A Balanced Approach To Achieving Long-Term Efficiency

How Community First Credit Union of Florida took advantage of opportunities in its external market as well as within its own four walls.

When the competitors of Jacksonville-based Community First Credit Union of Florida began pulling back during the economic downturn in 2009, the $1.2 billion credit union seized the opportunity to reaffirm its community roots and make fundamental changes in the way it conducted business.

Here, Mike Tomko, senior vice president of operations, discusses how the credit union’s changes helped reduce its efficiency ratio from 68.7% to its current 65.7%, according to year-end performance data in Callahan’s Peer-to-Peer. By comparison, the efficiency ratio for credit unions with $1 billion or more in assets is 68.8%. Additionally, its staff earns more in net income per employee, $43,681, than its asset-based peer group, $40,252.

Data As of December 31, 2013
Callahan Associates | www.creditunions.com

Data As of December 31, 2013
Callahan Associates | www.creditunions.com

Source: Callahan Associates’ Peer-to-Peer Analytics

When did the credit union begin focusing on efficiency?

Mike Tomko: When we were in the doldrums of the economic downturn back in 2009. It was clear this wasn’t going to be a temporary situation we could simply hunker down and weather by cutting expenses. We needed to make some fundamental business changes to be successful in what has been called the new normal.

Community First has higher net income per employee than the industry, on average. How much have you focused on improving the earnings side of the equation?

MT: We felt it was important to focus on both sides of the equation. Some of our competitors focused extensively on the expense side without doing anything on the earnings side. We believe that leads to a downward spiral you can’t cut your way to prosperity.

We had to focus on efficiency while also doing things to grow the business. We actually ended up spending some extra money to invest in the areas that would help us grow. This paid off in the long run, as we’re now at record capital and earning levels [with an ROA of 1.43% as of December 31, 2013, according to Search Analyze data on CreditUnions.com].


data as of 12.31.14

  • HQ: Jacksonville, FL
  • ASSETS: $1.2B
  • MEMBERS: 107,525
  • BRANCHES: 17
  • 12-MO SHARE GROWTH: 1.34%
  • 12-MO LOAN GROWTH: 1.43%
  • ROA: 1.43

What specifically did the credit union invest in, even as it was focused on enhancing efficiency?

MT: The first reaction by financial institutions evaluating their expenses is typically to cut marketing and training. We invested in both because we knew that if we cut marketing, we’d be missing out on an opportunity. We are in a competitive market and didn’t see some banks in the media at all during the economic downturn. So we could focus on visibility and invest in awareness.

We also felt investing in training was vital to delivering the type of member service we’re committed to. We continued to train staff while measuring and improving our Net Promoter Score.

How did the credit union communicate with employees and improve productivity?

MT: The employee base is another important component to consider. Employees get nervous if they think you cut expenses all the time. That can send a dangerous message and even contribute to a downward spiral. We have an amazing CEO; he was forthcoming and told staff we needed to restructure. We closed two branches, developed a plan, and communicated that plan. We didn’t lay off anyone.

On the productivity side, we had the tools in place to see how we were matching our resources to member demand. We invested in a workforce management tool and were able to look at three years of historical data and make a significant effort to match resource to demand. We fully implemented the workforce management system in branches in 2012 and were able to save $1 million in teller salaries. Again, we didn’t lay off anyone but through attrition and the workforce management system, we were able to create a teller pool of peak and part-time people. We are still the only financial institution in our area that is open all day Saturday, and we’ve been able to continue that by staffing more effectively.

Tell me more about the communication. How did you share the plan with staff?

MT: Our CEO held town hall meetings and we all attended branch sales meetings to communicate face-to-face, explain the plan, and give staff updates along the way. That type of personal and upfront communication with people made them feel better.

Another thing we did that helped with communication on a daily basis was flatten the organization. In the past, we had regional managers, so I only had four direct reports. I noticed during our meetings that these regional managers were often called away to discuss issues with the branches. We needed to make people more confident about their decisions so issues could be resolved right there at the branch level without calling on a regional manager.

Three years ago we eliminated the regional manager roles and empowered our staff to make more of their own decisions. I now have 20 direct reports, but it’s more effective because there are fewer translations of what we are trying to accomplish I tell them directly and we pay them to make decisions. Obviously, I’m still there to support them and weigh in on sticky issues, but that happens a lot less often than in the past.

Did you make any major process improvements along the way?

MT: Yes, we took seven people internally, put them through Six Sigma training [a methodology used to improve business processes], and then agreed on projects for them to take ownership of and improve. For example, we had a help desk in branch operations and another help desk in the call center. It was clear we needed a better process but before having the training and the time allocated for process improvement, no one was able to focus on it. Now that we have these seven people with a different mentality within the organization, it’s becoming a cultural change to look constantly for more efficient ways of doing things and improve processes.

How did you select those seven employees for training?

MT: The trainers recommended mid-level managers because they are at a level where they can get things done and they understand the organization well enough to identify where the issues are. First, we asked for volunteers. Then, we reached out to two more we thought would make good candidates to fill the full slot of seven. We’ve completed all of phase one and are about to begin phase two.

Any advice you’d share with other credit unions looking to enhance productivity and efficiency?

MT:Yes. How you communicate what you’re doing is important. For example, the workforce management tool we implemented could have been scary like the old idea of bringing in efficiency experts to analyze your staff. People immediately equate that with layoffs or other negative impacts. We communicated the benefits of what we were doing from the beginning. We asked managers if they found it difficult to staff and schedule people and then we showed them the tool that would help solve their challenge. Presenting things in a positive way and demonstrating the benefit to the individual managers and employees versus launching something new as a corporate initiative to reduce expenses was important.

March 17, 2014

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