CUSO

CO-OP Shared Branch Network Surpasses Chase – Takes Number 2 Spot Among Consumer Financial Institutions

More Than 1,800 Different Credit Unions Unite to Form Seamless and Secure Cooperative for In-branch Personal Banking 

RANCHO CUCAMONGA, Calif. – The CO-OP Shared Branch network has passed Chase in number of branch offices, making the credit union cooperative the second largest network of financial institution branches in the country.

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Voluntary Mergers: The Stuff No One Says Out Loud by Guy Messick

I get it.  You want to merge with a peer sized credit union.  Together you will have more scale, twice the number of branches, twice the membership size, twice the assets…twice, twice, twice.    Having all things twice should create the golden ticket of economies of scale.   But after the merger you seem to have twice the payroll but not twice the benefits.  What happened?   The dirty little details get in the way.

  1. If you don’t trim the payroll, you don’t save money. People are the highest cost of operations.   Unless you have fewer employees after the merger, you are not going to save money.   Are you willing to make those decisions?
  2. If you don’t trim the vendors, you don’t save money. The continuing credit union needs to quickly decide what vendor to use for each service.  Having multiple vendors for a service within a credit union does not create efficiencies.
  3. Be ruthless in you vendor selection. Past relationships with vendors are great but that is not a reason to keep a vendor if the vendor is not competitive on price and quality.  Buying a foursome at your credit union golf outing is not a sufficient reason to keep a vendor.
  4. The cost of terminating vendor relationships is a cost of the merger and should be calculated into the decision.  This is especially true for core IT services where the termination fees can be excessive.
  5. The staff expertise needed to run a credit union of X size is not the same as running a credit union of 2X size. The general level of expertise has to increase significantly if the size and complexity of the operation increases significantly.   There are all-star employees working at smaller credit union who could work at any sized credit union but the overall expertise level at smaller credit unions is not equal to the overall expertise required at larger more complex credit unions.  If the merger puts you in a peer class that is significantly larger, are you willing to make the necessary changes in staff?  That is a significant hidden merger cost.
  6. Larger credit unions tend to have different operational processes and a more formalized protocol and policy structure, which is often required to ensure consistency in member loans and regulatory compliance. Are you ready for that?
  7. The technology tools in a larger credit union tend to be more extensive and expensive than in a smaller credit union. Do you understand that cost and has that been a part of the analysis?
  8. If the merger puts your credit union within the jurisdiction of the CFPB, are you ready for the enormous costs of that oversight?
  9. Do you have the attitude to analyze the profitability of services and cut services that cannot be self-sustaining?
  10. Have you gotten past the post-merger identity of the CEO and directors? Does the board have the vision and talent for a larger, more complicated organization?
  11. How are you dealing with the staff issues? What will be the organizational structure and who is in each of the slots?  How are those decisions being made…by unemotional analysis or by cutting internal deals to be “fair”?
  12. How are you dealing with different salary levels and employee benefits? Do you have to pay retention bonuses to keep key employees around for the transition?
  13. Can you close branches? Do you have keep unprofitable branches open?
  14. Is there a strategy to tear down the “us vs. them” walls and tribe-like behavior that sometimes occurs post-merger?
  15. Do you have the metrics to measure the success of the merger?

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Cooperation Among Cooperatives: Stories From the Inside

Pat Connealy at the 2016 NACUSO Network Conference

Patrick Connealy at the 2016 NACUSO Network Conference

Each month we highlight at least one NACUSO member by interviewing one of their top executives. It’s an opportunity to tell their story in a casual and fun way. This month we sat down with Patrick Connealy.

PART ONE: Life Story and Experiences

What’s your current position and can you give me a brief overview of what it is you do in your work?

I’m the Executive Vice President of Commercial Banking for the National Cooperative Bank and I oversee nine Business Development officers that cover a variety of cooperative business segments nationwide.

What would you say most motivates you to do what you do? What are you most excited or passionate about?

I’ve been working with co-ops my whole life and have been with NCB for 30 years.  I started my career in the agriculture co-op banking business and spent seven years with them including three years with the Farm Credit Administration. I moved to NCB in 1986 when the bank was six years old. We fill the financing gap for co-ops that are not agricultural or electric co-ops.  I am most passionate about the long term customer relationships developed by NCB- some of which have been with us since 1980!

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Collaboration: The New Competitive Weapon

collab-illustration-gears-headerThat was the title of the January 4th article posted by Emily Waite on GonzoBanker. The article is geared to encouraging the 6,000 banks that share less than half the market to come together in the spirit of collaboration so they can compete.

Waite states “Today, banking executives are struggling to stay current in an industry growing ever-more complex with increased regulation, changing customer expectations and digital disruption.”

Sounds so familiar, which is why we are proud to have over 3 decades of collaboration history under out belts in the form of the CUSO. There are estimated to be over 1,200 CUSOs in the US and we’re excited to be able to confirm that number with data after the CUSO Registry is complete this week. Reminder: If you haven’t registered your CUSO, please do so before March 31st.

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NACUSO Spotlight on Kenn Bell, President/CEO of The Florist FCU

Kenn Bell, President and CEO of The Florist FCU with his adorable granddaughters in Lake Tahoe

Kenn Bell, President and CEO of The Florist FCU with his adorable granddaughters in Lake Tahoe

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.

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