Top-Level Takeaways

• Whitefish uses member stories to show how it’s part of larger, meaningful narratives.
• Member-first storytelling builds trust in ways traditional marketing can’t.
• Impact shows up in reputation, advocacy, and emotional connection rather than immediate conversions.

Marketing for Whitefish Credit Union ($2.1B, Whitefish, MT) doesn’t always lead with products and services. In fact, in some of its content, they barely shows up at all. But through a long-running series of credit union member stories featuring professionally produced short films and companion articles, the Montana-based cooperative is spotlighting the lives of its members with the credit union playing a supporting role.

“The credit union story is caring about members’ stories, their lives, their goals,” says Josh Wilson, senior vice president of marketing at Whitefish. “How do you tell someone’s story where the credit union is part of it but not the center? It’s about showing how the credit union fits into their life and helps them accomplish what matters to them.”

Today, the credit union has produced 30 of these stories, each focusing on an individual or business that makes the Whitefish field of membership stand out in the market.

“Frankly, the most interesting stories often come from people who are a little quirky or have unique perspectives,” Wilson says.

Some examples include the story of a historic ranch that might or might not have a ghost and a local woman known fondly as Sanders County’s “Plant Lady.”

Over time, this strategy has positioned Whitefish as not only a place to bank but also an active participant in its community. Wilson describes the videos as a love letter to its members and their engagement with the credit union versus something that’s explicitly about Whitefish Credit Union.

Where Do Stories Come From?

To make these stories possible, Whitefish hires an outside videographer that specializes in documentaries. Such a videographer brings a story-first lens to the end product. The credit union’s in-house team serves as producer.

As for where stories originate, that starts in the branches.

“Who shows up often?” Wilson says. “Who tells stories? Who stands out? We built a list of members who branch staff know personally pretty quickly.”

Part of what makes these member stories stand out is the distinct, strong identities of each community.

“These are tight-knit communities, the kind where people come out of their businesses to cheer on the high school football team as the bus heads to an away game,” Wilson says. “People know each other.”

When Whitefish started the project, it referenced brands like Yeti to explain to sources the style of storytelling it was hoping to capture. Today, the credit union leans on its own library of previous examples. Still, some people decline the request, and that’s okay. But when a member does say yes, the credit union and videographer take special care to make sure the process is comfortable.

“We do a pre-interview with the videographer and producer,” the marketing leader says. “It helps them understand it’s just a conversation, even with a camera present, and reassures them that we’ll treat their story with dignity and respect.”

Beyond surfacing story ideas, producing stories from start to release requires approximately a year.

“We collect stories at the end of the year, spend two to three months vetting them, then produce seven or eight stories over a two-and-a-half-week period when the videographer flies out,” Wilson says.

The credit union spends the back half of the year editing and building the production calendar. At the beginning of the following year, Wilson’s team executes the distribution strategy as part of Whitefish’s marketing plan.

Where Do Stories Go?

According to Wilson, the biggest challenge has proven to be distribution.

“Having a firm game plan from the beginning on how you’ll distribute the content is probably the biggest lesson,” he says.

When a member’s story is ready to share, Whitefish publishes the full version on its website with an accompanying written article and still photography. It also cuts short-form videos for platforms like Instagram and Facebook in addition to paid advertisements at local broadcast stations and movie theaters.

The credit union’s most unconventional distribution channel, however, is film festivals.

“We sponsor them and ask if they’ll play our stories instead of traditional commercials,” Wilson says. “Audiences often think they’re part of the festival lineup. They applaud and engage. Now, film festivals actually reach out to us asking to include our stories because they want that local connection.”

Whitefish also uses member story videos in conversations with policymakers, with Wilson serving as the credit union’s representative for state-level advocacy.

“As the largest credit union in the state, we’re active legislatively, but we’ve found that many lawmakers don’t fully understand what credit unions are or how we’re different from banks,” he says.

These member stories help humanize the work Whitefish does by connecting it to real, everyday Montanans —  otherwise known as voters and constituents. The videos also help explain things like commercial lending and how Whitefish’s approach differs from that of large, nationwide competitors.

“For us, it might mean helping a bakery on Main Street buy a couple extra ovens or a brewery purchase a property to create workforce housing,” Wilson says. “That’s the kind of commercial lending we do. Not massive out-of-state developments but homegrown businesses serving their communities. These stories show that.”

All of this is why high-quality production matters.

“This isn’t content meant to go viral or hit a million views,” Wilson says. “We’re focused on meaningful interactions, and that’s how we’ve led with this strategy.”

The result is a body of work that compounds in value, with each new story adding to the credit union’s broader narrative.

Returns That Reflect Mission

For Wilson, that long‑term payoff matters more than quick metrics.

“I teach data marketing at the graduate level,” Wilson says. “As someone who’s data-driven, this started as an experiment.”

Whitefish intentionally carves out small parts of its budget to test theories and concepts without attaching a direct ROI. The idea is to learn what works and use those insights to influence larger marketing campaigns.

“There wasn’t a direct ROI component to this, and there still isn’t because it’s difficult to directly attribute video content, whether paid or organic, to loan applications, mortgages, or deposit accounts,” Wilson says. “What we have seen is that when we target these stories to specific audience segments and share them through social media, film festivals, and our partners, something tangible happens.”

That something tangible is a mixture of strong brand differentiation, member engagement, and community trust. Visibility from these stories attracts both new members and new hires, each citing the work the credit union does as the reason they came in.

“We own that space in a way traditional banks and other businesses don’t,” Wilson says. “I received a job application this week from someone who referenced seeing our member story at a film festival this month and wrote in their cover letter ‘this is the type of place I want to work.’”

The impact of storytelling like this doesn’t always show up in traditional KPIs, and for credit unions accustomed to measurable outcomes, this approach can feel uncomfortable.

“This is qualitative data, but it’s essential to demonstrate the real-world effect your credit union has in its community, whether you’re in a large metro area or you’re a SEG-based credit union,” Wilson says. “You have to humanize what a credit union does in a very competitive industry.”

Your members’ stories belong here. Join fellow credit unions in uplifting the everyday moments that define the movement. Add your member story and help spark a ripple of inspiration across the industry. Submit a story today.

The post The Case For Marketing That Doesn’t Lead With The Credit Union appeared first on CreditUnions.com.

As consumers navigate these record-breaking holiday costs, credit unions across the country are stepping in to make a meaningful impact through creative financial solutions, philanthropic efforts, and community programs. Check out the standout efforts below.

Collaboration Makes For Meaningful Impact

Every year, a cohort of Oklahoma credit unions joins forces with a different local nonprofit to make a positive impact on the Oklahoma communities they serve. This November, 10 credit unions teamed up with Rebuilding Together OKC to make home repairs for a low-income senior and veteran.

Sarah Flanagan, manager of The WEOKIE Foundation, says the collaboration has been the highlight of her year.

“My favorite part of this experience was walking up to the home and seeing volunteers proudly wearing their credit union shirts working side by side to make a difference in this individual’s life,” she says.

Forty-two volunteers contributed a combined 121 hours across the day, making repairs to the home’s siding, floors, countertops, and more.

In a local news segment, homeowner Kent Murphy shared his home had been in his family since his grandparents.

In Minnesota, a day of service launched in 2013 by Affinity Plus Federal Credit Union ($4.4B, St. Paul, MN) has since blossomed into a multi-state initiative. Today, the Minnesota Credit Union Network (MNCUN) sponsors the initiative under the CU Forward Day banner.

