Hockey icon Wayne Gretzky had the right strategy when it came tooutwitting his opponents on the ice.

Gregg Stockdale, president/CEO of 1st Valley Credit Union in SanBernardino, Calif., pointed to Gretzky as he took a long, hard lookat what solutions were percolating that would keep the $30 millionCU up to speed.

“A lot of guys chase the puck,” Stockdale explained. “Gretzky tried to figure out where thepuck was going to go. Why not make a beeline and wait for where thepuck is going to hit?”

Stockdale decided to get out in front. One of the trends hespotted among smaller credit unions was building morecollaborations with peers and CUSOs.

In June 2010, 1st Valley underwent a data processor conversion.Stockdale said after looking at 13 potential vendors, CU*NorthWest, a  Liberty Lake, Wash.-based provider ofcore data processing services, was able to offer a lineup that wascheaper than what a former data processor offered.

1st Valley is using the CUSO's CU*Base that includes homebanking, audio response, mobile phone banking and imagingsolutions.

CU*NorthWest said at the time, 1st Valley was the first creditunion it had signed in California. The CUSO has since signed onseveral more in the Golden State. Stockdale said he is nowcollaborating with others in Washington and Oregon through theCUSO.

“Our business model and commitment to integrating strategies forcollaboration and cooperation between credit unions is resonatingin California,” said Greg Smith, CEO of CU*NorthWest, at thetime.

With 13 employees who often wear several hats serving more than4,000 members, Stockdale said it was critical to have a dataprocessing system that was accessible to everyone. He saidoperating expenses are $50,000 less than they were last year.

That efficiency is important to smaller credit unions, Stockdaleemphasized. On a recent visit to a billion-dollar credit union inCalifornia, he noticed that it had fewer loan officers than 1stValley. The larger cooperative had consolidated its underwritingand as a result, shared greater consistency among its manybranches, he learned. 

“As a small credit union, we don't have efficiency like that.Our loan officers are loan interviewers, credit report generators,they open new accounts and if the teller line gets backed up,they're the ones that will jump in and [assist],” Stockdale said.

Because of this juggling of responsibilities, the types ofalliances that 1st Valley seeks are those that will free up timefor staffers to focus on other areas, he noted. Stockdale said whenhe looked at a June report of California credit unions in the $5million to $49 million range, the efficiency ratio was roughly105%. To be profitable that percentage should be under 100%, headded.

To get there, the industry has had to control loan losses orincrease income, Stockdale noticed. At 1st Valley, staff was cut tothe minimum, then cut in half and even then, harder decisions wereconsidered. But for smaller credit unions, if staff are let go,some things eventually fall by the wayside.

“Luckily, we're sustainable, we're moving on and we're not inthe danger of running ourselves in the ground,” Stockdale said.

Part of that sustainability was built during the heydays of loanproliferation, he pointed out. A few years back, while some creditunions were giving out loans hand over fist, 1st Valley didn't jumpon the bandwagon. Stockdale said some lenders only looked at aperson's credit score for loan approval, but 1st Valley requiredemployment and wanted to know the amount of bills being paid eachmonth.

“Quite frankly, margins have never been thinner, regulationshave never been greater and the economy has never been worse,”Stockdale said. “You're not going to make up in any of that inloans.”

There once was a time when credit unions would use loans tosubsidize everything, Stockdale recalled. Now, consumers,especially younger people, are shopping around for who has thelowest rate. Stockdale said older members tend to be morecomfortable with having all of their accounts at one financialinstitution. Many young members have not bought into that yet–theyare content with having multiple accounts scattered around.

As with the data processor conversion, collaboration can play arole in wooing new generations, Stockdale said. The credit unionhas signed on to a program offered by the National Federation ofCommunity Development Credit Unions that brings the underservedinto the financial services mainstream. By offering check cashing,debit cards and money transfers now, Stockdale is convinced he isplanting seeds for other products and services later.

In addition to expanding its field of membership to all of SanBernardino County, 1st Valley is in the process of securing otheralliances–opportunities it may not have considered in the past. Formany credit unions, the change in thinking continues to be led bysoft loan demand.

“Nothing is off the counter. It seems everyone is saying 'whatwe're doing isn't working.' Especially with marketing,” Stockdalesaid. “It goes out the door a foot and a half and crashes to thefloor.”

Stockdale said he was one of the more than 140 persons who wroteto the NCUA opposing its CUSO rule amendment proposal. Criticsargue that the changes could all but extinguish collaborationchannels.

“Quite frankly, the NCUA is not interested in managing risk buteliminating risk. They're more in shutting it down mode. But youcan't come in with a one size fits all model.”