Don’t expect Joe Brancucci to back down from his convictions, especially when it comes to how credit unions have the choice of evolving or face extinction.
Granted, his views emanate from opinions shaped by the highs and the lows seen in the financial services sector during his more than 40-year career, including 20 years within the credit union industry.
Brancucci’s passion was on full display last summer as president/CEO of the $1.5 billion GTE Financial in Tampa, Fla., when a strategic plan for a rebrand in place before he took the helm in 2010 called for the words “federal credit union” to be stripped from the cooperative’s moniker. That stirred up a stream of dissent and angst among his industry peers and a few members.
For his fervor in carrying forth a controversial change that broke away from tradition, coupled with sweeping growth surges in lending, membership and a reinvigorated employee culture of trust and transparency, Brancucci has been named Credit Union Times 2013 Trailblazer CEO of the Year.
Among the reasons for the rebrand were reaching out to a younger demographic outside of the GTE legacy, getting up to speed on the latest technology and quarterly financials posted for all members to see.
More than six months after the GTE Financial name lit up message boards and social media channels so much that Credit Union Times tackled the issue in an Eloquent Online radio show last fall on using the words “credit union” in branding, Brancucci has no regrets about the rebrand.
“No question it was the right decision to make,” Brancucci offered. “To me, it was interesting to hear all the academic discussions and in some respects, the histrionic discussions. But I can tell you the pundits were absolutely incorrect. We’re talking about having engaged members.”
GTE Financial’s journey back to reconnection launched more than two years ago when the credit union’s board of director put in place a strategic plan to put the focus on members, employees and a commitment to surrounding communities. However, it was in 2012 when the fruits of the metamorphosis started to ripen.
Like many credit unions, lending at GTE Financial literally crumbled under the weight of the Great Recession. The situation was so dire that in 2009, the financial institution announced to members that it would no longer originate loans. As a result, loan growth slipped into negative territory by nearly 6% in 2011. It would take a concerted effort to bring reassurance back to members as the economy shifted and refinancing and other lending opportunities revitalized.
“We had to convince members that we were lending again,” Brancucci recalled.
When the Home Affordable Refinance Program made its debut, GTE Financial immediately signed on as one way to inflate its sagging mortgage loan portfolio. Advocates said the HARP program offered relief to homeowners behind on their mortgage payments who were unable to get traditional refinancing because the value of their homes had declined.
“We aren’t certain why others in our market chose not to offer HARP–maybe for fear of processing nightmares, maybe uncertainty of the program–but it was never a question whether we should,” said E.C. Williams, executive vice president and chief operating officer for GTE Financial.
In 2012, the credit union said it closed more than 1,700 HARP loans totaling more than $213 million and saved members over $70 million in interest. Another benefit was through HARP, GTE Financial was able to reintroduce the credit union back to the Realtors in the communities served by the cooperative, Brancucci said.
Mortgage lending became the driver of GTE Financial’s portfolio growth. The demand was so great for fast and accurate processing so that members’ loans could close in a reasonable amount of time that a new CUSO, Home Loan Alliance, was launched in 2012 for mortgage processing, real estate title services and secondary-market processing.
In the auto lending arena, GTE Financial reintroduced the credit union to every auto dealership in its surrounding markets, Brancucci said. As a result, new and used vehicle loans skyrocketed from negative 11.29% in 2011 to 70% in 2012 with a portfolio that increased substantially from $204 million to nearly $348 million during the same time period.
Overall, the move back into lending ushered the credit union back into the black going from negative 5.42% loan growth in 2011 to 16.6% growth in 2012, according to GTE Financial. Brancucci is especially proud that the turnaround didn’t involve putting bad loans on the books. When he took the helm in 2010, it really bothered him that the credit union had to stop lending simply because he doesn’t believe credit unions are in the business to hunker down.
“It was a sinking ship. We were battered by the recession. This is a low-income designated credit union. Low- and middle-class members got hit really hard by the recession,” Brancucci said. “The credit union didn’t have the infrastructure to deal with it.”
Membership had also taken a beating over the past few years. In 2011, GTE Financial’s net member growth was negative 8,000. Last year member growth swelled to 16,070. The credit union set a goal of 6% for net member growth in 2012. It exceeded that mark, reaching more than 9.11% thanks to a number of changes that occurred as a result of the rebrand. Among them, defining the member experience and developing a more engaged workforce.
GTE Financial’s more than 550 employees attended brand camps to learn how the change would benefit current and new members. An employee culture book written strictly by employees was a pendulum swing away from the August 2009 environment when the credit union promised no layoffs. The cooperative went back on its word with an abrupt round of layoffs and pay cuts–all with little or no communication or explanation, reads an entry in the employee culture book.
“Team members, by their own admission, worked in an environment where they were not respected, had no idea what was going on around them and had little or no effect on decisions, processes and the member experience,” Brancucci wrote in the culture book’s foreword.
The goal going forward is determining what GTE Financial’s staff believes the credit union’s culture is and not what we the leaders believe it to be, Brancucci wrote.
Despite a strong 2012, there are still a few concerns that keep Brancucci up at night: legacy assets the credit union holds and the economy not recovering as quickly as he would like.
“Regulator tsunamis also keep me up a bit. It can cost us a fortune in member money to be compliant. We manage around those things and we’re going to be compliant,” Brancucci emphasized. “I’m an optimist.”
The New York native has a busy schedule–the board has to remind him to take some time off–but he teaches financial literacy and travels as much as he can.