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A Shared Solution

May 2003 – Vol: 26 No. 5
by Charlene Komar Storey

A Shared Solution
By Charlene Komar Storey
May 16, 2003

This is bonus coverage from At the Crossroads? in the June 2003 issue of CUES' Credit Union Management, p. 20.

Instead of competing against each other, CUES member Ken Facer, SVP/finance with $719 million, 129,000-member Arrowhead Credit Union, San Bernardino, Calif., would like to see credit unions join forces against what he sees as the real competition—banks.

We should band together and go after banks, he urges. Shared branching is the key, he says, because the only advantage banks have is convenience.

Credit unions that reject such approaches only hurt themselves, the Californian says.

There's a credit union that's about two-thirds of our size—we both have community charters, and they really see us as their primary competition, Facer says. We both do very well, both grow about 20 percent each year. The difference is the decisions we're making.

Arrowhead CU is part of the shared-branch network. The CU wants its members to have the convenience of doing business at other credit unions. It also wants members of other credit unions to come into its branches, because they generate income.

That income helps the credit union pay for new branches, Facer says; Arrowhead CU adds two branches most years, but will open three in 2003.

There are two different ways of viewing the same situation, he continues. [The other credit union] sees our members coming in to them as making longer lines. And they don't want their members coming in to us, because they're afraid we'll steal them.

Credit unions need to work together, but today too many credit unions don't trust each other, he sighs.

Yet, he says, joining a shared branch network could prevent a smaller credit union from eventually being merged.

Across the country, $208 million, 25,000-member Call Federal Credit Union Richmond, Va., has opened a Credit Union Mall, with three credit unions in separate offices under one roof. CEO and CUES member Roger Ball believes that concept promotes a good image for credit unions, showing that they operate cooperatively.

I don't think it will change the future, but it might slow down the progression of 'all credit unions look like community banks,' he says.

Perhaps the best but most elusive solution comes from CUES member Brian McDonnell, president/CEO of $18 billion, 2.3 million-member Navy Federal Credit Union, Merrifield, Va.

We have to improve communication between credit unions, McDonnell says. We're like a dysfunctional family at times.

I don't have an answer, but I'm really concerned about this.

Charlene Komar Storey is a veteran credit union writer who lives in New Jersey.

Return to www.cumanagement.org.

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