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WEST PALM BEACH, Fla. – Credit Union Times has selected Wescom Credit Union CEO Darren Williams as its 2004 CEO of the Year. With all the talented CEOs in the industry, it was a difficult choice. Williams, however, stood out above the rest last year, and here’s why. Williams, 44, has been leading the $2.9 billion credit union for eight and a half years and has produced some stunning performance numbers, but there’s one stat that means more to Williams than any. It’s not assets, capital, loan or share growth – it’s member growth. In a time of flat member growth across the industry, Wescom is bucking the trend. Over the last three years its membership rolls have swelled an average of 11% – including 14% in 2004 – to a total of 241,000 members. When he started as CEO, Wescom had approximately 100,000 members. The CU’s assets have tripled under Williams, but the member number numbers are what excite him. “Membership growth is the number one priority. We look at that as the key and follow it closely. Frankly that’s what drives share and loan growth.” Wescom has tremendous potential to grow members with its six-county Southern California field of membership. If you want to add members, says Williams, there are two things you must do. First you have to have an adequate branch network. The credit union had only 11 branches when he came on board- today it has 35, and by year-end ’05 it will have 40. It adds about four branches a year. If you’ve been in one Wescom branch, you’ve sort of been in them all. “Our branches look very traditional. They have all been renovated to have the same look and feel. It’s not a high retail feel. Our format is you walk in and it’s very much like a Starbucks – very inviting, very comfortable, very spacious, very warm,” he said. Ten of its 35 branches are scaled down versions located in supermarkets. The second factor for adding members is you have to be willing to spend the dollars to get the credit union’s name out there – you have to market. “We think it’s absolutely essential to have a strong annual marketing/advertising budget. This year I’d say it will be $4 million-plus,” he said. The CU calls on a mix of in-house and outsourced marketing talent, and will utilize almost any medium to advertise – cable television, billboards, newspapers, and radio. Part of Wescom’s marketing plan is name ubiquity. Attempting to make Wescom a household name in a region of the country flush with large banks such as Citibank, Wells Fargo, Washington Mutual and others isn’t easy. One way to do that is community involvement, and Wescom does it to the max. About five years ago it created the Wescom We Care Foundation, its own 501c(3) non-profit charity run by Wescom employees with a board of directors made up of Wescom employees. “Every year the board selects a half dozen charities within our community that they wish to support. Our employees then will contribute via payroll deduction. The credit union matches their contributions and pays for the administrative functions so employees know every single dollar goes to charity.” Employee contribution is completely voluntary. Williams said approximately 55% of its 700 employees choose to contribute and last year gave $100,000 of what would have gone into their pockets to the foundation. The foundation is also active in all types of charity events, ranging from food drives to walkathons. “The key is whether it’s an in-house fundraiser or participating in another charity’s walkathon, the employee-managed foundation is in place to coordinate all of the efforts,” he said. Some efforts have produced much more than the CU could have hoped for. For example in one drive to help domestic violence survivors, the CU was able to collect 846 previously-owned cell phones (that were reprogrammed to dial 911) to be donated to domestic violence survivors. This served a public good, and also earned the CU some ink in local news stories. Another vehicle Wescom uses to permeate its name is its speaker series. The speakers program is open to all members and consumers free of charge, and features expert speakers on economic and consumer issues. For example in one event last election year it had two of the state’s leading economists discuss the policy issues of the two presidential candidates, ranging from social security to health care. The events often attract 300-plus attendees, with only about half of them being members. They are educational for consumers, but they present Wescom one more opportunity to sign up new members. Wescom is not overly obsessed with name penetration however. Last year when it merged with Unocal FCU, it wanted to maintain the Unocal name because it was so well-respected by Unocal members. Unocal FCU now operates as a Wescom division, but all the visible branding features Unocal. “Their membership had a close affinity for Unocal corporate, so rather than just simply merge, we thought there’d be some value in keeping that distinct brand. I can’t tell you how many phone calls I’ve fielded form other credit unions who are interested in doing the same thing,” said Williams. Serve Them, Don’t Sell Them What do you do with members once you get them? You serve the heck out of them so they don’t go anywhere and become the CU’s best marketing asset. It’s in serving members where Williams the contrarian emerges. Wescom does a number of things that go against what many CUs are doing these days. First, while he believes in aggressively selling the CU’s name in the community, he doesn’t believe in selling its members. You won’t find Wescom tellers or member service reps cross-selling members. That’s certainly different these days. Talk to any data processing sales person and they’ll tell you credit unions want systems that can get at member data so they can use it to cross-sell members. Wescom has the tools to match up members with products if the member so desires, but employees are not there to sell. “We cringe at cross-selling. I’ve made it clear that we don’t have a sales culture at Wescom. There are no sales quotas, no sales incentives. It’s all about service. I think you can only have one culture. So our personality, our culture, is service. If