Number of credit union CEOs with banking experience could proliferate

<p>WEST PALM BEACH, Fla. – Look around and you’ll find a fair number of credit union CEOs with banking backgrounds – many more may be on the way. With 25% of credit union CEOs expected to retire within the next four years, credit union boards will be searching high and low for new leaders. One of the reasons the banking industry may be the most fertile market is because for years they had some of the largest management training programs of any industry. Many of these former trainees are now seasoned bankers looking for new challenges. “I don’t think there’s any comparison to the education I got from the banking business. I was able to take all that I learned, all the processes, all the various retail financial background, and apply it for the member,” said Rod Staatz, president/CEO of the $504 million University of Wisconsin CU. Staatz was in the banking industry from 1977 to 1996. He worked in a number of areas, including retail banking, and also in what is foreign to CUs, merger and acquisitions. Staaz said banks and CUs have a lot in common. “In many respects there are a lot of similarities. It’s retail financial banking. It’s about delivery of retail products and service,” said Staatz. What’s different is the purpose of banks and CUs. With banks trying to turn a profit, service can be compromised said Staatz. “Some of the frontline people at banks would love to be working for the customers, wanting to provide better service. But with this era of cost-cutting, there was this constant push to just sell product.” Staatz said you can’t blame banks for doing active cross-selling, but their bottomline nature might result in cros-selling that’s not always in the best interest of the customers. At his CU, last year was dedicated to developing a sales culture. The CU is even tying a compensation program to getting members to purchase new products. But there’s a big difference in what University of Wisconsin CU is doing, than say Wells Fargo, says Staatz. “We look at it more as educating the member about what we have. It’s up to them to buy it. Quite often people don’t understand what is offered. You have an obligation to educate members. If not, you’re cheating them.” He said managers watch over employees and make sure when an employee sells a product, it was filling a member’s need. Henry Prior, president/CEO of the $262 million Power 1 CU, Hialeah, Fla., was in the S&L business for 25 years. He even helped charter three different S&Ls. Prior landed in the CU industry about four years ago, and so far he likes what he sees. “For me the difference starts at the top, at the board level. I don’t remember any conversations (with S&L boards) where we discussed customers, about how what they did affected the customers. Here every time we want to do something the board discusses how it affects the members. They’re always looking to avoid negative effects,” said Prior. There are other differences at the board level, said Prior. At banks directors are often business leaders who want to use their board position as a way to get more business, not so with credit unions, said Prior. “They might want the appraisal business, the insurance business, all the legal work. They were often large stockholders that wanted that business connection.” On a more personal level, Prior is thrilled the CU can’t be bought and sold, which happened a few times in his S&L career. “I’ve been bought twice in S&Ls. If you’ve never been sold, you don’t know how tough it can be. The board decides they want to sell and they sell it,” said Prior. “When someone like a Bank of America buys you, it’s not that they wanted you, more they wanted to eliminate you,” said Prior. Operationally, the difficult thing about being a credit union is you can’t go out to the capital markets to raise additional capital, said Prior. “Our growth is really limited by field of membership and access to capital. You’re mining the same mine over and over. You can’t dig a new one,” he said. Credit unions have an intangible edge though, said Prior. “Members tell me they love their credit union. Banks might have better rates, but they don’t have that.” Prior believes bankers will continue to flood into CUs. “There’s a big pool of trained men and women in that industry,” he said. Darren Williams, president/CEO of the $1.9 billion Wescom CU, Pasadena, Calif., worked in banking during college and for a few large commercial banks right out of college. “I worked for Imperial Bank and Union Bank, and then made the move to credit unions pretty early on when I had the opportunity to join Huhges Aircraft Employees Credit Union. It was the best move I ever made,” said Williams. Williams, who went through a bank management trainee program, says he sees no problem with bankers coming into credit unions, but they better be prepared for the member service aspect. “I think bankers and business people give a lot of lip service to customer service. In credit unions, you’re really cowtowing to your members. Service is the single best way we have to differentiate ourselves. We can’t always beat the competition on products and price.” Though it was a short banking career, Williams said the customer was usually second banana to shareholders. “About the only time we would ever really stop to consider how a pricing decision might affect the customer was when the decision might have an impact on marketshare. That’s about as far as we went considering the impact on the customer.” He said a bank would never do what Wescom did this year for members during the Rose Parade. “We happen to be one block from Colorado Blvd. Our parking structure accommodates 500 vehicles. Rather than charge for parking, we let our members reserve parking spaces free of charge. That’s a minor thing, but every other business charged. I got so many e-mails from members on that.” [email protected]</p>