HONOLULU – When NCUA Board member Debbie Matz first announced her Partnering and Leadership Successes (PALS) workshops last year, there wasn't much excitement. But fast forward to today and PALS has become a dynamic, interactive event that credit unions of all sizes are participating in. The most recent workshop was held in Honolulu following CUNA's Future Forum, with almost 250 people attending. Although the crowds have grown, the interactivity remains. Each PALS includes an unscripted Q&A session and networking is encouraged throughout the event. Matz originally envisioned PALS to be workshops for a small group of CU leaders, but as the crowds have grown, PALS has had to adjust. It is now bringing in outside expert speakers and when it books hotels it is trying to find facilities where it can expand if necessary. According to Matz' office, it has unfortunately had to start turning away people, because of space issues. "PALS has been more successful than I ever could have imagined. Best practices shared in PALS workshops and on the PALS Web site have inspired other credit union leaders to offer innovative services they may not have considered before – services that have proven successful in reaching people who need credit unions the most," said Matz. So far there have been eight PALS workshops, with four more scheduled next year. Credit unions demonstrated their unique cooperative nature during the Honolulu PALS. Based on that event, not only do credit unions operate in a cooperative manner individually, but they are willing to share their ideas for building relationships with members with other credit unions. "It takes a willingness to serve, not just be order takers and mommies," Ka'u FCU CEO Bernard Balsis said. He explained that when he came to the credit union, it was community chartered but was not acting as such. With the help of small grants from NCUA, the credit union was able to expand into the underserved Ocean View area within its FOM. The credit union also was awarded a grant from Community Development Financial Institutions fund, partnered with other credit unions, became the first Small Business Administration-approved credit union lender in Hawaii, and participated out business loans. Outside help is crucial to the $10 million credit union. Ka'u FCU does not even pay rent for its branches that can be found in local businesses. Balsis added that the credit union was looking to establish a foundation focused on financial education. Products and services are key to adding new members, Suncoast Schools Federal Credit Union CEO Tom Dorety said. "You aren't going to get a lot of members if you don't have good products and services," he stated. Suncoast Schools set a membership growth goal of 8% for the year; Dorety estimated they would probably reach 9% by the end of 2004. "We're talking about members from all parts of the economic system," he emphasized. Suncoast Schools not only has 600 select employee groups, but it has added four underserved areas under Dorety's tenure. Among the services credit unions interested in expanding their membership should be studying are free checking, check cashing, and loan products, but not just any loan products: mortgages tailored to those of lesser means, such as zero down mortgages, and payday lending alternatives. Another factor is the convenience of these services. Offer them through branches, ATMs, phone service, and on the Internet; most members want it all, Dorety has discovered. Finally, no one will know you are out there if you do not do some marketing, he added. Suncoast Schools is using billboards and newspaper advertising, as well as rolling out television ads this year. "We've chose to continue to preach the difference between banks and credit unions," Dorety said of the ads. The credit union runs one aimed at the young, another at retired persons, and another targeting working people. Suncoast Schools has also formed partnerships with local kids clubs, a community development corporation, and has four branches inside high schools and hopes to add three more. Shreveport Federal Credit Union has decided to target younger groups to grow its membership, according to CEO Helen Godfrey. "After college, most students tend to stay with their financial institution," their surveys found. The credit union travels the area teaching financial literacy at the local schools, typically in grades five through seven. Shreveport FCU also surveyed to find out what young adults have as far as financial services and what they should be looking at. For example, 77% of 18-29 year olds have savings accounts, but only 31% have retirement savings plans and just 20% have mortgages. Godfrey explained that the credit union has set up a number of different clubs for all segments of the FOM. There is a Kirby Club for those under 12, a teen club, Club XCEL for 20-35 year olds focusing on small business and home ownership, and Spirit Club for faith-based organizations. The Kirby Club takes its members on a field trip to the zoo every year, Godfrey explained. "[T]hose kids never forget their credit union," she stated. The leagues are trying to play a role in this too, American Association of Credit Union Leagues Chairman Paul Mercer, president and CEO of the Ohio Credit Union League, said. Ohio credit unions have just a 24% penetration rate, but, on the other hand, that gives the state's credit unions a great potential to work with, he said. About four years ago, the league