Andrea Molnau serves as the director of public engagement and strategic initiatives for the MNCUN. She says the sizable impact that comes from dozens of credit unions working in tandem demonstrates how the industry can amplify its power to make a difference.

“It feels good to put some good in the world,” Molnau says. “That’s part of the attraction of the day.”

MNCUN has packaged the program and made it available to other states, with Illinois, Michigan, Wisconsin, Pennsylvania, Maine, and others now also carrying the mantle. The toolkit includes information on the day itself, how to promote it to credit unions, how to organize around it, what data to collect, sample media materials, and more.

Read more about this multi-state day-of-caring initiative in “There’s Nothing Random About These Acts Of Kindness.”

Seasonal Solutions Ease The Strain

Credit unions are also stepping up ahead of the holidays with limited-time promotions and relief programs.

First Choice Credit Union ($77.1M, New Castle, PA) is offering eligible members the opportunity to skip a personal or auto loan payment through Jan. 30, 2026. Sierra Pacific Federal Credit Union ($176M, Reno, NV) is running a similar promotion through the end of the year on any one qualifying loan payment.

Holiday loans are another popular tool to ease the financial burden of this time of year. AmeriCU Credit Union ($2.8B, Rome, NY) recently announced a holiday loan program that provides up to $5,000 on an unsecured personal loan with rates as low as 5.75% APR.

Other credit unions mix and match multiple seasonal offerings. CPM Federal Credit Union’s ($673.2M, North Charleston, SC) “Holiday Happenings” include a holiday loan special, a skip-a-pay option, and a community-giving campaign.

Credit unions aren’t reserving innovative and impactful products solely for the holidays, though.

Earlier this year, First Alliance Credit Union ($284.4M, Rochester, MN) launched a savings certificate designed for depositors who want their money to not only earn interest but also actively support community-impact lending. The minimum deposit for the Impact CD is $100,000 and term options include five-, seven- and 10-year certificates with APYs ranging from 2.0% to 3.0% (although rates might change). Importantly, the credit union earmarks funds raised through these deposits for things like low-income mortgages and vehicle loans, small-business growth, under-banked or non-traditional credit profiles, and others seeking a “financial fresh start.”

“I’ve always said I see us not as a financial institution but as a community development institution that happens to offer financial services,” says CEO Brent Rempe.

Read more about turning private prosperity into shared possibility in “First Alliance Debuts Mission-Driven Deposits.”

Foundations Fuel Community Giving

Credit union foundations play an invaluable role in the industry, and the season of giving naturally keeps many executive directors and their teams extra busy.

In Utah, the Mountain America Foundation solicited public involvement in this year’s Giving Tuesday campaign. The foundation will award $1,000 grants to 28 nonprofits, with organizations selected through community voting that took place from Oct. 20 to Nov. 14.

“By voting, our members, employees, and the public, can help strengthen organizations that are making meaningful contributions in our communities,” says Suzanne Oliver, executive director of the Mountain America Foundation. “We are eager to see where the $28,000 in funding will go. Together, we can uplift lives and build brighter futures.”

Read more about Mountain America’s foundation work in “From Foster Care To Financial Wellness.”

In Louisville, KY, the Park Community Foundation’s Pathways to Prosperity grants fund projects backing education, financial wellbeing, and community. Since 2019, the foundation has contributed more than $580,000 to local causes that support these three areas of impact. The 10 nonprofits selected as grant winners for 2025 will receive $97,960 in total, with winners announced on Nov. 21.

“These organizations are small, grassroots nonprofits that are making a difference and changing lives in Kentucky and Southern Indiana,” says Shannon Kisselbaugh, executive director of the foundation.

Read more about how Park Community reimagines local philanthropy “How A Credit Union Foundation Builds Equity And Access.”

Real People. Real Impact. Real Credit Unions. Credit Unions are making a meaningful impact in their members’ lives, from gestures big and small. For proof, check out The Member Story Project on CreditUnions.com. Don’t forget to submit your own!

The post 3 Ways Credit Unions Ease Holiday Financial Stress appeared first on CreditUnions.com.

Montana Federal Credit Union ($336.5M, Great Falls, MT) welcomed a new chief financial officer, Pat Woodall, in August 2021 and a new president and CEO, John Hageman, in 2023. Here, the duo shares their internal and external perspectives on the credit union’s recent executive transitions.

How did the credit union prepare for the latest CEO transition?

John Hageman: The way I prepared is probably a little different from how the organization prepared. Specifically, I focused on building different skillsets and went through a leadership training program to help me shorten the learning curve. I previously served as the chief financial officer, but I was also afforded the opportunity to move into the executive vice president role prior to the transition. This allowed me to work closely with our retiring CEO, Steve King, and bounce ideas off him while he was still here. I was fortunate to be able to do that.

In terms of the credit union in general, succession planning is a work in progress. At our size, it can be difficult to stretch the org chart vertically, so we tend to be more horizontal. We’re trying to cultivate leadership in all positions — from supervisors to our leadership team — by providing more training.

Montana CU’s new CFO comes from outside the industry. What are the benefits and drawbacks of taking an external versus internal approach?

Pat Woodall: Most of my experience was in healthcare and other industries, and I was able to come into the organization with a different viewpoint. As an outsider, it can be more challenging to jump in at such a high level and be productive immediately. However, John did a great job training and mentoring me for the first six months I was onboard. He lives and breathes this, and it made me decide this is somewhere I should be.

JH: You want to cultivate your staff and put them in positions to succeed. There are tons of pros for internal hires. They know the culture and the experience of working at the credit union, and they understand how they fit into their new role. However, external recruitment brings in a fresh perspective and allows you to tap into skillsets not currently present in the credit union. It all comes down to time and place and what’s best for the credit union when it comes to internal versus external hires.

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John, please talk more about your transition to CEO.

JH: Our board did not look externally, but there was a definite process, and I wasn’t officially promised the role in the beginning. So, I focused on trying to learn as much as I could from Steve and put myself in a position where the board would have confidence in making that decision. I think the most important thing is maintaining open communication. I let people know that becoming CEO was something I’d be interested in at some point in my career and asked for development opportunities to help prepare and prove myself.

How are both of your new roles going so far?

JH: The first four months have gone by fast. As prepared as we were, it’s still different. However, I feel fortunate that I already know our culture and don’t have to work through that adjustment period on top of all the decisions that have to be made in an interesting economic environment along with the various projects, conversions, and potential field of membership expansions we have going on.

PW: It’s going well. Shadowing John in the beginning was helpful. This is the job he had, and he did it well, so I have a playbook there and a coach. I’ve been at other organizations where that’s not the case. I’m still learning and asking questions. Every day is a new challenge, but I can’t imagine having any more support than I’ve had here since my very first day.

What advice do you have for others?

JH: Don’t discount the effect change has on an organization and on teams and staff members. I don’t always know the complete answer, but I try to be mindful of what change means to everyone as a team and individually. Everything takes time, but if you focus on why we’re here — to serve the members and one another — then things will fall into place.

Also, there’s a lot of opportunity, which isn’t always recognized. Executive positions need to be filled in the industry, and it’s exciting to think about the scale of opportunity that is out there for people who have been working toward those goals.

This interview has been edited and condensed.

The post How To Prepare For A Smooth Executive Transition appeared first on CreditUnions.com.

Top-Level Takeaways

• Paul Herendeen’s background is in environmental engineering; he joined Clearwater Credit Union as its first director of impact market development.
• Herendeen helps determine what products and services to offer based on triple bottom line principles and member demand.

Paul Herendeen is an environmental engineer who has found a new industry where he can put his training to good use: financial services.

