Anatomy Of A Leadership Culture

In February, Callahan & Associates visited Iowa-based Veridian Credit Union ($20.B, Waterloo, IA) for a two-day investigation into how the credit union creates a culture where everyone is a leader and everyone is an owner. Learn more in this quarter’s Anatomy Of A Leadership Culture.

 
 

The past few years have been difficult for financial institutions across the United States, but Iowa-based Veridian Credit Union chose to not participate in the recession, says Jean Trainor, CEO of the $2.0 billion credit union. It seems the surrounding area has taken the same approach.

Iowa has fared better during the recession than other states. Its December unemployment rate of 5.7% beats the national average, and as of June 2011, Iowa credit unions have the strongest asset growth – 10.47% – of any state in the country. Now, fourth quarter economic indicators are pointing to a strengthening national economy. Household borrowing increased 9.9% in November. With the addition of 243,000 jobs in January, the unemployment rate fell to a three-year low of 8.3% and remained there in February with the addition of 227,000 jobs, according to the U.S. Department of Labor.

The state has escaped some of the harsher effects of the most recent recession, but that doesn’t mean Iowa is a stranger to hard times. During the farm crisis of the 1980s, the state learned firsthand about financial hardship. Fortunately, its currently robust economy includes not only farming and agriculture – although those industries are ever present – but also manufacturing, biotechnology, finance, insurance, and green energy production. Case in point: Iowa has more than 1,100 wind turbines across 47 wind farms, making it the second largest producer of wind energy in the United States (Texas is No. 1).

Despite a popular belief by the country’s flyover crowd, the state actually has a predominantly urban population. According to the U.S. Census Bureau, the population of the Waterloo-Cedar Falls metropolitan area, where Veridian is based, topped 165,000 in 2010. Iowans and state visitors enjoy arts, entertainment, and recreation in the forms of museums (the Grout Museum District is located in Waterloo), festivals, hiking trails, and camping. There’s Des Moines’ Blank Park Zoo as well as Adventureland Amusement Park, the Iowa Great Lakes of Okoboji, and the Iowa State Fair, which inspired the novel and subsequent Broadway musical State Fair. And don’t forget those infamous bridges of Madison County.

The ambitious Hawkeye State now hopes to become the healthiest state in the union by 2015 in terms of physical, emotional, and mental health. And with the help of local establishments such as Veridian Credit Union, the state can add financial well-being to that list.

With slightly more than $2 billion in assets, nearly 166,000 members, and more than 500 employees, Veridian Credit Union is the largest credit union in Iowa. John Deere employees founded the credit union in 1934. John Deere Employees Credit Union transitioned to a community charter, with the name John Deere Community Credit Union, in 1986. Twenty years later, the credit union undertook an extensive rebranding campaign and became Veridian Credit Union. Its name reflects its roots – “verdant” is Latin for green, an homage to John Deere’s trademark colors – as well as its present and future – “veritas” is Latin for truth, a core value of the credit union.

If past performance is any indicator of future success, the largest credit union in Iowa has a lot to look forward to.

“We’ve experienced strong growth,” says Monte Berg, senior vice president of finance at Veridian.

Indeed, the credit union has averaged 9% loan growth and 11% deposit growth since 2006. It has maintained its target capital ratio of 9% to 10%, and its earnings are strong. It’s ROA at year-end 2011 is 1.32%, and its loan delinquency and loan charge offs are on average half its peer average.

Although it is based in Waterloo, IA, Veridian’s community charter gives it a presence in 35 counties. Veridian faces some tough competition with national banks, community banks, and credit unions in its three major markets of Des Moines, Cedar Rapids/Iowa City, and Waterloo/Cedar Falls, but credit union awareness helps support Veridian’s strong market share.

“The Cedar Rapids/Iowa City market has three significantly sized credit unions, so it just seems like credit unions as a whole do well in that market,” says Doug Gilbertson, Veridian’s senior vice president of operations. Both Collins Community Credit Union ($685.4M, Cedar Rapids, IA) and University of Iowa Community Credit Union ($1.4B, Iowa City, IA) are among the area’s top 10 depositories.

And off the books? Veridian has excelled there as well. According to a 2011 employee opinion survey conducted by the Bankers Administration Institute (BAI), 89% of respondents said Veridian makes sufficient effort to elicit ideas from employees, 90% of respondents said Veridian provides sufficient product knowledge training, and 91% of respondents said Veridian uses feedback from employees and internal customers to improve products, services, and quality of work. Overall, employee satisfaction is an impressive 10% higher than that of its survey peers.

“I don’t like to tell people what to do,” says Veridian CEO Jean Trainor. “I think it’s more valuable and we get better decisions if we have a team approach.”

It’s that attitude, along with its focus on leadership, community development, and inclusion that has helped the credit union excel in America’s heartland.

 

 

 

March 12, 2012


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