we focus on service, sales will come out of it. I see organizations all the time that focus on sales, sales, sales and sales come out of that not service,” said Williams. Wescom certainly has plenty to sell members. In addition to all the core lending and deposit products, it offers a full menu of investment and insurance products through two CUSOs. In fact at most Wescom branches, members can purchase investment and insurance products through reps who are on site. Its investment and insurance CUSOs bring in $6 million and $3 million in annual revenue respectively. Service is about more than just products, says Williams. In fact he doesn’t consider the CU’s rates, although better than most in Wescom’s market, as a major advantage – to him service goes further. The CU is always looking for creative ways to get that service advantage. For example during December, members can have their holiday gifts wrapped in Wescom branches at no cost. Williams said the CU wrapped approximately 10,000 gifts free of charge last year. To best serve members, you need to speak their language and in diverse Southern California that doesn’t mean just speaking English and Spanish. “We have employees who are fluent in 10 languages: Spanish, Vietnamese, Tagalog, Chinese, Armenian, Arabic, Hindu, Russian, Gujrati and American Sign Language,” said Williams. The CU keeps a phone roster separated by languages spoken so members can be routed to someone who they can communicate with. Williams said although relationship pricing is not part of Wescom’s strategy, it uses the concept to provide a service advantage to its high-use members. It dubs some members Signature members by virtue of the number of relationships they have with the credit union. Similar to first class flying, Wescom offers these members unique check and statement designs and provides them a separate dedicated 1-800 member service number which is manned by its most experienced member service reps. All Business, But Not For Business Another area where Williams goes against the grain is business services. Credit unions, especially those in Wescom’s asset range, are introducing business products and services at a feverish pace, and why not, it’s one more area of growth – but Williams doesn’t think it fits Wescom. “It’s a strategic decision we made and one we revisit. Each time we’ve concluded this is what we do best. We lack the expertise, the systems and our branches are not conducive for commercial services. It’s not to say we couldn’t do it, we could, but that’s not who we are.” Williams also wants Wescom to see members, literally. Transactions may be cheaper via online banking or at the ATM, but he doesn’t think you gain a service advantage remotely. “I know a lot of financial institutions for years have been trying to migrate members to the more automated and remote delivery channels. We don’t have a migration strategy, we want more members in our branches. That is a way to deliver on the service quality differentiator. It’s hard to do that through an ATM, hard do to that through home banking. We want to see them or talk to them on the phone,” he said. Not so fast Mr. Williams. While he doesn’t want to push the remote services, the CU must be doing something right with them. It boasts some impressive remote delivery figures. Here are just a few: 55% of members with checking accounts are active Internet banking members; 25,000 Wescom members receive electronic statements only; and 20,000 members are active bill pay users. Wescom is actually very high-tech. Its Wescom Resources Group CUSO helps other credit unions get more out of their Symitar core system. WRG acts as a service bureau provider for the Symitar system for eight CUs, and has 56 other CUs using its products, ranging from software for ATMs to disaster recovery. Controlling the member relationship is crucial to Williams. He is not a big believer in outsourcing products and services to third-party vendors. Case in point is investment products. In part spurred by an SEC interpretation of a rule affecting CUs and investment services, last year Wescom brought broker/dealer services in-house. It previously offered investment services through a networking arrangement with CUSO Financial Services. It is still an owner in CFS and utilizes some of their back office and administrative services, but members are served by its CUSO, Wescom Financial Services, now a registered broker/dealer. Again it keeps the Wescom name prominent to members. “The SEC change didn’t require us to register as a broker/dealer. We could have worked with a third-party, but our thought there was we like to control the quality of service our members get and our future direction,” said Williams. In fact over the years Wescom has broken ties with some “very good vendors” said Williams in an effort to keep control in-house. Speaking of control, Wescom is aggressively pursuing the expansion of its own proprietary ATM network, which now includes 350 Wescom ATMs. Williams said the ATMs, like branches, are part of its efforts to be more visible in the Southern California region. In addition to its proprietary ATMs, it does have a relationship with a third-party to co-brand another 200-plus machines, which are available to members surcharge-free. Wescom does do indirect lending via CUDL, which doesn’t seem like a move for a CU that likes control, but Wescom is not your typical indirect lender. “We don’t leave it to the vendor to establish the relationship with dealers. We have a staff of four or five individuals who directly call on the dealers,” he said. The employees decide which dealers will be part of indirect lending and maintain those relationships. Williams the Manager Williams said he expected to be asked about his management style, and knew he would have trouble defining it. “I don’t know how I would describe my management style. I think I’m pretty hands on in terms of wanting to be informed and keeping close to members and employees on the front line. But I also believe that I delegate pretty freely to my direct reports. I have extremely capable people working with me. I don’t need to directly supervise or monitor their work,” said Williams. Wescom has approximately 65 department and