For the past five years, Herendeen has been the first and only director of impact market development at Clearwater Credit Union ($921.0M, Missoula, MT). There, he’s responsible for leading efforts that build the progressive cooperative’s triple bottom line (TBL) of economic, social, and environmental impact.

Clearwater is one of two U.S. credit unions – along with Vermont State Employees Credit Union ($1.1B, Montpelier, VT) – accepted as members of the Global Alliance for Banking on Values, which provides the definition of TBL as a framework for delivering sustainable development in those three areas.

Herendeen reports directly to CEO Jack Lawson, who for the past few years has led the execution of the credit union’s strategic mission to “be a force for good in banking.” Herendeen supports that work by ensuring Clearwater adheres to its four core values of inclusion, empowerment, cooperative ownership, and impact.

“Everyone in the credit union builds their work around this mission and these values,” Herendeen says. “But we needed someone with the time to dig into the question of how to broaden our impact — to read, research, meet people, and, ultimately, help develop products and services that advance our mission.”

Green Lending Research

That someone turned out to be Herendeen, an environmental scientist and engineer with no banking background. Herendeen joined Clearwater from a consultancy where his work included dam design and groundwater chemistry. Before that, he did bioenergy systems work at Colorado State University and spent a few years as a research coordinator with the U.S. Forest Service at its Pacific Northwest Research Station.

During the past several years, Herendeen says, he has honed his research and quantitative skills as well as developed an appreciation for the critical nature of collaboration.

These attributes made him a promising candidate for the position at Clearwater. But something else made him stand out, too.

“I know if I’m confused by something, it’s because that something is confusing, not because I’m not capable,” he says. “That’s a subtle but important point to remember when venturing into new intellectual territory. It helps to have the confidence to say: ‘I didn’t quite follow that, can you explain it again?’”

Herendeen puts his curious and collaborative nature to work every day as he conducts the research and outreach that lays the foundation for Clearwater lenders to build their own relationships.

“Our business lines – consumer, commercial, and real estate lending – are good at what they do and are very busy,” Herendeen says. “The point of my position is to have the time and bandwidth to get out into the community, make connections, do the research, and then work with the business lines to develop products and services to serve unmet needs. I research, then I work closely with the lenders on implementation.”

I know if I’m confused by something, it’s because that something is confusing, not because I’m not capable. It helps to have the confidence to say: ‘I didn’t quite follow that, can you explain it again?’

Endless Opportunities In Big Sky Country

In Big Sky Country, mining and ranching are being joined by tourists and new permanent residents drawn to the region’s natural attributes. Standing up a green lending business here should be no trouble for Herendeen, who, along with having extensive fieldwork, holds a master’s degree in biological and agricultural engineering from Cornell University. To make matters even better, Herendeen has support at the credit union, too.

“The opportunities are nearly endless,” Herendeen says. “Our board and management completely support our mission, and I have free rein to pursue things that align with it. The challenge is that we’re working on big, long-standing problem. There aren’t any quick fixes.”

That’s not to say the credit union isn’t trying. Three areas of particular focus for Herendeen and Clearwater are energy efficiency, affordable housing, and local food and agriculture. Loans made in connection with the first two already have helped Clearwater book $223 million of TBL loans. Initial steps in food and agriculture work are still underway.

“This is a good example of this kind of impact work,” Herendeen says. “Food and agriculture is an area in which we’re just starting to build experience, and we’ve had a hard time identifying an unmet financial need. We’re reaching out and meeting people, learning the landscape, and trying to find ways to have an impact.”

Clearwater Credit Union is growing rapidly by embracing values-based banking and characteristics of life unique to Big Sky Country. Learn more in “Banking On Values In A Crowded Montana Market.”

Herendeen says he feels lucky to be working on things he finds interesting but believes many people could do his job well, each bringing their own approaches and strengths. However, anyone would need a few core competencies to succeed.

“There are some key elements,” Herendeen says. “First is strong research and analysis skills. These are complicated issues, there’s a lot of information out there – of varying quality – and you need to be able to assess the problem and potential solutions. The ability to think critically, independently, and quantitatively is important.

“Second, you need to be able to communicate clearly,” Herendeen continues. “Good communication to me means the ability to listen to and understand what other people are telling you and distill a complicated topic into an understandable message.

“Finally, you need to be able to work productively with all kinds of people, inside and outside the organization.”

Social impact is difficult, if not impossible, to precisely define and measure. We aim for enough information to make decisions without spending too much energy chasing too much precision.

Ecosystems Of People And Organizations

Working with all kinds of people, inside and outside the organization, is essential, Herendeen emphasizes. The areas on which he is focusing already have a well-developed ecosystem of people and organizations who have been doing this for years, if not decades

“They’re the real experts,” Herendeen says. “I go to a lot of conferences, buy a lot of coffees, and foster connections with local leaders.”

There’s no shortcut for that kind of relationship development. Herendeen wants people to get to know Clearwater and understand it is dedicated and serious about sustainable development. That’s how he’s helping those outside the credit union see Clearwater in a new light.

“They know we’re a resource for the financial perspective, not just for actual lending, but for ideas and answers to their questions,” Herendeen says.”We’re out in the community and happy to sit down and kick ideas around.”

Clearwater is serious about sustainable development, but determining and defining how much impact Herendeen and Clearwater are having can be elusive.

“On the one hand, it’s important to measure our impact and mission alignment,” he says. “On the other hand, social impact is difficult, if not impossible, to precisely define and measure. You run the risk that the measurement itself becomes the project. We aim for enough information to make decisions without spending too much energy chasing too much precision. It’s a work in progress, and something we’re always trying to improve.”

The post What Does An Environmental Engineer Do In Financial Services? appeared first on CreditUnions.com.

Throughout September, CreditUnions.com has featured stories of how the industry is making an impact in consumers lives, including everything from strategies to reduce delinquencies, recruit younger members, providing financial education, and more. Read on for highlights from this month’s coverage.

Going All In For Community Development

As Clearwater Credit Union ($921.0, Missoula, MT) has embraced values-based banking, it has also turned to a program from the federal government to stretch its impact further. Having recently been certified as a Community Development Financial Institution, leaders from the Montana-based cooperative discuss the meaning of CDFI status, their struggles meeting the lending needs in their communities, and more.

Read more in “Clearwater Embraces Its CDFI Status.”

Financial Education Abounds

When Kentucky schools resumed in-person instruction in 2021, schools across the state were also in their first year of providing state-mandated financial literacy courses. Enter Abound Credit Union ($2.0B, Radcliff, KY), which stepped in to help, meeting with local schools to develop in-house curriculum that would not only meet state requirements, but keep students particularly younger ones engaged and entertained, all while taking some of the burden off of teachers. The end result has not only helped students from grades K-12 better understand money management and meet the state’s requirements, but also reinforced the credit union’s partnerships with local schools.

Read more in “Adding Fun To Financial Education.”

A Tie Between Financial Literacy And Lower Delinquency

Want lower delinquency rates? It might be time to roll out additional financial literacy offerings. According to data from Callahan Associate, among institutions with more than $100 million in assets, credit unions providing financial literacy education consistently report lower delinquency rates than those that do not. At midyear, there was a 21-basis-point difference in delinquency rates between those two types of institutions. What’s more, delinquency rates consistently trend downward at credit unions that make education tools available to members, whereas rates move up and down in some cases dramatically at credit unions that don’t provide such resources.

Read more in “Financial Literacy Offerings Drive Down Credit Union Delinquency Rates.”

