WEST PALM BEACH, Fla. – Veterans or relative newcomers, CEOs seem to share a lot of basic attitudes toward issues facing credit unions today: field of membership expansion, CUSOs, growing competition, the role of credit union boards, and looming challenges. To learn CEOs' opinions on some important issues facing credit unions today, Credit Union Times talked with several CEOs – some of whom have been in their positions for many years, and others who are relative newcomers to their executive responsibilities. John Bratsakis CEO Community Trust Credit Union Gurnee, Ill. (CEO for more than 2 years) Field-of-Membership: I've been exposed to both sides of the field-of-membership question. The credit union I started in was a SEG-based credit union. We're a community charter. I don't see field-of-membership expansion as a negative in any way if we can serve groups who want to be served. CUSOs: CUSOs are very positive. The danger with a CUSO is credit unions getting involved when they don't have the expertise. If they hire the right people, do the right planning, and have the right structure, CUSOs are wonderful. Competition: Competition is a fact of life. I focus on where does my competition comes from, and what is my core business? When we were expanding our charter, out of courtesy I talked to the CEO of another credit union. He commented, "If I lose members to you, shame on me. If you lose members to me, shame on you." I really can't think of a better way to view competition than that. CU Boards: What I see is maybe the makeup of boards changing. You're getting people who have a little more understanding of what the board and CEO relationship should be. The board is there to support, give direction, give vision but not run the day-to-day operation. Challenges: The challenge I see is the danger of resting on our oars. We have to go out and let people know there's a benefit to being a member of a credit union. We have to stop thinking just because we're a credit union, people will come to us. Glenn Strebe CEO Air Academy Credit Union Colorado Springs, Colo. (CEO for 3 years) Field-of-Membership: If you're trying to expand your field of membership and you define from a strategic viewpoint who you are and what you are, then go chase that whether it's a community field of membership or select employee groups. The people who run into trouble have what I consider "catchall" phrases and still try to say they're a credit union. The reality is, if everybody can join, I really don't know what that makes you. CUSOs: I absolutely love CUSOs. We have a CUSO, and we do financial planning, for example. I think those credit unions who say they don't want to offer stocks and bonds and so forth because they don't think it's part of their core are going to struggle. Some day as your membership goes through one complete life cycle, what are you going to be left with? How many people are going to put money in CDs as a long-term investment? Society is shifting to equity-based investments. Competition: I believe competition is good. Competition forces us to be better stewards of our members' money. Competition drives you to be a little more efficient, it forces you to make some of the tough decisions. CU Boards: The board should never micromanage, because if they have to micromanage they should fire the CEO and hire someone who knows how to manage the business. The board has to be able to keep up, and that is a challenge. We as managers and executives should help the board. The onus is on us to make sure they're up to speed and understand some of the issues associated with being a board member. Challenges: To me, one of the challenges credit unions are going to have to face is the realization of their core competencies – who they are, what they are, who they can serve and how they can best serve them. I don't know if a lot of credit unions realize this and have asked the questions. Carla Craig CEO CitizensFirst Credit Union Oshkosh, Wis. (CEO for almost 10 years) Field-of-Membership: I'm of the opinion that credit union membership should be open to all Americans – in fact, everyone throughout the world. So I think field of membership expansion is a good thing. Competition is good, it keeps us on our toes, so why should we be afraid of expanding our field of membership? CUSOs: CUSOs are a useful tool to provide products and services, lower our costs and expand services to our members. So I think we are fortunate we have that system. Competition: One of our greatest challenges is increased competition from non-bank financials. They don't have the same regulatory environment. That allows them to compete in certain areas more effectively than we can. I think the playing field should be fair. CU Boards: Board members should not be experts in the industry, that's what they have staff for. But they should be knowledgeable enough to make informed decisions. They should also play an active role in developing business for the credit union, being advocates, looking for opportunities to bring to the credit union. Challenges: I see three challenges facing credit unions. One is increased non-bank competition. That ties into regulations. Regulations that make us slow down in terms of products we can offer and how we can expand need to be updated. Another challenge is we have declining spreads and increased costs when it comes to providing the technology our members are looking for. Ludovico "Lou" DeCarolo CEO Marine Corps West FCU Camp Pendleton, Calif. (CEO for almost 24 years) Field-of-membership: Our field of membership is fairly restricted. We automatically have turnover, with people coming in and leaving constantly. Retention depends on whether they want to stay in the military. The only drawback, as far as we're concerned, is our demographics remain static. Fifty-five percent of my members are 18 to 24 years old. We're looking into changing our charter from federal to state as a way of diversifying our membership. CUSOs: Our members' need for insurance and other CUSO