3 Credit Unions, 1 CEO

In California, three credit unions put a shared-staffing strategy to work at the highest level.

Jon Hernandez, CEO of Mattel Federal Credit Union, Calcom Federal Credit Union, and Nikkei Credit Union

Jon Hernandez CEO of Mattel Federal Credit Union, Calcom Federal Credit Union, and Nikkei Credit Union began his credit union career 20 years ago as a teller at Mattel FCU. The chief executive is now responsible for guiding three independent credit unions, each with their own boards, business plans, 5300 reports, exams, audits, and membership bases.

Although the credit unions operate separately from one another, they do share resources when it is fiscally logical to do so for example, in matters of compliance or technology, real estate loans, marketing, and, of course, executive leadership. It is a strategy that has allowed Mattel FCU($27.3M, El Segundo, CA), Calcom FCU($63.5M, Torrance, CA), and Nikkei($67.8M, Gardena, CA) to remain independent within a cooperative world. It has also allowed them to stay true to their missions and members.

Here, Hernandez discusses how a shared CEO model benefits smaller credit unions and underscores the competitive advantage of the cooperative model.

CU QUICK FACTS

Calcom Federal Credit Union
Data as of 03.31.15

  • HQ: Torrance, CA
  • Assets: $63.5M
  • Members: 8,117
  • 12-MO Share Growth: -2.06%
  • 12-MO Loan Growth: 11.72%
  • ROA: 0.21%

How did you become CEO of multiple credit unions?

I started as a teller at Mattel and became CEO of CalCom Credit Union (then named LICOMTO Credit Union) in 1996. In 2002, I took over a small credit union, Copley, when the CEO passed away. In 2003, City of Downey Credit Union called for help as it transitioned to a new CEO. I was running its board meeting for three months when the board asked if I wanted to continue working with all three credit unions.

And you still serve as CEO for three different credit unions?

Yes, however there have been some changes. Copley and City of Downey have merged with CalCom. In 2004, Mattel asked me to take over as CEO, and in July 2014, I became CEO of Nikkei Credit Union.

CU QUICK FACTS

Mattel Federal Credit Union
Data as of 03.31.15

  • HQ: El Segundo, CA
  • Assets: $27.3M
  • Members: 2,784
  • 12-MO Share Growth: -13.23%
  • 12-MO Loan Growth: 0.35%
  • ROA: 0.03%

How did you and the credit unions’ board members evaluate this strategy?

In the Copley case, I was helping the credit union and I could do it without negatively impacting CalCom, so I did it. When it came to deciding long term, I had to go back to my team at CalCom and ask if I would have their support. Could they assist if anything came up? I had to have the same discussion with the Copley and City of Downey board of directors. We decided we would try it for a four- to six-month period to see whether it was too much to effectively manage.

All three of the boards were supportive. For the Calcom board, it was all about the deliverables. If I could meet the goals, it didn’t matter how I did it.


What other resources do the three credit unions share?

CU QUICK FACTS

Nikkei Credit Union
Data as of 03.31.15

  • HQ: Gardena, CA
  • Assets: $67.8M
  • Members: 6,069
  • 12-MO Share Growth: -3.39%
  • 12-MO Loan Growth: 19.49%
  • ROA: -0.03%

We share certain positions the credit unions can’t afford individually. For example, a compliance officer or technology officer, a real estate loan person, a marketing director. Those are dedicated positions we each wish we had, so we share between two or even among all three credit unions.

Sometimes we share tellers. For example, one of the credit unions was robbed in late December and its tellers needed to go through trauma counseling. So a teller came over from one of the other credit unions for the day.

How does your leadership style help you manage multiple organizations?

I provide the structure and the job expectations, but, really, it comes down to accountability. I’m not present all the time, so I need to inspire my employees to think for themselves and do the right thing for the organization. I ask them to take the initiative and take ownership.

I also have a screen door policy. By the time someone comes to me with a problem, I want them to also provide a possible solution. More than likely, what they propose will be the right thing to do. Through that process, they learn they were right or close in what they thought. That helps them become more confident and independent in the future.

What are the greatest successes for each of the three credit unions?

For CalCom, it is the growth and expansion of our service offerings. The credit union was $4 million in assets with 900 members when I took over. Today, it has more than $66 million in assets with more than 8,000 members. I don’t think we had a checking account when I started. Today we have checking and much more to offer the growing membership.

For Mattel, being able to serve members through the tough economic times was a big success. When the corporates shut down, Mattel had three separate corporate accounts because of the way our branches are geographically dispersed. We went from 10% to 7% capital overnight. Despite that, we were able to sustain and thrive. Today, we’re at 8% capital.

A shared CEO model is not the right approach for everyone, but I believe the industry needs more collaboration. In most cases, we don’t compete with one another so why not join forces where we can?

With Nikkei, we’ve completely restructured the organization and are focusing on loan growth so we can reduce our net losses and break even. We need to continue executing the plan, but we’re on the right path. In a short amount of time, we’ve increased the loan portfolio by 20%. We’re still in the honeymoon stage and there is more work to be done but our initial efforts are paying off.

What can others learn from your shared CEO structure?

A shared CEO model is not the right approach for everyone, but I believe the industry needs more collaboration. Smaller and mid-size credit unions, specifically, just don’t have the economy of scale we need.

If we collaborate with one another, there’s a much better chance we’ll continue to serve our members and thrive. In most cases, we don’t compete with one another so why not join forces where we can? A credit union is a cooperative, so I’m trying to go back to that.

Read more from Jon Hernandez in On Leadership, appearing in the second quarter 2015 issue of Credit Union Strategy Performance.

Sharon Simpson contributed to this article.

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