Mergers Run Rampant on My Credit Union Soul
The very thought that the NCUA has to issue a regulation – a proposal thus far – requiring credit unions to ensure succession planning pisses me right off.
I’m not one for government intervention when it’s not necessary, but obviously many credit union boards are not fulfilling their duty to ensure continuity of the credit union. The lack of planning, strategic execution of our duties, fiscal responsibility of the members’ money, leadership development, collaboration and more comes from lackluster involvement by board, arms-length CEOs who don’t want the board unsettling their comfy positions as they’re drifting off into the sunset, and fantastical egos balanced with fear. You know who you are, and you’re endangering the entire credit union community and all the members who rely upon them and need their services.
130 credit unions merged away in 2020
161 credit unions died in 2021
40 are on the docket already in 2022
With fewer credit unions to regulate, eventually Uncle Sam is going to decide it’s not worth having two separate regulators. Oversight will fall to the banking regulatory agencies, which will see things quite differently. Uniformity for efficiency, and then – poof – credit unions will just be a crazy old lady memory I tell over and over and over again to my future grandchildren.
Shrinkage
Credit union loans are growing, and membership is increasing, so if you’re not, there are steps your credit union can take. According to CUNA Mutual Group, average credit union loan growth was 6.5% last year – not stellar, but certainly well in the black. The company has forecast loan growth at 9% for 2022, but what will that mean for credit unions of various sizes?
CUNA Mutual Group monthly credit union data
At first glance one might say, oh poor small credit unions. But not me! We must save credit unions that can be saved. Take a look at what’s happening at credit unions that are merging. Shout out to Frank Diekmann at CUToday.info for doing the legwork, highlighting some sad tales from 2021.
$32.4 million credit union’s CEO was retiring
$20 million credit union couldn’t find new board members or staff
$6 million credit union merged because it could not afford to invest online banking, but had 36% capital
$7 million credit union with 23.3% capital could invest in infrastructure necessary; returned just 6% of capital to members
$2.5 million credit union with more than 40% capital! AND DID NOT RETURN ANY TO ITS MEMBERS
If you couldn’t tell, I’m pounding my keyboard harder and harder with every bullet point. These credit unions might not be too small to compete if you’d served your members and grown.
Rebirth
I recently spoke with a small credit union CEO who’d taken in a smaller credit union, and immediately discovered the pent-up loan demand among its new members. They’re there. All you have to do is offer something of value to your membership, which is the entire purpose of credit unions.
Other small credit unions are taking a different tact. The $47 million North Park Community Credit Union went 100% virtual, netting recurring savings and moving from a negative ROA to 2.09%. After closing branches and reducing staff to invest in the credit union’s digital services and training, CEO Carma Parrish has positioned the credit union for at least a chance at success.
Did it take a lot of collaboration, technology, training and hard work? HELL YES!
Wasn’t the change scary? Yes, but we must make it anyway.
I believe in understanding and honoring the history of a credit union, but we cannot forever live in that history and expect to succeed. Employers shut down, leaving single-SEG credit unions to languish. This blog, A Strategic Approach to Field of Membership Can Save Credit Unions, is a couple years old now, but instead, the last Sears credit union went down with the ship that had been sinking for decades.
So, what do the credit unions that can still be saved need?
Strategic vision. Who do you serve? Why and how?
Leadership. What do you need from your board? Do you have the right board members in place? What about management?
Guts. Making decisions about new investments in technology or cutting staff is scary and uncomfortable. Tough. Your credit union serves your members, not the other way around.
Collaborating with partners. Small credit unions are proud of the personal service they provide. It’s the same for smaller “vendors” who truly collaborate and partner with credit unions to go above and beyond! Here are a few to try:
CU Strategic Planning: Community Development Financial Institution certifications, grants, product development, DEI education
Open Lending: Auto lending platform to reach more nonprime borrowers, backed by default insurance
Your Marketing Co.: From strategic planning to branding and marketing, YMC will work with your credit union and hold you accountable. Just ask Dori Harvel, CEO at the $24 million Mint Valley FCU!
Ser Tech: A credit data firm, specializing in targeted (yet turnkey!) marketing, credit scores and education, and credit risk management.
Wescom Resources Group: Core data management outsourcing, including updates, failovers, data security and more. And it’s a CUSO!
uncommn Marketing Partners: Beautiful and compliant website design, plus youth savings programs!
Member Support Services: Helping mid-sized credit unions join forces for efficiencies in back- and mid-office operations. Another CUSO!
Communication. This is crucial, internally and externally. You need employee buy-in, and your members need to know what you can do for them!
Will to execute.
I love credit unions. I’ve worked in the credit union community more than 20 years, and I’ve volunteered in it for more than 10. This is where I want to be, but obviously I am frustrated with what I’ve seen happening to this tremendous, collaborative movement. I’m frustrated because I want to be a part of the credit union community for possibly the next 20 years, and I’m afraid I won’t have that opportunity if leadership doesn’t push through their fears to embrace change.
