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“Every time the Fed cuts rates we take a haircut, so alternative sources of income have become more important” said Tom Miller, CEO of Affinity Group CU here. One new way AGCU has found is providing management services to smaller CUs through its wholly owned CUSO, Affinity Group Services LLC. Because many smaller credit unions cannot afford the salaries required to court and keep a highly trained CEO, the CUSO can do it for them, he said. “We have the capacity within our executive team to assist with compliance, strategic goals and other needs that are time consuming, so that the operating officers are free to do the day-to-day operations, which we don’t do,” said Miller.
Affinity’s own innovation was in creating a partnered approach to credit union mergers, as it combed three other credit unions into a larger, more powerful entity. They are WySouth FCU, Crestwood Community CU and Municipal Health Services CU, all of which have retained their own identities but have access to greater service options.
It’s worked just fine since January for Chiropractic FCU of Farmington, and brings in noninterest income to Affinity, said Miller. CFCU has $20 million in assets, an active board of directors, good equity and a field of membership with solid growth potential, covering all chiropractors in the state, Miller added.
Margie Brace, vice chair of the board said CFCU wasn’t interested in merging with another CU and found the option just right. “But as a small credit union it’s quite expensive to go it on our own and resources are limited. In the absence of a president/CEO Affinity provides us with management expertise in all areas of operations as well as a vast range of products and services not previously available to our membership. In addition, we bring an innovative business perspective to the group that other Affinity credit unions can also participate in. For CFCU, it’s the perfect partnership.”
“We don’t run their branches, but our branch network becomes available to them. And through our affiliation with Xtend Inc., they have some 130 shared branches also available,” Miller said. “The goal is to leverage all our other available services, too. For example, they’re now also partnered with CU Partner Solutions LLC, which just signed a deal with Office Depot for a substantial discount on office supplies, computer systems, furniture–everything they sell–which can bring substantial savings to a small credit union.”
The concept may also be valuable for CUs undergoing replacement of a CEO and can be used on an interim basis, said Miller.
Alternatives FCU in Ithaca, N.Y., has adopted an environmental approach to greening the town by planting trees, said Tristram Coffin, CEO there. “We call it our Save a Tree fee but members realize it as our Greening the Community campaign,” he said. “And while it certainly is a noninterest income generator, it’s also a way to help boost people who are already inclined into doing something to save the environment. We all know there are little things we each can do that add up to big results and switching from printed CU statements to e-statements is one of them.”
AFCU has notified members that starting at the end of April there will be a $2 fee for those printed statements and already about 1,000 members have converted, said Coffin. Not bad for an 8,000- member base, he said. “And I expect it’ll be widely adopted when it kicks in, given the appeal, and our members are receptive to this kind of thinking.” To help boost participation, AFCU is donating funds to the city’s forester that will pay for the planting of 100 new trees in the town. “The city forester’s budget was cut from $30,000 to $5,000 this year, so it’ll really help,” Coffin said.
—cburger@cutimes.com