Atomic’s Key To Capturing Young Members

A student-run branch program from Atomic Credit Union ($532.5M, Piketon, OH) that began 11 years ago with just five branches has expanded to nearly 60 branches and 421 volunteer student workers, making it one of the largest such programs in the nation. Along with nearly 6,000 active accounts and deposits totaling $3.1 million, the program is teaching students across the region about consistent saving and good financial habits.

“We provide each student with their initial deposit to open an account to ensure there is no one left out of the program,” says Atomic CEO Tom Griffiths.

Read more in “School Branches Earn High Grades For This Ohio Cooperative.”

Financial Wellness? There’s An App For That.

Service Credit Union ($5.2B, Portsmouth, NH) is helping improve financial wellness for members of all ages particularly younger demographics with Fin-Life, an app-based financial-education tool that uses psychology and behavioral science to reach consumers where they already are on their phones. The app is intended to teach users everything from budgeting to savings, tax planning, understanding debt and credit scores, retirement preparation, and more.

Read more in “Service Puts Financial Wellness In Members’ Pockets.”

The post Impact Strategies From September 2022 appeared first on CreditUnions.com.

Clearwater Credit Union ($899.0M, Missoula, MT) takes its name from the pristine waters that crisscross the state. Like a swelling river, Clearwater has expanded from three counties to 20 across the western side of the state during the past decade and has become one of the nation’s top-performing credit unions by nearly every performance metric.

Since 2013, Clearwater’s assets have more than doubled, rising from $383 million to $899 million, and the credit union projects it will reach $1 billion in 2023. Over the past few years, the credit union expanded its charter, underwent a name change, became the state’s largest Community Development Financial Institution (CDFI), completed a core systems transformation, and dramatically expanded its lending program.

CEO Jack Lawson attributes Clearwater’s success to the credit union’s move to values-based banking in 2017. Clearwater’s strategy is to rise above the competition in the crowded Montana market with a strong commitment to environmental protection, financial inclusion, member centricity, and full transparency.

“Montana is not under banked,” Lawson says. “There are [45] other good credit unions operating in the state and a lot of good locally owned and regionally owned community banks. It’s a competitive environment. We win on values-based banking, while staying competitive on price. That and the ability to assemble good teams are what’s delivering our success today.”

Montana is not under banked, Lawson says. There are [45] other good credit unions operating in the state and a lot of good locally owned and regionally owned community banks. It’s a competitive environment. We win on values-based banking, while staying competitive on price.

Just how competitive is the Montana market? By Clearwater’s own estimates, there’s one financial institution for every 32,000 people nationwide. In Montana, the fourth-largest state in terms of land area but with 1.1 million people among the smallest in terms of population, that ratio is one institution for every 12,790 residents.

Clearwater’s transformation to values-based banking has been a journey, much like Lawson’s professional career. He initially focused on biology and environmental studies at the University of Vermont before attaining a master’s degree in development economics at the University of London.

Lawson was working on a doctorate in economics at The New School for Social Research in New York City when he stumbled into an opportunity to help organize a small credit union serving predominantly low-income Spanish-speaking immigrants. That institution ultimately became Brooklyn Cooperative FCU ($55.6M, Brooklyn, NY), and after a decade as the founding CEO, Lawson moved on to Self-Help Federal Credit Union ($1.8B, Durham, NC). Coming aboard there in 2008 as chief operating officer and working out of Self-Help’s California offices, Lawson joined at a pivotal time, given how the Great Recession impacted the California market.

“Five years into that, I got hungry to be a CEO again,” Lawson says. “I was eager to get back to strategic and outward-facing work, so I started hunting around the country. Luckily, I landed the job at Missoula.”

According to Lawson, Missoula Federal Credit Union, now Clearwater, had a strong board, a brand with nearly full penetration in the Missoula market, and a reputation as a highly engaged, good corporate citizen. But the credit union had room to improve.

“We lacked a clear sense of strategic purpose, and our lending engines were broken,” he says. “We weren’t lending effectively. We had come out of the Great Recession later than many communities and later than most financial institutions. We needed new thinking about the way we led teams on pricing, underwriting, marketing, goal setting, and performance metrics.”

Since then, the lending program mortgage lending in particular has turned around. Clearwater’s loan-to-asset ratio has moved from 32% in 2013 to more than 60% today, even with the credit union selling approximately 40% of the mortgages it originates to the secondary market.

“It’s still not where we need to be, but it’s much better,” the CEO says.

Leslie Halligan, who joined the credit union’s board of directors in 1991 when the institution had just $83 million in assets, has witnessed dramatic changes at the cooperative.

“When I first started, the credit union was almost like a savings and loan a credit union where people came to get a car loan,” says Halligan, a circuit court judge and former prosecutor and district attorney. “Then we started to bring in more services to work toward being a full-service financial institution. The board is proud of the performance of the credit union, which has allowed us to continue to expand services and support the membership.”

Over the years, the credit union has lost many battles for high-net worth depositors to banks; however, it has filled an important role of supporting low- to moderate-income members.

Consequently, the credit union built a strong reputation of community impact. According to Halligan, two major changes brought greater focus to that mission: bringing in Lawson to replace a retiring CEO and adopting the principles of values-based banking in 2017.

As CEO, Lawson tackled CDFI certification and led the rebranding from Missoula Federal Credit Union to Clearwater Credit Union (which included the conscious decision to drop Federal from the branding, although it retains a federal charter). All of those developments came at a time when the state’s economy was shifting from industries such as logging, mining, and agriculture to tourism and outdoor recreation.

“Montana folks are fiercely independent, but they’re also interested in the environment, interested in communities, interested in the growth of families, and interested in the success of individuals,” Halligan says. “Values-based banking fits well with those our core values.”

In 2017, Clearwater became the second U.S. credit union behind Vermont State Employees Credit Union to join the Global Alliance for Banking on Values (GABV), an international network of forward-thinking financial institutions that collectively serves more than 50 million customers.

At Clearwater, the values-based approach revolves around five principles:

• Member-centered
• Long-term resiliency
• Local economy
• Social and environmental impact
• Transparency

Since transitioning to values-based banking, Clearwater’s accomplishments to date include achieving carbon neutrality in its business operations, attaining a member growth rate of 4.3% in 2021, and donating 5% of its net income to charities, with $755,530 going to 151 nonprofit organizations in 2021.

“We set metrics under each of the principles of values-based banking,” Lawson says. “That is what our board holds us accountable to. It helps us drive forward to demonstrate a deeper commitment to values-based banking.”

Transparency to its 55,000 members is a key pillar of values-based banking, the CEO adds. Clearwater shares its five-year strategic plan along with overall compensation data on its website.

“We serve pretty detailed compensation metrics that help describe how we pay our workers, how women and men are paid differently or similarly in the same job classes, and the distance between the lowest- and highest-paid person in the organization,” Lawson says. “We also publish detailed environmental-impact statements that describe solid waste production, water consumption, and greenhouse gas emissions from our business operations as well as from our balance sheet. Those transparency initiatives are important to deliver impact and hold ourselves accountable to measuring and sharing where we’re succeeding and where we’re not.”

Values-Based Operations

Values-based banking principles are evident in the way Clearwater interacts with members in its eight branches, giving impetus to long-considered improvements such as universal associates, more inviting open floor plans, and interactive teller machines in the drive-thrus.

“We got rid of teller lines completely,” says Clint Summers, chief operations officer at Clearwater. “If somebody needs to come in and do a quick cash transaction, they have access to our universal associates. It’s more like we’re working through it together. We built toward this hip-to-hip model of sitting down next to people versus sitting behind a barrier. This allows people to feel more welcome.”

