How to Succeed with a Community Charter

Credit Union Magazine
January 17, 2008 | COMMENTS

Why convert to a community charter when your main sponsor isn't downsizing or moving? To grow and attract new borrowers and savers, and fill a niche, says Joe Thomas, CEO of $223-million-asset Fairfax ( Virginia ) County Federal Credit Union.

Fairfax County Federal converted to a community charter to deepen members' relationship with the credit union by offering more products and services, bundling these products, and expanding lending beyond top-tier borrowers. It also grew the credit union's brand in the community by expanding TV, radio, newspaper, and bus ads, participating in fairs and community events, sponsoring events and organizations, such as Little League and Boy and Girl Scouts, and tying events to loan or saving promotions.

Measuring marketing results is especially important, Thomas says. Measuring a marketing campaign's return on investment helps determine if the promotion is worth the resources spent to achieve the results. “You can't manage what you can't measure,” he says.

Thomas even set a goal for his marketing director: Sign up 40 new members in a month.

“We never had held our marketing people's feet to the fire before,” he says. “It worked.”

Since converting to a community charter, Fairfax County Federal routinely attracts 400 new members per month.

Century Heritage Federal Credit Union, a $121-million-asset credit union in West Mifflin, Pennsylvania, also converted to a community charter. It's reasons were stagnant member, select employee group, and loan growth; inadequate member diversity; and a lack of a distinct marketplace identity.

Century Heritage Federal introduced a “George Bailey” radio ad to explain how credit unions differ from banks. The ad pays homage to the classic film, It's a Wonderful Life.

“It communicates financial products and services in a different way,” says Vin Cerasuolo, CEO of Century Heritage.

The credit union also joined six local chambers of commerce, gave its support to emergency personnel and youth activities, and became the primary sponsor of a highly successful high-school basketball tournament each December with the local newspaper. “The circulation for our local paper matches our field of membership,” Cerasuolo says, providing excellent exposure.

Make Organizational Changes

Converting to a community charter requires credit unions to develop new policies and procedures, Cerasuolo says. Century Heritage Federal, for example, put a new check-hold policy in place, implemented risk-based pricing, and began screening new checking accounts.

Other organizational changes included hiring new lenders with community experience, improving staff training, and implementing an incentive plan for lending staff. Plus, staff who refer loans that close receive payments from $5 to $50 per loan depending on the loan size.

Fairfax County Federal pays annual employee bonuses up to 12% of base salary if the credit union meets its return on assets (ROA) goal of 1.1%. Employees have embraced the program and are keenly aware of the credit union's ROA.

“Our janitor saved old plastic to use as trash-can liner because he wanted his 12% bonus,” Thomas relates.

Focus on HR

Century Heritage Federal hired HRValue Group in Middleton , Wisconsin , to upgrade its HR function with new job descriptions, a performance management plan, employee surveys, and formalized employee learning standards with a new full-time staff training position. The credit union also created a leadership development program for management.

The effort has paid off. Member satisfaction scores for member service representatives and lenders, on a scale of one to seven, average more than 6.5 for responses to statements such as “I treated you with respect,” “I served you quickly and efficiently,” and “I identified a product or service to meet your needs.”

“We ask staff, ‘What could we be doing better and smarter?'” Cerasuolo says. “And we have them finish this sentence: If I ran this credit union I'd . . . These responses provide good insight.”

This story first appeared at www.creditunionmagazine.com and is reprinted with permission.