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<p>HOUSTON, Texas – How StarTrust FCU, formerly Enron FCU, has dealt with the events of recent months may serve as a valuable case history for the nation’s few remaining single-sponsor credit unions. The credit union has done a lot of things right in recovering from the blow it received when Enron Corp. filed for protection under Chapter 11 of the U.S. Bankruptcy Laws on Dec. 2. Its CEO will tell you that they could have done at least one thing better. Although Enron FCU and Enron Corp. were operationally and financially independent entities, otherwise they were connected at the hip. The credit union shared Enron’s name and logo, had its only office located on the third floor of Enron’s downtown building, and promoted itself as an Enron employee benefit. “We were totally devoted to the company,” said Jack McAdoo, StarTrust FCU President and CEO. But on Dec. 3, Enron started laying off employees – about 3,000 of whom were in Houston. With that event came the sensation in members’ minds that if Enron was failing, the credit union must be failing, too. The credit union had aligned itself so closely with Enron Corp. that its members assumed the credit union also would be affected by the bankruptcy, according to McAdoo. “For five days, we had lines out the door, people wanting to withdraw their money. I set up a table outside the front door for management employees, so that we could explain the difference between us and Enron Corp,” McAdoo recounted. “We explained that Enron had no control over the money in the credit union and that member deposits were backed by NCUSIF. For many people, that’s all it took,” McAdoo said. “But we lost about a third of our deposits and about 1,000 of our members in the first few weeks.” In fact, the credit union had $90+ million in assets December 1. Less than five months later, the credit union is significantly leaner at $53 million and 11,500 members. Following Enron Corp.’s announcement, the credit union immediately sent out communications to members via direct mail, e-mail and Web site that addressed the safety and soundness of the credit union and the fact that the credit union was looking for a new physical location. “Many people did not want to come back into the Enron building.for any reason. Fortunately, the credit union is a member of Texas Credit Union League’s shared service center network, which has multiple locations in the Houston area. This turned out to be a blessing for us. We also notified members of our goal to open a new office with very public access.” In addition, members could access credit union services through Internet banking, the 24-hour lending call center and ATMs. “Our communications basically just asked members to bear with us and told them the name and logo would be changing. The old name was on checks, credit cards, forms, everything. It was big. We also made sure they knew we were here to help those who had been affected financially, through extensions, refinances, etc.” Next, the credit union hired Easterly & Company, a local business branding firm, to give them a new identity. “We knew we needed advice from experts,” McAdoo said. The credit union, with the company’s assistance, came up with a list of approximately 600 potential credit union names, with 8-10 making the short list. Then three focus groups met: one for members (current or former Enron employees), one for people who had no association with Enron Corp., and one for credit union employees. The responsibility of the focus groups was not to pick a name, McAdoo said, but to react to names. Ultimately, the staff chose the StarTrust FCU name because they felt it exemplified the credit union’s trustworthiness and shining service. The new half-rising star logo is accompanied by the tagline, “Going beyond banking.” As the media began to uncover the enormity of Enron’s problems, not surprisingly NCUA became very interested in the credit union’s situation. “They have been very helpful – not hampering – but they definitely want to know what’s going on. We’ve gone over our financials, our liquidity, our capital to satisfy their questions,” McAdoo said. One reason the credit union has fared as well as it has is the unified front presented by its staff of 24. “You asked me what a CEO thinks in this situation. My answer is, `What if I lose my key people?’ My management team has been critical to me during this time,” McAdoo said. “They singularly pledged their commitment to seeing this thing through. We’re not out of the woods yet, but we’re getting much closer.” McAdoo has communicated regularly from the beginning with all employees. Initially, he said, they were very concerned about their jobs. “Sure, that was their first question. I told them I needed them. We’re moving to a new location.” Fortunately, the credit union’s management and board of directors place a high priority on strategic planning. Interestingly, Enron FCU had discussed adding select employee groups to its membership in the past, but decided it was not feasible at the time because “Enron was growing so quickly.” However, one of the scenarios considered in their strategic-based planning was “What would we do if our sponsor company went away?” Although they believed this had little chance of happening, they did preliminary planning for the possibility. “We believe you can’t accurately predict the future with 100 percent accuracy, but you can predict a range of scenarios that are probable. Of the four scenarios we came up with for our credit union, we felt the disappearance of our sponsor company was the least probable,” said McAdoo. “After what has happened, I am now a strong proponent of this kind of planning.” “As a result, we knew we had to do three things: change our name, change our location, and expand our field of membership. All these are now happening simultaneously.” The credit union has leased space in a nearby building and expects to move in late May. StarTrust FCU has amended its charter to include several companies that have purchased large asset groups of Enron Corp. and also underserved areas in and around downtown Houston. Overall, the credit union has weathered the storm well, but McAdoo feels they could have minimized repercussions if they had not believed they were immune to the “disappearance” of their sponsor company. “When times are good, it’s easy to have blinders on,” McAdoo said. “I would offer extreme words of caution for any credit union in this (single sponsor) position. Enron Corp. was a Fortune 7 company. Within a three-month period, they were completely wiped out. And no one really knew what was going on until it was too late.” McAdoo hopes some of the members who left the credit union will return as word reaches them of the credit union’s new identity. Members who have maintained credit union accounts are pleased with the new name and are excited about the new location, he said. “Of course, they’re very anxious to get new checks and credit cards without the Enron name on them,” he said. -</p> <p>[email protected]</p>

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