Clearwater’s open floor model, so far implemented at three branches, was partially inspired by branches in Germany. Meagan Kraft, Clearwater’s senior vice president of operations, was attending a GABV Leadership Academy in Berlin and snapped a few photos of open lobby. An architect worked with Clearwater’s team in Montana to design a new branch with a pod-style floor plan.

The efficiencies it creates are huge, Kraft says. “We don’t need giant branches to provide service to our members. The new layout with the pods allows members to get help sitting on a couch while they’re having a cup of coffee.”

Clearwater’s philosophy for branches is to never put a screen between an employee and a member who steps inside for service. For members who don’t want to step inside, the credit union is implementing a new online banking system. Glia, next-generation digital-communication platform, will enable contact center staff to interact with members via web, mobile, chat, email, co-browsing, and two-way video. It also provides seamless transfer to others.

Three years ago, the credit union replaced its core banking system with Corelation’s Keystone, which enabled numerous improvements that support member services. One key enhancement, Summers says, is the ability to automatically trigger surveys with members when they open or close an account or make changes to services or loans. Clearwater’s response rate to those is approximately 10%.

“We’re getting those notifications almost immediately so we can reach out,” Summers says. “That’s usually me or the senior vice president of operations. We’re looking at how to connect with those people immediately.”

Rethinking Consumer Lending

Consumer lending is another area of the credit union that has been growing rapidly, partly because of the focus on values-based banking, says Bill St. John, senior vice president of consumer banking.
Business for term loans, auto loans, and solar loans nearly doubled from $48 million in 2015 to $87 million in 2021, and the credit union is on track to reach $100 million in 2022. Unlike other financial institutions, Clearwater doesn’t rely on computer-based auto-decisioning to underwrite loans.

“This allows us to be more responsive to a variety of different levels of credit borrowers,” St. John says. “All of our lenders know how to look at credit, collateral, capacity, and character to see what makes sense for the credit union and what makes sense for the member.”

To address the needs of low- to moderate-income borrowers, Clearwater has introduced a variety of innovative programs, from a payday lending alternative to non-prime auto loans. Launched in January 2021, Auto Boost targets borrowers with no credit score or credit scores lower than 620 with loans in the 10% to 15% interest rate range. Recognizing that most of these borrowers are unlikely to walk into a branch, the credit union reached out to a half-dozen independent auto dealerships to spread the word about the new program. To date, Clearwater has made 63 non-prime loans with few delinquencies and no charge-offs.

“We verify income and we have some other special qualifiers, but for the most part, we’re saying if they don’t have any auto charge-offs and no bankruptcies within the past two years, we don’t care how low their credit score is,” St. John says. “If they have the ability to repay and they’re putting some cash down on it so they have skin in the game, then let’s make some auto loans.”

According to St. John, the credit union has loaned slightly more than $400,000 through its Auto Boost program, but that represents 63 people who might not have been able to get an auto loan or would have paid a higher interest rate.

Similarly, the credit union targets members struggling with repetitive overdraft fees with its Overdraft Sweep program. Started in 2017, the program treats overdrafts as short-term loans rather than fee opportunities. To date, overdraft loans have saved members more than $1 million in fees.

Clearwater sees these values-based initiatives as a competitive advantage in the crowded marketplace.
“Everyone says, Come see us, we’re local,'” St. John says. “We were saying the same thing as everybody else. Now, we are still local, but we talk about values as our differentiator.”

Looking Ahead

Looking ahead in the face of rising interest rates and a slowing economy, Clearwater is actively preparing its balance sheets for continued growth with an infusion of secondary capital. Recent growth spurts diluted the credit union’s net worth ratio from 11% in 2019 to 9% in 2020.

In response, Clearwater in 2021 was among less than 2% of the nation’s credit unions to receive secondary capital from the Emergency Capital Investment Fund administered by the Treasury Department. The credit union is implementing $16.8 million of that secondary capital in 2022 and expects to return Clearwater’s net worth ratio to above 12% so it can continue as a well-capitalized institution.

“From a net worth standpoint, it will allow us to expand and take on additional risk, and continue lending in those different markets,” says John DeGroot, chief financial officer at Clearwater.

This infusion of capital, plus other activities, should position Clearwater to meet new challenges, Lawson says.

“We have to continue to grow the credit union, we have to continue to recruit and retain the best people in the market, we need to continue to lend effectively, and we need to continue to differentiate along values-based banking lines,” the CEO says. “We need to get better at that year in and year out. I see a lot of hard work ahead of us, but I see a tremendous amount of opportunity and exciting work as well.”

This is part of the “Anatomy Of A Credit Union” series, presented every quarter by Callahan & Associates. Read more about Clearwater or dive into a decade of archives. Contact Callahan to learn about gaining access today.

The post Banking On Values In A Crowded Montana Market appeared first on CreditUnions.com.

• To differentiate itself from competitors and better live its mission, Clearwater FCU adopted a values-based approach to banking in 2017.

• In its efforts to become a force for good in banking, the credit union developed metrics for its 2020 strategic report that ensure it is fulfilling its five core principles.

Five years ago, Clearwater Federal Credit Union($752.8M, Missoula, MT)was feeling the pressures of a mid-size shop.It wasn’t quite large enough to operate at scale, and its growth was limited by the size of its three-county field of membership.

In 2015, the then-named Missoula Federal reported negative member growth and a loan-to-asset ratio of 36.8%, nearly 30 percentage points lower than the national average.

Clint Summers, COO, Clearwater FCU

At that point, we wanted to realign and find some stability,says Clint Summers, the credit unions COO.

In doing so, the credit union asked itself an introspective question: What kind of organization did it want to be?

It pressed its board, executives, management, and staff to come up with an answer and ultimately recognized it needed to align its core values with the wants and needs of its members and staff if it hoped to grow.

In 2017, the rebranded Clearwater Credit Union introduced a values-based banking strategy in which four core values support the credit union’s mission and vision statements. Taken together, these guiding values inform day-to-day decision-making.

Mission,Vision,And Values At Clearwater Credit Union

Mission:To be a force for good in banking, in the communities we serve,and in the lives of our members.

Vision: By living our values,we will redefine the role financial institutions play in building thriving, sustainable communities.

Values:

• Together We Own: We practice responsible banking, grounded in cooperative ownership.

• Together We Empower: We solve problems and create opportunities for a better tomorrow.

• Together We Include: We choose to be inclusive, not exclusive.

• Together We Matter: We are committed to making a difference in the world.

Values And Principles

From the start, staff members embraced Clearwaters values-based approach, Summers says, which goes to show the values were already informally guiding operations and decision-making.

We just formalized things,Summers says.Which made for an easy transition.

Clearwater remains competitive on price and product, and the values-based approach helps the cooperative overcome competitive challenges facing the credit union.Of note, Montana’s aging population puts greater importance on attracting and retaining younger members.Additionally,Clearwater estimates there is one financial institution for every 28,000 people in the United States. In the credit union’s field of membership,that’s closer to one institution for every 7,100. As such,local competition in intense.

Clearwater’s approach is based on business fundamentals, but within its values the credit union has developed five principles. The significance of each principle is clearly defined, and each principle has a key metric to help the credit union assess its long-term progress. The principles are:

• Member Centered
• Long-Term Resiliency
• Local Economy
• Social & Environmental Impact
• Transparency

Clearwater was the second U.S. credit union to join the Global Alliance for Banking on Values (GABV), and the cooperative’s principles are influenced by the alliance. But as the credit union was putting together its five-year plan covering 2020-2024,it decided to lean heavily into its transparency principle and developed a 13-page version of its strategic plan to post on its website.

