sandwich and made 3 car loans.
Unfortunately, The NCUA has created a “WalMart effect” by allowing large community chartered credit unions to expand into these very small towns that have a small credit union serving them well. The big credit unions have WalMart sized marketing budgets and can really threaten the small credit union’s business. The numbers are showing why this is a bad practice. So many credit unions have community charters that credit union market share should’ve increased. According to CUNA, our market share is still a dismal 7%. The reality is, we’re just stealing each other’s members.
When you think of the future, what gives you hope and what makes you concerned?
One of the hardest things for credit unions is this low interest rate environment. Our yields are down but our bills are the same. I think I do a pretty good job with my investments (1.7% yield), but every dollar matters on the expense side which is why we put ourselves through the pain of a core conversion – to save money so we could add needed services.
The NCUA is always a concern. They announced they were going to change the way they examined credit unions with less than $50 million in assets. When I read it I was encouraged because it felt like they were going to really simplify the process. In my 20 years in the business it was the hardest exam we’d ever experienced. We are a 3 person credit union and they had a team of 3 people here for the exam. They gave us 5 days to prepare. Can you imagine if the government auditors gave the NCUA 5 days to prepare!! I understand their job is to protect the insurance fund but it’s difficult to comply with rules that are clearly written for a larger credit union.
The biggest reason I believe small credit unions need to survive is because we are in touch with the credit union values and truly live the mission of people helping people. We help small businesses with delivery van loans. We help people that don’t make a ton of money get their first home. We help young people get their first car. That’s what gets me excited every day and why I continue to work here.
Finally can you share something interesting about you that would surprise our readers? It can be anything, a hobby, an adventure, sports, the most embarrassing thing that’s ever happened to you, something fun.
Not too many people know about this but when I was in my 20’s I made a decision to go see the world. I had never been out of the Pacific Northwest but my sister was in the Peace Corps and her stories helped me make a decision. I decided to put off college, take all the money I had ($1200) and I went, by myself, to Central America. I met a few people on my journey and we decided we were going to walk the Darien Gap. The most intense 90km on earth. It took us 3 days and was life changing. I was truly bitten by the travel adventure bug and a few years later hitchhiked across North Africa.