began to devote resources to reach out to the Hispanic community, which it realized was growing at a rapid clip. In Ohio, the Somali population is also on the rise, Mercer added. The league has dedicated one staffer to outreach, created an foundation aimed at education and outreach, started media advocacy campaigns, and is working to increase CU awareness. The Ohio league is reaching out in low-income communities through partnerships with Smart Money, Cleveland and Columbus Saves programs, and financial education efforts. Credit unions in the state have also started offering payday alternative loans. But the league is also helping credit unions turn to younger potential members as credit union membership grays. The state has two college-oriented credit unions, First Miami Student FCU and Kent State Student FCU, with student intern programs. Mercer emphasized that any credit union can implement these types of growth strategies. "It's got nothing to do with asset size. It has everything to do with attitude," he concluded. Next, the PALS workshop looked at how, once you create these new members, credit unions can maintain the relationship? Helping them build wealth certainly helps. One way USA FCU, which formerly had a military based field of membership, helps its low-income members earn wealth is by offering $50 certificates of deposit, according to CEO Mary Cunningham. On payday, members can make incremental deposits into these accounts, but with the same return as higher minimum CDs. The program has been so successful it was copied by the largest credit union in the world, Navy Federal Credit Union. USA FCU has grown 19% annually for the last three years, she said. Cunningham added that while she was the CEO of CUNA CU prior to coming to USA FCU, they offered an Individual Development Account Program by partnering with the social services agency in Madison, Wis. She emphasized that these programs are done more easily with a partner. Cunningham also held up State (N.C.) Employees Credit Union's payday lending alternative product as a shining example of helping members build wealth. The credit union recently began tacking on a small amount to loan payments that go directly into a member's savings account. The fund is used partly to secure the loan but it all goes to the member as savings at the end of the loan term. Dennis Cutter, CEO of Numerica Credit Union, said his credit union has begun offering dedicated savings accounts. These accounts are $25 to open but earn higher dividends than the typical savings account. Participants must save $1,000 before they can withdraw from the account without penalty. Numerica currently has $1.2 million in these accounts. The $500 million credit union also works with the Federal Home Loan Bank of Seattle on matched savings accounts called Homestart. For each dollar the member saves, they can get $3 back from the FHLB up to $5,000, Cutter explained. The accounts are aimed at first time homebuyers that make less than 80% of the national average income. They are given up to two years to save their money then the funds can be used toward the purchase of a home. This program also has financial education requirements to help members help themselves, Cutter said. Since April, Numerica has held 13 classes and certified 60 people for the program. In 2004, the credit union helped 12 individuals get $60,000 from the FHLB. Numerica is also concentrating on the growing Hispanic market, according to Cutter. To bring this segment in, the credit union offers bilingual staff, accepts matricula cards for identification, accepts ITINs for those without Social Security numbers, offers non-interest bearing accounts for those without a matricula or ITINs, and participates in the IRnet. "We believe knowledge helps to build wealth," US Federal Credit Union CEO Bill Raker commented. US FCU is out to curb high-cost tax refund anticipation loans through the Volunteer Income Tax Assistance program. Through the program, the taxpayer can see their return within one week, which helps them resist the desire for these loans, Raker said. He listed numerous products his credit union offers to help members build wealth, including first time homebuyer and zero down payment products and $5 share accounts. But US FCU also offers what Raker referred to as `value added' services. For example, the credit union provides a free vehicle buying service to help members understand the whole process and helps members buy and sell homes at a reduced rate through its real estate credit union service organization (CU Realty). "Our organization is one where our members can get service and values they can trust," Raker stated. New World Federal Credit Union (in Lafayette, Calif.) CEO Pat Wagner teaches members to save small change that can add up to thousands a year. Working one-on-one with many of her 1,500 members, Pat Wagner and her small staff are able to "treat every member as an individual." She demonstrated how members can save over $6,000 a year by limiting daily expenses, like making coffee at home as opposed to buying it at Starbucks. "This unique workshop offered shining examples of successful initiatives to serve new members from all walks of life," NCUA Board Member Matz, who initiated the PALS program, remarked. "Our eight panelists.clearly demonstrated how credit unions of all sizes can offer innovative services that will attract new members and help those new members build wealth." -

[email protected]