That’s where the rubber meets the road,Summers says.Not only are we transparent in what we are trying to measure, we’re also holding ourselves accountable by putting it out there.

And what it’s putting out there are the specific ways it intends to live up to each principle.

For example, what does it mean for Clearwater to be member centered? According to the strategic plan, Clearwater aim[s] to build long-term relationships with our member-owners, not just transact with them on a one-off basis. To that end, we tryto understand their economic activities, problems, and opportunities. We then design products and services to meet those needs.

CU QUICK FACTS

Clearwater FCU
Data as of 12.31.20

HQ:Missoula,MT
ASSETS:$752.8M
MEMBERS: 52,408
BRANCHES:7
12-MO SHARE GROWTH: 35.8%
12-MO LOAN GROWTH:31.7%
ROA:0.98%

To ensure it is living up to this ideal, Clearwater is tracking membership growth looking to reach 4% by 2024 member satisfaction and utilization rates in its feedback channels, account openings in a newly designed branch model, and more.

Each principle includes at least three sub-focuses under which it tracks its goals. For the member centered principle, those focuses are membership growth, member voice, and new branch model and the goal tracking includes new members, lost members, andnet membership growth by geography.

Clearwater’s metrics don’t just live in its online PDF, however. The credit union has built an automated dashboard through Power BI with which it presents its quarterly progress to its board. And because the information it collects is so vast,the credit union continues to add lines to its dashboard to build a more comprehensive picture of its progress.

We wanted to commit to reporting, but the reporting itself can take energy and effort to get done,Summers says. Automating the report alleviated much of that.

Looking at fourth quarter performance, Clearwater’s 2.61% member growth is slightly behind its plan of 3%. However, it is achieving significant growth in other areas of its balance sheet. Under its long-term resiliency principle, Clearwater hasplanned for 7% annual asset growth with assets surpassing $750 million, 15% annual loan growth, and a loan-to-asset ratio of 70%, among others line items. Since 2019, assets have grown nearly $200 million without a merger and loans have spiked as well; annual loan growth in 2020 surpassed 30%, keeping pace with asset growth to maintain a loan-to-asset ratio at 56%.

We have our goals set for the next five years, but it’s not just about the numbers,Summers says.We want to ensure our culture remains strong and we become a force for good in banking.

Living Values

Clearwater is focused on living its values and becoming an institution focused on more than just profit. It put its strategic plan online in part to be an example for other credit unions considering the shift.

We are not part of some exclusive club,Summers says.We want people to see what we are doing and feel like they can do it, too.

To operate under a true values-based strategy, Clearwater must embed its five principles into the very fabric of the institution. Its employees must live those values and work in ways small and large to support them. Putting its values at the forefront of everything it does has helped the credit union recruit and retain employees more effectively. There’s no cultural surprises when a new hire starts, as the conversations all occur before the hiring decision.

Culture also flows into vendor relationships, Summers says. At the onset of its values-based banking transition, Clearwater recognized its core provider wasn’t fully able to provide the data the credit union needed, so it underwent a conversionin 2019. Since then, during vendor due diligence, the credit union ensures data reporting capabilities are up to par and cultures are aligned.

Are they putting profit first, or are they helping us live our values first?Summers asks.I’d say the same thing about our products, services, and polices.

To that end, Clearwater has made several changes to better align policies and values.

In 2016, the credit union dug deeper into its courtesy pay program, a service designed to cover accidental overdraws, and learned that while most courtesy pay users actually use the service just once or twice per year, a small proportion courtesy payusers used it very frequently and paid the majority of fees to the credit union. Sometimes the fees that an individual member paid could reach levels that were uncomfortably high to credit union management. So, Clearwater piloted a new program inwhich overdrafts can be treated as a short-term loan rather than transfer fee. The loan is lower cost for the member, says Summers, less than 20% 0f the cost of a traditional courtesy pay fee.

As that program has expanded, courtesy pay fee income has decreased and members have saved money, with no loss of service. In 2016, courtesy pay fees were approximately 0.14% of average assets. In 2020 they were 0.8% of average assets. That’s notjust due to asset growth, Summers says. The absolute dollar value of total of courtesy pay fees has decreased about 40%.

That decision has impacted our bottom line as an organization, but it has positively impacted the people who needed the help,Summers says.

As long as we stay true to the values we’ve identified and the principles that make us different, we’ll attract the right people and maintain the right culture. We’ll continue to grow and make a difference.

In Clearwater’s market, finding affordable housing can be a challenge. And the high rates and fees that typically come with mobile home loans can quickly turn an affordable option on its head. To combat this, the credit union introduced a hybridhome loan product that it underwrites differently from a traditional mortgage and thereby can offer a lower rate.

Beyond products, Clearwater has made significant investments toward social and environmental impact.

Last year, it released a Diversity, Equity, and Inclusion plan to further change policies, procedures, and practices by setting goalsand developing action items to achieve those goals. For example, Clearwater wants its workforce to be representative of Montana’s diversity. To that end, it is creating an affirmative action plan that identifies new areas in which to advertisejobs and increase unrepresented populations. It also is creating an internship program to support BIPOC students and refugees who are in the Montana University system.

On the equity front, Clearwater does not pay less than 80% or more than 120% of market pay for employees; the executive range is 75% to 125%. It also limits the base pay of its highest paid employee to no more than 10-times its lowest paid employee. Inits annual compensation report, Clearwater highlights where employees fall in this range. The current multiple from the 2020 report was 9.48.

We’re not trying to keep that a secret,Summers says.Knowing that is important, so we’re open about it.

As for sustainability,Clearwater is tracking greenhouse emissions,water and paper consumption,and the total carbon impact of its loans and investments.It partnered with Climate Smart Missoula,a local firm,to help calculate carbon offsets in the home-building process.

All together, we’re trying to determine what our carbon impact is and how we can do a better job in our building projects, in our facilities, and with our travel to protect the environment for the future,Summers says.

Moving forward, Summers sees that there will continue to be pressure from external sources such as fintechs or local competitors. If the credit union can maintain its values-based approach, success will follow.

As long as we stay true to the values we’ve identified and the principles that make us different, we’ll attract the right people and maintain the right culture,Summers says. We’ll continue to grow and make a difference.

We are building a network of leading credit unions that will help us define impact metrics and standards, share their perspectives and practices, and work with us to evolve the credit union story.Join the network today.

The post A Force For Good In Banking appeared first on CreditUnions.com.

In the wake of racially charged killings of unarmed black men and subsequent protests in all 50 states, CEOs of major U.S. institutions including Wells Fargo, Bank of America, Facebook, Netflix, Apple, and Disney have decried racial injustice and expressed support for the Black Lives Matter movement. They re not alone. Credit union CEOs around the country also have come out in support of the movement.

Put The Principle To The Test

As topics of discrimination and economic inequity dominate the headlines, CEOs are finding themselves thrust into a new role: Chief Equity Officer.

Bill Bynum, CEO, HOPE Credit Union

In a sense, the BLM movement is a test of the credit union founding principle of concern for community, raising questions of fairness in hiring, upward mobility, and inclusiveness in the workplace.

Bill Bynum, CEO of HOPE Credit Union ($361.3M, Jackson, MS), said in a recent interview that the problems facing minorities are deep-seated and pervasive dating back to before the Civil War.

When you look at where the health outcomes and the education outcomes are the worst those are in the same counties and in the region where you have the highest concentrations of African Americans, Bynum says. Unfortunately, those communities have not been able to accrue wealth places like Selma, AL, or Itta Bena, MS. The entire deposit potential in Itta Bena is just over $1 million. That s not enough to finance the homes, the businesses, and the grocery stores that a community needs to prosper.

