Reorienting a CU

Pat Smith developed a successful plan that gave Unitus Community CU added recognition in the Portland area.

Pat Smith came to Oregon Telco as CEO four years ago. It had one facility and was scarcely known in its home city of Portland it did not even have an outdoor building sign. For more than 60 years, Oregon Telco had been the credit union for a single-sponsor,with a shrinking base of late. In 2001, it became the first community-chartered credit union in the state, serving six counties in the Portland area. Pat developed a plan of gaining recognition in the community and for expansion. Rebranded as Unitus,the credit union now has $660 million in assets, 59,000 members, and a capitalization ratio of more than 11%. But much more remains to be done. Traditionally the credit unionhad a checking account penetration of only about 35%; it had a small percentageof depositors controlling a disproportionate bulk of deposits, thus creating a risk of disruption should they withdraw their funds.

How are you going to move forward from here?
We have focused on membership growth.We’ve been doing well, growing it at 10 to 12% during the last three years. But now we need to focus on deposit growth as well, particularly in core deposits.

Do you have a specific program?
When I came four years ago, we were a very order taking, transaction-processing and paper-intense organization with no focus on asking the member for their business. Weintroduced a sales culture last year and are in the process of rolling out our new Personal Performance Planning and Review (3PR) program. This is a performance management system, aligning performance measures throughout the organization. It establishesagreed-upon goals both for the organization and each employee, and it’s a huge initiative for us. 3PR involves setting goals for everyone, with a major focus on sales goals for our frontline staff so that each person understands how he or sheas individuals can drive the performance of the credit union. In the process, we want the staff to develop deeper relationships with members.

One of the goals, of course, is to raise checking account penetration. Staff will receive regular reports on our progress; management will meet monthly to discuss accomplishments and to tweak any action plans.

How are you going to work on the deposit problem?
We’ve traditionally paid great rates on CDs, but we need to develop a better deposit mix to control our cost of funds. We are definitely not going to chase hot money.We also want to discourage relationships in which a member opens up an account to take advantage of our CD rates and then doesn’t use any other services.

How are you going to work on the profitability issue?
We’ve been analyzing accounts. We found that profitability can be fickle. We found that, for example, one group of members with four services per member can show a differentprofitability from another group that also has four but different services per member. It came down to how the members were using the credit union. Figuring out the combination of services people use and working to make each combinationprofitable is part of our overall business plan for this year.

We are also working on a program of relationship CDs. If you have a checking account with us, you get a better rate; if you have direct deposit with us, you get an even better rate.

What about electronic relationships?
Our focus on online enhancements and online penetration has taken a back seat to all the other work we’ve had to do for the conversion and branding. Now we are going to turn our attentionto it. We just completed an upgrade of our online capabilities. We’ll be looking at ways to further enhance the online channel and create some strategies around increasing our overall online usage. In fact, we just received a note from a membersaying that he had not been excited about proposed changes, yet when he actually saw them he was thrilled with them.

What other ways are you gaining recognition?
Through community involvement. We are very grassroots. Our employees work on different projects. Each branch we now have six around the region adopts a non-profit organizationas a focus for aid. From both a corporate and a branch level, our credit union supports Doernbecher Children’s Hospital and a variety of agencies that provide assistance to youth, basic food and housing, literacy, and school supplies. Additionally,we have adopted an elementary school where 60% of the students qualify for the free lunch program. Each year we supply every student with a backpack containing all of the teacher-specified school supplies needed for the entire year.

We will also advertise. We’ll use some radio and billboard media but mainly local newspapers, because we think local advertising is best for us.

April 28, 2016

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