MIRAMAR, Fla. – When Eastern Airlines folded its wings in January 1991, its credit union might also have become history. Fortunately, about six years before the airline's bankruptcy hit, Eastern Financial Florida Credit Union started aggressively wooing SEGs. The core sponsor airline seemed healthy, but the credit union decided it was time to broaden the membership base. "It was in anticipation of the danger of single-sponsor credit unions," explains current President/CEO Kent Herbert. "I know there are some other airline credit unions doing the same thing right now. The CEO at the time convinced the board of directors to diversify. "It's a good thing he did. Had he not, we would not be here. During the two years following Eastern Airlines bankruptcy, the credit union wrote off pretty close to $50 million," says Herbert. Since then EFFCU has cultivated a strong business development staff. While other credit unions add sponsors from time to time, at EFFCU it's a deliberate strategy that has drawn 900 companies into the FOM. By switching from a federal to state charter, the credit union has also expanded to serve entire counties as well as specific employee groups. The FOM now covers Miami-Dade and Broward Counties on Florida's east coast and Hillsborough and Pinellas Counties on the west side of the state. "We have not made an application with the state, but I assume our next growth would be north (on the east coast) into Palm Beach County," Herbert says. As the credit union has expanded, membership has evolved to serve a very broad demographic spectrum. The rolls still include about 30,000 former Eastern Airlines employees. But that number is shrinking. "I would say our membership profile probably looks a lot like most financial institution demographics, a bell curve with the young members on one side, then a larger number of people in their 40s and 50s, then sloping down again on the other side with older and retired members," Herbert explains. "It matches very closely the demographics of Florida. It's a very mobile population here. There's a lot of relocation not only into the state, but within the area. There's been enormous movement from Miami-Dade County to Broward County. It's very heavily Hispanic. That's true of your member base. It's true of your employee base," he adds. "It's not a challenge. It's an opportunity. You simply have to be aware of it in your marketing, in your product offerings." That also means staying tuned to differences between Florida's east and west coast, Herbert continues. EFCU operates very different marketing programs for the two regions. Herbert believes the biggest competitive barrier EFFCU faces is the fact Florida is a heavily-banked state, including all the major players with their extensive branch networks. In addition, there are also large credit unions -a number ranking in the Billionaires Club – who are more than willing to accept new members. The mobility of the Florida population means there's very little loyalty to any particular financial institution. It's a shopper's world, just as it is when someone eyes the grocery ads for Albertson's and Publix. Price, delivery and service rule. "It's particularly important to us because we don't have a core sponsor," Herbert points out. "A lot of the larger, billion-dollar credit unions with multiple SEGs still have a strong sponsor. GTE (FCU) still has all the telephone workers. McDill (FCU) has people from the Air Force base and other military. South Florida Educational (Employees FCU) has all the teachers. "We don't have anything like that. We really have no peers. Like every other business we look at our peer groups, and our peer groups are very different," says Herbert. The importance of convenience to current and potential members explains the fact EFFCU has 18 branches, with another eight on the drawing board. In addition to those new branches, two storefront locations will convert to freestanding branches. Growth and branch expansion will be a major thrust during the next two or three years, Herbert says. Like many Floridians, Herbert has roots elsewhere. After graduating from Marquette University in Ohio with a degree in accounting, he spent much of his career in what he terms "that other industry" – banks. He appears to have made the shift from bank to credit union. "The bankers bother me," he states. "Although I came from that industry, I don't like the terrible logic they use, and the whining. The whining of the bankers is probably my pet peeve." The Wisconsin native spent most of his adult life in Chicagoland. He's married, with grown children. He joined EFFCU seven years ago as COO. At that point the credit union had just under $800 million in assets. He has been CEO for three years and figures he shares a lot of characteristics of CEOs in billion-dollar organizations. He's an acknowledged workaholic and considered a Type A personality. When he tries to deny his Type A status, people laugh. Even so, he considers himself very approachable with the door open to any employee. "I expect my executive staff will operate the same way – and they do. We all try to interact with the employees and communicate well with them. Although we may not do as good a job as we could, we're trying," Herbert emphasizes. He believes that approach is rewarded with strong employee loyalty. Turnover runs about 8% a year, compared to 25% at many financial institutions. As CEO, he says, he stresses a team-oriented, empowered approach. "I try to make this, as much as you can in a financial institution, as little like a vertical organization and as horizontal as possible," Herbert says. He believes decisions should be made at the lowest possible level. Granted, a financial institution faces more constraints than Nordstrom, for example, the high-end retailer legendary for allowing sales associates to grant customer requests. But employee power has been broadened at EFFCU. To help carry out that commitment, EFFCU boasts a large training department which has been working for about three years instilling empowerment and a sales focus. Eventually all employees, including production as well as member contact staff, will qualify for incentive opportunities. "We have a very, very strong sales culture," Herbert notes. "That's something I brought here. In this day and age, with competition and the squeeze on margins, you need a lot of product offerings and a lot of off-balance-sheet income." The sales emphasis is reflected in the branches. There are no branch managers. Each branch has an operations manager, who oversees day-to-day activity, and a sales manager. Those sales managers spend most of their time outside the branches calling on current member companies and recruiting new firms. Branch sale managers are backed by an EFFCU business development staff which also recruits new sponsors, places ATMs and holds credit union days. This year the credit union expects to stage approximately 800 credit union days at member companies, signing up new members and taking loan applications. "That will be my legacy when I leave here – empowerment and a sales culture. Those are the two things I want to have fully accomplished when I leave here," Herbert declares. -

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