Why Can’t Bigger Be Better?

This is not an indictment of large credit unions. Instead, I hope it’s a reminder to all of us of why we're here.

I’m afraid my credit union’s outgrown me, and I wonder what that means not just for me, but for our industry. A risk I see in some credit unions, including my credit union is that the larger they get, the further removed decision-makers getfrom the member.Leaders become more focused on the institution than the members who make it up.

This does not have to be the rule. In fact, it may well be the exception but it happens more often than it should. There are plenty of very large credit unions that excel at member-first service. Two that come to mind areBECU($16.4B,Tukwila, WA) and State Employees’ Credit Union($35B, Raleigh, NC).

What made me come to this realization was an event in my life. My ARM is up for reset.I saw the rate for new loans on my credit union’s website was favorable compared to the re-set rate I had, so I called about modification options.Iexpected to pay a fee and modify my loan. I was told they would have to basically underwrite the whole loan again, including an appraisal and title insurance, the whole shebang.

This felt odd to me, as a consumer; they want me to pay for things I don’t need like title insurance and an appraisal. Plus the process of income verification and asset documentation is a pain.My first reaction was: if I have to go throughthis process I might as well look around at other lenders. The fees and process will be the same anywhere.

During the GAC I asked other credit unions how they handle it.During a conversation with Norman Okimoto, CEO of HawaiianTel Federal Credit Union($600.1M, Honolulu,HI) he proudly called his vice president of lending so he could tell me directly about their member-focused philosophy.That philosophy includes being willing to modify an existing loan without underwriting it from scratch. I can sharedozens of other examples of credit unions who shared similar practices.

That’s not all. My credit union also won’t modify an auto loan unless you first refinance it with a competing lender!Yes, I know modifying loans can reduce the profitability of a loan and extend duration on the balance sheet, but italso keeps real cash in members pockets.

In the grand scheme of things these examples are small. But to me they signal that the organization is focused on things that aren’t important to me as a member. It feels like they are more focused on growing and protecting their own balancesheet than their members’.

I met Rex Johnson, a legend to many, for the first time a few weeks ago.He told me that, in his opinion, some of the best-run credit unions in the country are run from the bottom up, not the top down.Those that listen to the member and puttheir interests first are often the ones that have the best sustainable organic growth possibilities.That made sense to me.

My hope is that as the credit unions that make up our movement continue to grow and thrive, they remember why we’re here. We’re here to serve members.The further our leaders get from touching and seeing individual members the harderthey have to work to ensure the culture of the organization clearly puts members first.

As Doug Fecher from Wright-Patt Credit Union ($3.5B, Beavercreek, OH) tells all new employees,If you don’t like helping people, you better find somewhere else towork.

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March 2, 2017

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