The Power of Small Credit Union Collaboration

The word “policy,” uttered in the presence of a small credit union leader, can send shivers down the spine. They – the policies, oh the policies – must be reviewed each year. The board must approve them each year. Rinse, wash and repeat.

And policies are only a sliver of the compliance gauntlet that a small credit union must navigate to keep the lights on.

Worse yet, hiring a professional to handle these requirements – to tackle regulatory changes, and to conduct audits and training – is, typically, unattainable for many small credit unions.

Unless.

Unless you’re one of the 14 credit unions in New York that has joined arms – with support from the New York Credit Union Association – to hire a shared compliance professional to completely manage that work.

And at a fraction of the cost.

It all started, according to Bill Carhart, president/CEO of Oswego County Federal Credit Union, and one of the beneficiaries of this program, during a discussion four years ago among CEOs on ways credit unions could better leverage their resources together.

In the wake of the financial crisis, the conversation, naturally, shifted to compliance.

“Compliance is a specialized calling,” Carhart said. “To have that patience and level of detail, to be able to make regulations digestible, making it easier for the board and staff to understand, it does take a special skillset.”

It so happened that NYCUA staff were in the room during that meeting. And eventually, the association developed a program that would deliver that specialized professional right to the credit unions’ doorstep.

After identifying the credit unions that were willing to participate, the association hired its first shared compliance specialist, trained her and divided her time among the first four credit unions in the program.

There’s no waste, Carhart said, as the specialist works for the credit unions only for the time it takes to fulfill their needs, allowing each credit union to pay an amount that’s commensurate with the work.

The specialist is employed by the association. The credit unions simply pay NYCUA a monthly bill.

“We certainly wouldn’t be able to afford the cost of a full-time compliance officer here,” Carhart said. “It worked out easiest for the association to step in and be that advocate for this.”

Linda Bow, NYCUA director of compliance, added: “It’s a person who comes onsite who can help them with everything from board training for BSA, to disclosures, to CTR and SAR reviews, policies, procedures, forms, questions, training and even implementing new products.”

As one might imagine, the benefits of that support – of being able to shift focus away from compliance – cascade down and improve each aspect of the credit union.

Oswego County, for example, works hard to incorporate technology into its offerings, and having the compliance specialist has given the credit union peace of mind when it launches those products.

“It’s allowed us to lend more and reach out to the members in different ways,” Carhart said. “We always held off on a HELOC program because we didn’t have enough time to make sure the paperwork was done right. But with the availability of the compliance specialist, we were able to roll it out with confidence and it was a nonissue last exam.”

CUNA’s Small Credit Union Committee applauds this type of collaboration. Sharing resources is one way we believe small credit unions can not only survive, but thrive.

We’d love to see more of this type of cohesiveness. Even the smallest among us are leveraging economies of scale to make a difference in their operations. Take the example of the Faith Based Credit Union Alliance of Chicago, a group of extremely small credit unions that have banded together and successfully negotiated better pricing on a core provider that each of them would not have been able to afford individually. Amazing.

Certainly, efforts like the shared compliance program – which can also be found, at least, at the New Jersey, Michigan, Cornerstone and Wisconsin Credit Union Leagues, in addition to the Pennsylvania Credit Union Association and Georgia Credit Union Affiliates – take a commitment from a group of credit unions to get involved. But the benefits are hard to ignore.

Take it from Bill Carhart: “I honestly don’t know if we would have been able to grow and have the success that we’ve had without having this integral piece in place for us. It really kind of allowed us to focus on our business and do what we do well, which is serving our members.”

And we contend they wouldn’t have been successful without collaboration.

Note: This is the first in a three-part series by CUNA’s Small Credit Union Committee on the biggest issues facing small credit unions and ideas on how to address them. In part two, the committee will cover the importance of having a strategic focus. Visit the CUNA Small Credit Union Community to follow the committee’s activities.  

Gary Parker is Chair of the CUNA Small Credit Union Committee and President/CEO of 1st University CU. He can be reached at 254-752-2797 Ext. 313.