Amy Thomas, Chief of Staff, Arlington Community FCU

On June 30, Netflix announced that as part of its plans to donate $100 million to support minority communities, it would make a transformational deposit of $10 million at HOPE Credit Union, a U.S. Treasury-certified community development financial institution (CDFI). Over the next two years, HOPE estimates the Netflix deposit will support financing to more than 2,500 entrepreneurs, homebuyers, and consumers of color.

Protests following the death of George Floyd while in the custody of Minneapolis police have generated greater scrutiny of all major institutions, and public statements from CEOs is fueling the dialog. The response was overwhelmingly positive after Karen Rosales, CEO of Arlington Community Federal Credit Union ($354.2M, Arlington, VA), emailed employees and members to say the credit union stands with its Black colleagues, members, and neighbors who are in pain. But members also wanted more.

A lot of members said, I hear what you re saying, but tell me what you re doing, says Amy Thomas, chief of staff at Arlington Community. They wanted tangible things. They wanted to know how diverse our leadership team is and how are we ensuring our lending policies are equitable? Good questions, and our CEO has been responding to those questions personally.

Stephanie Miles, talent acquisition and talent management consultant at CUNA Mutual Group, supports Black Lives Matter in Madison, WI.

Work To Do

Nationally, the number of African Americans in leadership positions lags behind the communities they serve. A 2016 Federal Reserve survey found 17% of credit unions members are black, compared with 12.8% of banking customers and 13.4% of the U.S. population. However, just 165 of some 5,800 credit unions approximately 3% have black CEOs. Even more telling, says Lynette Smith, CEO of TruEnergy Federal Credit Union ($129.4M, Springfield, VA), is only three credit unions led by Black women have more than $100 million in assets.

There definitely needs to be more diversity, equity, and inclusion at the CEO level, Smith says.

Jack Lawson, President and CEO, Clearwater Credit Union

Questions concerning how to create that diversity, equity, and inclusion are undoubtedly on the minds of CEOs. Some, such as Jack Lawson, president and CEO of Clearwater Credit Union ($597.7M, Missoula, MT), addressed the matter head-on in announcing the credit union s recognition of Juneteenth, a celebration of the end of slavery in America.

Clearwater is a credit union that was founded by eight Missoula police officers in 1956, Lawson wrote in a news release. Today, we are governed by an all-white board of directors and managed by an all-white executive team. We serve a predominantly white membership in the predominantly white state of Montana. We know some will ask us to stay in our lane. We know some would prefer we sit this out. We also know that silence is not OK. Black Lives Matter to us.

Lawson continued, saying the problems of racism against African Americans, Native Americans, and other people of color are systemic, and the banking and financial services industry has been complicit in this racism. He outlined several programs aimed at driving change including plans to draft and adopt a diversity, equity, and inclusion plan in 2020, inclusive membership guidelines, and philanthropic pursuits to empower people, protect the planet, and build inclusive economies.

We are listening, Lawson said. We know we have a lot to learn. We know we have work to do.

How To Take Action On Diversity, Equity And Inclusion

Listen to our on-demand panel discussion with credit union executives as they discuss the current challenges facing our society and our industry in the areas of diversity, equity and inclusion. Discover new ideas as to how your credit union can play a meaningful role in pushing DEI forward.

Listen Today

Bend Toward Justice

There s a sense that issues of diversity, equity, and inclusion are at the forefront of America s collective conscience. For example, the Pew Research Center has tracked the use of the #BlackLivesMatter hashtag on Twitter since it emerged in 2013 with the acquittal of George Zimmerman in the shooting of Trayvon Martin, an unarmed black teenager in Florida.

Through the years, BLM posts have spiked for a week or two after racially charged incidents, peaking at 1.1 million tweets in 2016. However, However, all records were broken with 8.8 million tweets on May 25, 2020, following the death of George Floyd. Surveys have shown a majority of Americans support the protests for racial justice, particularly among Gen Z. A Morning Consult survey of 1,000 Americans ages 13-23, found:

• Gen Z sees the coronavirus pandemic and Black Lives Matter movement as the two most impactful events of their lifetimes.
• 82% agree racism is a major problem in America; 79% agree Black Americans are frequently discriminated against.
• 67% say how companies respond to BLM and deliver on their commitments to address inequality will influence their decision to do business with or seek employment at those companies.

Michael MacPherson, President and CEO, Freedom Of Maryland FCU

Michael MacPherson, president and CEO of Freedom Of Maryland Federal Credit Union ($338.3M, Bel Air, MD), likened the movement to the social upheavals of the 1960s.

Our mission of people helping people requires we not be silent in troubled times, MacPherson says. It requires we stand united with all people against racism, hatred, intolerance, and injustice.

Janie Barrera, president and CEO of LiftFund, a San Antonio-based CDFI that works with credit unions to provide microloans to underserved businesses, quoted the Rev. Martin Luther King Jr. in an interview with the San Antonio Business Journal.

The arc of the moral universe is long, but it bends toward justice, Barrera says. Achieving Dr. King s vision requires that everyone has the opportunity to prosper through credit and education for their business. We believe standing up and voicing concerns against systemic racism will reduce economic disparities and close the economic divide that prevents too many black entrepreneurs from achieving their dreams.

Maurice Smith, CEO, Local Government FCU

Maurice Smith, CEO of Local Government Federal Credit Union ($2.4B, Raleigh, NC), says he understands the conflict weighing on many Americans. Local Government FCU counts police officers among its 360,000-plus members, and Smith himself serves on a municipal police memorial foundation board and is a member of the North Carolina Sheriff s Association.

Protests awaken in all of us a reaction that should be addressed, Smith says. First, we learn about the underlying issues that brought about the protests. Second, we look at our world and develop an opinion on sides, morality, and messages. Finally, decide what action we should take. Even if we choose not to react, that inaction is a decision.

Credit unions were invented to address a social problem, Smith continues. Let s not be dismissive of the real mission of credit unions. Providing financial products is only part of the story. Our trade is in financial services, but the reason we offer financial services is to remedy social conditions.

Turning Words Into Action

To support racial equality, credit unions have many resources available right now, including the NCUA s voluntary Credit Union Diversity Self-Assessment tool. According to the NCUA s 2019 survey, which included participants from 118 credit unions:

• 55.6% of responding credit unions reported a leadership and organizational commitment to diversity.
• 48.2% reported taking steps to implement employment practices to demonstrate that commitment.
• 29% were monitoring and assessing their diversity policy and practices.
• 7.7% had procurement and business practices that promote supplier diversity.
• 17.2% demonstrated transparency of organizational diversity and inclusion.

Martin Eakes, CEO, Self-Help Credit Union

Martin Eakes, CEO of Self-Help Credit Union ($1.2B, Durham, NC), notes issues of inequality extend far beyond policy brutality.

They come in the midst of the devastating COVID-19 crisis, a crisis that is disproportionately impacting communities of color, Eakes says. We feel the importance of our mission extra keenly today, and we will continue to push ourselves to live up to our values of equality and opportunity in every aspect of our work. That includes the services we provide, the policies for which we advocate, the ways we lift up our community partners, the choices we make when we invest in communities, and the ways we take care of our staff.

The post CEOs Take On The Role Of Chief Equity Officer appeared first on CreditUnions.com.

• Vocal bought a bank branch in a banking desert to ensure residents retained financial services.

• Vocal’s CEO believes its consumer-focused model will succeed where the bank’s large-dollar lending model did not.