branch managers, and an executive team of about 20, of which approximately eight are at the senior executive level. The president’s staff, which is the SVPs and Williams, meet weekly, while the entire management team meets one a month the day after the board meeting. “Some of the best use of my time is visiting the branches. I try to be very visible, that means driving all over Southern California. I have lunch with employees a couple times a month. Once a month I meet with department heads of branches for breakfast before we open. I guess part of my management style is being visible.” Great communication with employees goes hand and hand with great leadership, said Williams. Williams meets with all new employees and believes in indoctrinating them on the history of credit union, the history of Wescom and the direction and philosophy of the credit union. “From time to time we have outsourced climate surveys. One thing we consistently hear is how well the front line reps understand the mission of the credit union, that’s more than half the work here.” Williams doesn’t want employees isolated, working in their own little world. Once a month Wescom links all 700 of its employees in multiple locations together via a video conference. What can you really get done in that kind of meeting? Williams says it’s more about celebrating the staff and having a little fun. He spends about 20-30 minutes delivering the president’s message, where among other things he will recognize a branch or department that has helped achieve some organizational goal. Wescom pays above market rates to keep employees, and also utilizes a team-based variable pay package to offer bonuses. The CU’s employee retention rate is about 70%. Williams said he’d like to see it a little bit higher, but given the nature of some of the jobs and a high percentage of students working in lower level jobs, it’s probably close to its peak. The video conferences are also a chance for employees to take their shot at the CEO. “We’ll spend five or ten minutes playing a game called `Stump the CEO’. They can ask me a question about the credit union, and if they stump me, I’ll buy the department or branch lunch,” he said. It’s not exactly an easy game said Williams. Some departments will bring out tough statistical questions, though Williams is still batting about 500. Doing its Part for the Movement Williams is very aware of the banker attacks and the damage they can do. “All they (bankers) want is the business. They would like to put us at any competitive disadvantage to get it. Fortunately our elected officials understand that taxing credit unions is only going to pass more fees on to their constituencies. Consumers, whether they’re members or not, benefit from this competition,” said Williams. About three years ago Wescom wanted to up its political activity, so it hired a vice president of regulatory and legislative affairs whose job it is to make sure state and federal officials are getting good information about Wescom and credit unions. “We take an active role in advocating for consumers in general, not just Wescom or credit union members.” Taking its political presence a step further, Wescom recently created a federal and state PAC. He said initially the CU will be looking to its management team and board members to contribute, though it might broaden out down the line. He stressed Wescom wants to take on consumer issues, not just CU issues. Wescom has also been a good credit union citizen when it comes to mentoring other credit unions, and even helping new credit unions get off the ground. It’s currently helping two groups – one in East L.A. and the other a consortium of Indian tribes in Southern California – form their own credit unions. Leadership and Life Williams points to one brief influence early in his CU career, and one powerful influence midway in his career, that have helped shape who he is as a CEO and in some respects a person. “I worked for Bob Pacheco at Hughes Aircraft FCU for only six months. With me as a new credit union person, he really demonstrated the credit union philosophy. He let us know what credit unions were all about. That was my foundation in credit unions,” said Williams. The Pacheco experience was important said Williams because during college he worked at a bank, though he doesn’t consider himself a “former banker” because his bank experience was so early on and relatively brief. Probably his biggest credit union leader influence was Orange County Teachers FCU CEO Rudy Hanley, who he worked under for eight years. “It was one of the best things I could have done to equip myself for success,” said Williams. “Some of the things that stand out would include the importance of communication in leadership, the value in showing sincere appreciation of others and that, above all, integrity and honesty are the most important qualities of any leader.” As for his personal interests, for Williams it’s all about family. “I’m not a golfer, I gave that up years ago and have been much happier ever since. I tried the fishing thing. I think it’s just like the golfing thing; I don’t have the patience. Outside of the office, its’ family time,” said Williams. Besides who needs golf or fishing, when you can have hockey, soccer, dance, and all the other activities he experiences through his kids’ interests. Williams has four children, Ryan, 19; Alexis,15; Matthew, 15; and Amanda, 8. Being the type of leader that has produced the results that helped earn him CEO of the Year honors isn’t always easy on the family. “I enjoy the job immensely. The only tough aspect, and I’m sure it’s one we all struggle with, is the balance between work and family. I don’t work 12 hour days, but the family is always sacrificing for the good of the credit union,” said Williams, whether it be travel or being on call to deal with a credit union issue. Williams above all feels very fortunate to have landed at Wescom, and says you can’t take a good opportunity for granted. “I think I have been real lucky. This organization was just an enormous opportunity. It was really well positioned when I got here, and to have the opportunity was just the ideal situation.” -

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