CUSO

NACUSO Spotlight on Brad Crandall, CEO of The Servion Group

Last month a CU Times article featured the rebrand of CU Mortgage Services to The Servion Group. Their story is the kind we cherish and love to celebrate. Beginning with 3 credit unions working together to help their members. That’s cooperation among cooperatives at its best. Here’s the rest of the story. Enjoy!

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 President and CEO of The Servion Group. Honestly, though, I always tell my employees that I’d drop all titles if I could. I’m a basketball coach outside of the office; I look at myself as a coach when I am at the office.

We focus on relationships rather than on transactions at Servion. In line with that, we’ve developed a language that supports our culture. We talk about “hitting the bullseye,” which is our way of visualizing of the different ways we want to add value for our partners.

We also talk about service in layers of the bullseye. Availability, accuracy, and partnership are the outer rings. You need to be able to hit them if you want to hit the bullseye. We hit our bullseye when we have earned our partners’ trust through availability and accuracy, and thereby become their advisor on the road to success.

As the coach of the Servion team, my day to day is about leading us to hit the bullseye for every credit union we serve.

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

I’m fortunate, when you asked me what I do day to day, you might as well have asked what I am passionate about. When I get done leading our staff townhalls or with an ideation meeting, I could run laps around the building.

One thing in particular that energizes me is innovation. The Servion Group came from an idea first drawn-up on the back of a napkin. That origin story is very much in line with my leadership style. If someone on our staff has an idea for a great solution – one that can profitably deliver the benefits of scale to our partners – I get excited about empowering them to go make it a reality. In fact, many of our services today came from staff pitching ways we could solve a pain point for our partners. Recent examples are our correspondent and wholesale mortgage channels, or our mortgage quality control service.

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A Dozen Lessons Learned in Credit Union Collaborations By Guy Messick

In my thirty years of forming credit union collaborations, I have come to see common lessons, especially in multiply owned CUSOs providing one or more back office operational services.  I examine twelve of those lessons in these types of CUSOs.

  1. Collaborations are usually born out of fear. Creating and maintaining collaborations is hard work and it takes a significant motivator to undertake the effort. Sometimes the motivation is opportunity but it is often fear.  The fear of becoming obsolete in a world full of low cost and efficient competitors is real.  Collaborations are created by those with the vision to see the challenges that lie ahead and understand the urgency to make changes while there is still time to act.
  2. Collaborations must overcome cultural and instinctive biases. Sharing resources and working together in a collaboration for the mutual benefit of the partners is a foreign concept in the for-profit business world. The success of a collaboration is not dependent upon the legal terms in a contract, rather it is the power of the owner/user model. All users of the collaboration own the collaboration.  If there is a problem for a user, the owner fixes it. You would think credit union folks get this concept and many do but not all.   It is an especially hard concept for examiners and lawyers.
  3. A collaboration is a relationship not a transaction. A collaboration will succeed if the partners view the relationship with the lens of the long term benefits and understand that all services are not “home runs” all the time.   Constantly “hitting singles” will win you the game. Just as in a marriage, the key is to make adjustments to nurture the relationship between the partners and consider the effect of one’s actions on the other partners.
  4. Trust is the key to all collaborations. This is a trust that the partners share a belief of the importance of the collaboration, trust to meet the commitments made, trust to be truthful, trust to “have the back” of your partners; and trust to communicate to keep the partners aligned.  Trust begins with the credit union CEO’s and, if successful, moves to the senior staff, the board and the rest of the staff.  Many successful collaborations have begun when two or three credit union CEO’s decide that it is essential to obtain scale.  They say to each other, “We have to do this and while all the details are not clear yet, we are committed and will find a way.”   The collaboration will start off with a plan but the plan is constantly changing as the collaboration faces unforeseen issues to overcome.  At some point, a collaboration requires a leap of faith grounded on trust.  After it is formed a collaboration requires constant vigilance to protect it from adverse internal and external forces.
  5. A champion may create a collaboration but the institution must sustain it. Credit union CEO’s and boards change. The enduring collaborations will develop new champions within the credit unions to ensure its continued successful ongoing operation and benefits.  Credit union boards will hire new CEO’s who fully support the collaboration.
  6. Scale by itself is not enough. Inserting a CUSO into a credit union’s operations actually adds costs unless the credit union adapts its internal business model. Credit unions must agree to use the same policies, documents, procedures and related vendors.   It is only through standardization of the back office functions that scale enables the credit unions to achieve the efficiencies they seek.   Doing more with less people is also key to saving money.  Usually the CUSO employees will have higher levels of expertise that are now affordable given there are less employees with a more efficient process.   The strategic thinking has to be elevated.   A $250 million credit union in a collaboration with three other equal sized credit unions must think in terms of how a credit union with the scale of $1 billion operates.  Significant benefits from collaborations require significant changes.
  7. Quantify the benefits of the collaboration so you will know how to maximize the benefits. You will be able to determine what services will have the “biggest bang for the buck” and what metrics will determine success.  You will also know how many partners is an ideal number before the complications of running the collaboration make it counterproductive.
  8. For operational services, peer sized credit union partners each with an equal vote works best. Peer sized credit unions face similar problems that require common solutions.
  9. Developing a collaborative mindset is key. Determine what services are off-limits to collaboration (e.g., member facing services) and be open to collaborating on all other services with credit unions of like mind-set. When new services are considered, think of how new services might be enhanced if done through the collaboration and how that might help both your credit union and your partner credit unions.
  10. If the CUSO is providing a key service hire a person with CEO level capabilities to run the CUSO. If the CUSO is run by a person who has to be micro-managed daily by the credit union partners, the CUSO will be mired in mud.   The CUSO CEO is accountable to the credit unions but he or she needs the ability to work effectively without constant supervision.
  11. Educate and communicate with the credit union boards and staff on the reasons for the collaboration and how the collaboration will affect their roles. The more education and communication there is, the more likely the changes will be accepted internally.
  12. Provide a means to unwind a collaboration. Nothing is permanent.   If a partner wants out, the CUSO’s operating agreement should provide a means for the partner to disassociate in a manner that does not harm the collaboration and is fair to the disassociating partner.