When Eddie Black, the CEO of Vocal Credit Union($31.2M, Helena, MT), attended a hearing at the Montana State Legislature in March 2017, he probably thought his testimony against a pending piece of legislation would be the most important thing he did that day. Citizens of a small town located in the southwestern sector of the state might disagree.

It was during this trip that Black struck up a conversation with Ben Ruddy, the CEO of Dutton State Bank. And Ruddy had a problem.

I’ve got a branch in White Sulphur Springs that is not profitable, Black remembers the other CEO saying. My model does not work.

Ruddy was on the verge of closing the branch that served the small city whose population wasn’t quite 1,000 as of the 2010 census in a banking desert. ContentMiddleAd

His two concerns were making sure his staff landed on their feet and the community continued to receive financial services, Black says.

Soon after this conversation, Ruddy sent Black the financials for the White Sulphur Springs branch, and the credit union dug in. Ultimately, Vocal agreed to acquire the branch.

A Different Model

Dutton State Bank and Vocal Credit Union run two distinct operational models. According to Black, Dutton is a traditional bank and makes large-dollar and agricultural loans. In contrast, Vocal is more consumer-focused.

CU QUICK FACTS

Vocal Credit Union
Data as of 12.31.17

HQ: Helena, MT
ASSETS: $31.2M
MEMBERS: 4,018
BRANCHES:1
12-MO SHARE GROWTH: 24.5%
12-MO LOAN GROWTH: 33.3%
ROA: 0.22%

Our niche is small-dollar loans to folks of modest means, the credit union CEO says. I’m happy to make a $5,000 loan to someone with no credit that no one else will loan to.

As part of its business model, Vocal offers a People Helping People payday loan alternative, a loan of up to $75,000 for mobile and manufactured homes, a new or used RV loan, and even a personal loan for purchasing hunting equipment.

Because of this model, Black was confident Vocal could serve the community that Dutton could not. The two institutions signed an agreement in May. The state approved the acquisition in June. And on October 2, the credit union began its operation in White Sulphur Springs.

It happened fast, Black says.

To serve the new community, Vocal had to add Meagher County to its field of membership. Another credit union already counted that county in its FOM, but it was headquartered more than 100 miles from White Sulphur Springs, did not have a branch in this area, and supported Vocal’s move into the county.

Make It Work

The White Sulphur Springs branch is located more than 70 miles from Vocal’s head office. It holds 900 accounts worth approximately $7 million in deposits and $3.5 million in loans. When Vocal ran the numbers, the deal proved challenging financially.

As of third quarter 2017, Vocal’s net worth ratio of 7.46% was lower than the 12.06% average for credit unions $20 million to $50 million in assets, according to data from Callahan & Associates. This didn’t go unnoticed by the regulators when they considered the proposal.

Click the tabs below to view graphs.

LOAN COMPOSITION

Nearly 40% of Vocal’s loans are new or used auto, while other unsecured loans total not quite $690,000.

TOTAL DELINQUENCY

At third quarter, Vocal’s total delinquency of 0.19% sits 90 basis points lower than the average for credit unions $20-$50M in assets, and 60 basis points lower than the average for all credit unions in the U.S.

NET WORTH RATIO

For the last six years, Vocal’s net worth ratio has hovered between 8.30% and 7.30% below asset- and peer-based averages.

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It was the thing they were most concerned about, Black says. We run a pretty lean credit union.

Vocal agreed to take on the $3.5 million in loans but limited its branch deposits to just $5 million of the $7 million. Any more, and the credit union’s net worth would dip below 7%. What Vocal couldn’t take, Dutton kept. And as part of the agreement, Vocal paid par value for the loans and deposits.

We told those new members we wanted their business, we just couldn’t take on all the deposits, Black says.

The credit union needed time to settle into the community, according to Black, but it eventually wanted the deposits. Part of settling into the community meant learning about its distinct challenges. For example, White Sulphur Springs is a ranching community, and fall is calving season. Ranchers sell cattle and use their influx of cash to make loan payments and deposits.

We had to make sure we had the ability to take deposits from someone who sells their cattle and brings in $200,000, Black says. We don’t want to say, We’re sorry we can’t take that.’ I’ve learned more about the calving season than I thought I would as a credit union CEO.

Regulators also forbid Vocal from purchasing the physical branch building until the credit union can prove its model’s profitability. For now, Vocal rents the building from Dutton, but Black is aiming to buy it by 2019.

From a reputational risk standpoint, [the regulator] wanted to make sure I didn’t get stuck closing the branch and owning the building, Black says.

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Make sense of branch saturation and demographic data for any market, or find recently closed branches to reduce the cost of brick-and-mortar expansion. With BranchAnalyzer, the ability to make smart decisions about your branching strategy is just a click away.

It’s The People, Not The Name On The Door

Beyond the financial realities of the acquisition lies the community at the heart of the branch.

White Sulphur Springs is a rural community. The Dutton State Bank branch employed four people who all stayed on with Vocal after the acquisition.

In June, Black spent four days per week in White Sulphur Springs setting up the credit union’s IT system. In August, Vocal sent credit union staff to train bank staff on the credit union’s organizational philosophy and the credit union difference. By September, White Sulphur Springs’ head teller was learning the credit union’s core system during a monthlong training at Vocal’s headquarters in Helena.

It really is the people that the members are doing business with, not the name on the door.

When she moved back to White Sulphur Springs, she had a month on our system, Black says. She was able to serve members immediately.

As far as indoctrinating the credit union to its new community, Black says he’s had a leg up there, too. In his past, he officiated high school and college basketball for years in communities across the state, including White Sulphur Springs. In a community this size, he says, the whole town shuts down for basketball games.

It’s a ghost town unless you’re at the gym, he says.

He’s a recognizable figure and a respected community volunteer. That goes a long way in developing local relationships and encouraging new members to join.

Retaining all of Dutton State Bank’s staff also proved valuable when interacting with community members. Black is often asked about the staff, and he gets to say the staff has not changed. That bit of continuity is important.

It’s the people that the members are doing business with, not the name on the door, he says.

The acquisition is important for Vocal on a strategic level, too. As a credit union pushing $30 million in assets, the credit union must grow to achieve greater operational efficiency and scale, Black says. Over the next five years, he’d like to see the credit union hit $40 million in assets.

By acquiring the branch, Vocal brings on some 500 new members, millions in deposits and loans, and expands into a new county. And while that’s significant, Black also highlights his new talent that’s come onboard, including a commercial lender.

We’ve had members ask us to help them with a commercial loan and we haven’t had the expertise on staff, Black says. We do now.

Adding services will help Vocal differentiate itself in the years to come, especially now that a new bank has moved to town. But in addition to financial services, Vocal wants to bring a little fun to the community as well.

We like to laugh and giggle and stay approachable, Black says. That’s a good fit in this community.

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What Is ROM?

ROM goes beyond traditional safety and soundness issues covered by CAMEL scoring to instead assess member value.

Learn morE ABOUT ROM

For credit unions, which typically offer better rates, fees and service than for-profit financial institutions, members recognize benefits in proportion to the extent of their financial transactions and general usage, says the Cornerstone Credit Union League on its website.

But how do credit unions measure the benefit of their membership?

Enter ROM, a comprehensive metric designed by Callahan & Associates that uses savings, lending, and product usage to quantify member value and assign a score to every credit union in the United States. Credit unions across the country use their ROM score to set member-facing goals and hold staff accountable to better serve members.

The interactive graphic below shows the top ROM leader in every state. Filter the view by state, ROM score, and credit union name. Click here to learn more about ROM calculation.

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