"There's not that much fat in the budget to cut," said Andrew Pistoria, CEO of the $120 million credit union in Pottstown, Pa. "The corporate write-down for next year is expected to be between 15 and 30 basis points. I think 30 is more realistic. That's more than $300,000 off the bottom line before we even get in the door."
To search out more opportunities to grow, Tri-County has linked up with Impel Consulting Group, a credit union consulting CUSO in Middletown, Pa. Impel recently launched its Needs and Opportunities Assessment solution that aims to help mainly midsize credit unions find new avenues towards revenue growth, said Dave Dunn, president/chief operation officer of Impel. The CUSO will help them come up with a list of potentials, spec out the projects and determine how long it will take and how much it will cost. Whether the credit union chooses to continue implementation with Impel or not, it can use the template to get projects up and running.
Dunn said the midsize credit unions, which he acknowledged are hard to quantify these days in regard to assets, were working hard to get by before the corporate credit union system stabilization kicked in. The hits to earnings, loan losses and pulling everything out of the hat from marketing campaigns to community charters to grow has left many CEOs exasperated.
"Much of this wasn't turning into the pot of gold at the end of the rainbow," Dunn said. "The thing is that none of the CEOs have ever been through something like this before because the industry has never been through something like this before."
Impel's NOA-"like Noah and the flood"-is similar to GAP analysis, with a heavy emphasis on prioritization, Dunn explained. The process is more interactive and goes beyond a questionnaire and questions seen on call reports, he added.
"Earning pressures are immediate," he offered.
For instance, from the human resources angle, he noticed that some credit unions are freezing benefits, getting rid of defined-pension plans and doing away with holiday bonuses. At one credit union, Dunn suggested putting a performance incentive plan in place. Employees now earn about $200 for helping to sell credit life and disability insurance. He said the credit union is bringing in $20,000 a month in fee income.
On the retail end, boards and CEOs should take a hard look at what products and services are the most profitable.
"That doesn't mean you sell something to someone who doesn't need it," Dunn said. "This is about paying for performance."
Because some midsize credit unions don't have the resources to juggle multiple launches, Dunn said NOA strives to eliminate the fluff and hones in on products, services and fee structures that are compatible with the marketplace. Those flush with capital and not sure what to do with it are presented with "attainable and achievable" solutions.
At Tri-County, Pistoria said the credit union has made some tweaks where possible, but more search and recovery is needed.
"Maybe it's getting more yield through buying participations," said Pistoria, who is board chairman of Impel. "It has to come from somewhere. We're all facing rising delinquencies and charge-offs and corporate bills we have to pay for. Interest margins are real tight now. It's really tough."
So far, Dunn has talked to Impel's seven owners about NOA. A Texas credit union recently implemented the solution within its business services division. Dunn is scheduled to meet with another credit union at the end of the month to look at compliance.
Today's landscape looks eerily similar to 1934 when the Federal Credit Union Act was signed, a few years after the Great Depression began, Dunn noticed. Throughout his career, he said he has worked at banks "that prided themselves on being able to survive the Depression."
"Other than the S&L crisis, credit unions have never been through something like this. They don't have any personal experience to draw on. But one thing they have in common is a real commitment to the movement. They don't want to give up. They have no intention of giving up."