products is very limited. Yet there are a lot of other products you can get through a CUSO. Strategically we always have it on our program, but we haven't pursued it. Competition: We definitely see competition. Just in our county there are five military credit unions. We generally all provide the same product. What is our niche? – To serve young military people with consumer loans. CU Boards: It becomes more and more challenging to keep my board educated and informed. That's especially true as it pertains to technology. I take it upon myself to be an educator for my board. Challenges: Sometimes I think our industry asks for too much. Maybe we're going to lose our tax advantage by asking for all the bank-type products and services. Larry Strong CEO Austin Metro Financial Credit Union Austin, Texas (CEO for 14 years) Field-of-Membership: In 1998 the City of Austin, our primary sponsor, laid off 1,000 employees. If we hadn't expanded our field of membership, it would pretty much have brought us down. In those days, expansions were related to the original field of membership. Then times changed. Big credit unions opened up the barn door and allowed major expansion. Now they're trying to close it. I don't think they can. It my opinion it almost spells the doom of the smaller credit union. There's a certain amount of arrogance. There are predictions that in a few years there will only be 200 credit unions. We're full throttle to make that happen, and I'm going to be ashamed. CUSOs: I firmly believe CUSOs will someday be supporting credit unions. I have a sub-prime CUSO that in one year made $1.2 million. My credit union that year made $1.5 million. That little CUSO only has one employee and no assets. We have another CUSO for brokerage and investments. The brokerage firm allows us to give members investment advice. If we don't, somebody else will. Competition: Competition is certainly keeping me on my toes. The most aggressive bank I've ever seen in my life is Wells Fargo, a huge bank that acts like a small community bank. Everywhere I go with my SEGs, and we have over 250 SEGs, I hear the bank has been there and offered to provide a branch in the company. CU Boards: As far as boards of directors, I've been to several credit union conventions that look like a geriatric conventions. Boards are getting older, and older, and older. I think the average age on my board is around 61. They're not taking a more active role. They're leaving the leadership of the credit union up to me. They're performing their fiduciary responsibilities, but they're pretty much saying, "Keep up the good work." Challenges: There's a range of challenges facing credit unions. My figures may not be exactly correct, but there are about 600 credit unions that are members of the Texas Credit Union League. Of those, 400 are under $10 million. The burden of carrying those people has started larger credit unions wondering whether it's worth it or not. It concerns me that leagues may start being made up of credit unions of $10 million or less. Our ability to lobby effectively and efficiently is going to be hurt. David Maus CEO Public Service Employees Credit Union Denver, Colo. (CEO for 20 years) Field-of-Membership: Expanding the field of membership has been our lifeblood for survival. We were a single-sponsor credit union for a utility company that downsized from 8,000 to 3,200 in the state. So 10 or 12 years ago we starting taking in SEGs. We now have 2,000 SEGs, and because we're state-chartered we can take in communities as well and have several small community charters. We have 60,000 members. CUSOs: CUSOs are part of our financial future. Soon I will speak at a public hearing with four other credit unions applying for a charter in Colorado to start a trust CUSO. CUSOs have not only given us the ability to expand our services, but has also provided a means to partner with other credit unions to get economies of scale. Competition: I definitely see competition becoming tougher. It's good for the member. It makes us all work harder to earn business. Unfortunately, it's become much tougher on the credit unions that maybe don't put their efforts and energy into providing high-quality services. CU Boards: I'm not sure the role of the board has changed. I would say their function has changed. As credit unions get more sophisticated and technologically astute, the function of the board is probably broader based than it was years ago. Boards tend to look at the long-term perspective. I definitely think that has been a positive evolution. Challenges: The key challenge facing credit unions is how to leverage our resources together. We're small compared to other financial entities. A good example of that leveraging is the trust CUSO we're trying to start. There's no way our credit union could do that alone. Pat Taylor CEO General Electric Evendale Employees FCU Cincinnati, Ohio (CEO for 28 years) Field-of-Membership: I feel field of membership expansion has been good for credit unions. We're a federal credit union, so we're sort of limited. State-chartered credit unions seem to get as broad a field of membership as they want. This is really causing a lot of problems. It's something the board and I have talked about. CUSOs: We have a CUSO. I believe the services we're providing through that CUSO belong to credit unions. We're here to help the member save or whatever the case may be. Competition: Competition is good. However, too many people are getting into our ballpark. If you can go to Kroger and do your banking, why can't you come to the credit union and buy bread? CU Boards: We've been very fortunate to have the board we do. We have a lot of people who have been here for quite a few years. That's good to keep the credit union philosophy from turning into a bank. Challenges: The biggest challenge credit unions face is the membership issue. But I don't think we're on the same playing field as state-chartered credit unions. It's my biggest concern right now. – [email protected]