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Never Burn a Bridge With Former Girlfriends

Never burn a bridge with former girlfriends.  It can jump start a career.   I stayed friendly with my high school girlfriend Maryanne who married John Unangst the President of Franklin Mint Federal Credit Union.   John formed one of the first CUSOs in 1988.   The CUSO provided mortgage services and data processing services to multiple credit unions.   As a result of meeting John through Maryanne, I formed John’s CUSO.  John became a director on the newly formed NACUSO Board and asked me to go with him to San Diego on his dime to a NACUSO Conference and play golf.  My bags were packed before he finished his invitation.

In San Diego, I did a presentation to a four table conference.  John suggested to the NACUSO Board that I be their General Counsel.   My most attractive feature was that I was free.   So began my representation of NACUSO.  I thought I could handle this gig as CUSOs are essentially small businesses and I had a lot of experience representing small businesses, including being the attorney for the local Chamber of Commerce.   I grew up in a small business.  My parents owned two restaurants. Eventually, my practice evolved into the near exclusive representation of credit unions and CUSOs.

The part of our practice that gets my juices flowing is helping credit unions create and expand CUSOs and other collaborative relationships.   How can we structure a relationship between organizations and people that will reward all participants on a personal and professional level?  Collaboration is not easy.  It is not altruistic.  It is finding people with the right values and incentives to work together to achieve a common goal.  It is a challenge but when it works, it can provide amazing results.

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Spotlight on 7 Insurance President, Jerry Tweeten

We’re excited to feature the 2017 NACUSO CU Collaboration & Innovation Award winner 7 Insurance. We sat down with Jerry Tweeten to hear how he came to work in credit unions and how two credit unions, less than a mile apart decided to not see each other as competitors but collaborators for the benefit of their members.  

PART ONE: Life Story and Experience

Jerry Tweeten, President of 7 Insurance, not to be confused with “Elf on a Shelf”

What’s your current position and can you give me a brief overview of what it is you do in your work? I am the President, and we are a full lines independent insurance agency. We are a collaboration of Y12 FCU and ORNL FCU and I oversee nine CSR/Agents.  I manage both credit union’s corporate insurance programs and their other insurance programs, GAP, Service Contracts, Debt Cancellation, Accidental Death & Dismemberment (AD&D), and collateral protection insurance (CPI) programs.

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

What motivates and excites me most of all, along with our team, is saving our members money.  The savings are real, not perceived. We have saved our members well over $500,000.   Our most successful stories involved three of our members that saved over $3,000 annually on their insurance and provided better coverage.  How can this not excite you?

I want to hear the story of how you came to work with credit unions. What attracted you to work for 7 Insurance?

In 1986 I started at Alaska USA FCU as a temp employee, working in their insurance department. I worked within the insurance department during my tenure there and established their insurance CUSO as their Manager of Insurance Services.

My father was a CMSGT at Elmendorf AFB and opened an account for my brother, sister and myself.  AK USA FCU was always part of my life since we moved to Alaska in 1977, so for me it was a place that was always there for us.  I had a friend who knew the human resources person at AK USA FCU and she told me there were open positions. I was there the next day and started working the following week.  AK USA FCU believed in me and offered me every opportunity to succeed. I can’t thank them enough for what they did for me and my family.  I’ve been working in and around credit union’s since 1986 and won’t work in any other industry.

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Better, Faster, Cheaper. How One CU Got All Three With a Core Conversion

NACUSO is on a mission to tell stories of collaboration, innovation and cooperation that not only strengthen the credit union movement but also are in the best interests of our members. We believe that we’re better together. We also know that the CUSO model has mitigated the need for many credit unions to merge by obtaining economies of scale and driving efficiencies. CUProdigy is a great example of helping credit unions with a quality cloud based core that is affordable. We heard about the tremendous cost savings and reached out to a recent convert, Roy MacKinnon, CEO of Edwards FCU.

Roy, first, tell me a little about your credit union.

Edwards FCU was founded in 1962 on Edwards AFB in California and was originally chartered to serve personnel on the base. Edwards FCU received a community charter shortly after 2000 as many military base credit unions did.  Today, we serve all of the Antelope Valley, which is nicknamed Aerospace Valley because, in addition to the Air Force base, other major manufacturers are here like Lockheed, Northup Grumman and The Spaceship Company. We are proud to say that Edwards is the only locally born and raised credit union that’s still headquartered in the Antelope Valley.

How did you come to work at Edwards FCU?

I became the CEO of Edwards in May of 2016. Previously, I was with First Entertainment Credit Union for 25 years. This was my first CEO gig and I knew what I was walking into. I was handed a financial statement showing a $120K loss and 7.2% capital the first month. I immediately initiated a freeze on just about everything. By mid-year we were running at an annual loss of about $200K. By year-end, with a significant expense reduction and with the financial benefits of a PSCU conversion, we reduced our year-end loss to just $5,900.

I felt a missed opportunity existed, one that many credit unions encounter when they convert to a community charter – founding segments are ignored. In this case, it was the air base. I told the board that if they hired me, we would go back to our core, get our house in order, and then when we’re a little healthier we’ll go back to the community in a very disciplined way.

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