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SAN DIEGO – Keeping remote branch staff working together as one cohesive unit is a struggle for many credit unions, especially those with branches located in multiple states and time zones. But that struggle seems like a cakewalk compared to the challenges faced by the $677-million USA Federal Credit Union, which operates 11 branches in Japan and Korea, outnumbering the credit union’s eight domestic branches. Overseas branch service is an important niche market for USA Federal. Although the multiple sponsor credit union counts both military and non-military SEGs in its field of membership, many of the credit union’s 61,000 members are active or retired military personnel. USA Federal was originally chartered in 1953 to serve Naval personnel in San Diego. Following WWII and the Korean War, the U.S. military set up permanent bases in Japan and Korea, and in response, USA Federal opened its first overseas branch in 1969. Janet Walters, Vice President, Branch Support, explained that military personnel overseas usually have only one option for branch service: the military’s contracted Community Bank, owned and operated by Bank of America. However, credit unions may petition the Department of Defense to request a geographical franchise, which allows them to operate overseas as a guest of the U.S. military. Upon military approval, the credit union works with the NCUA to add the military base to its field of membership, much the same way it would add a new SEG. Walters was put in charge of overseas branch operations in 2002, as part of the institution’s effort to get overseas branches in compliance and more involved in main office activities. To meet this goal, Walters visited all of USA Federal’s overseas branches twice a year between 2002 and 2004, spending as long as two months at a time away from home. Restrictions on overseas branches are excessive. In addition to stateside regulatory requirements, organizations operating in foreign countries must adhere to a Status of Forces Agreement (SOFA), which is negotiated between the U.S. Government and the host country. Although Japanese branch employees are U.S. citizens, per SOFA regulations in Korea, USA Federal must give preference to Korean nationals when hiring for non-management positions, and must allow foreign employees to observe Korean holidays. In order to bridge the gap between foreign employees, military commanders and credit union headquarters, USA Federal created two Regional Director positions to oversee branch operations: one located in Korea, and the other in Japan. Both Regional Directors have military experience, as well as experience speaking the native language and understanding local culture. Thanks to their military experience, Regional Directors and Branch Managers provide valuable assistance to young military personnel, developing a sense of trust with the young members thanks to their “been there, done that” perspective. “We see a lot of 18-year-old soldiers who have never had a checking account or a loan before, and here they are going buck wild in another country,” Walters said. “Our employees can sit down with them, speak their military language and share their experiences. When they (soldiers) come back stateside, they see us as a service provider they trust, and a good deal are still with us years later.” Managers overseas also provide valuable staff training assistance, especially for foreign employees. “We must train all branch employees to offer products and services to members in English, as well as communicate with our main office staff,” Walters said. Walters said she was impressed with how overseas branch employees embraced organizational sales objectives, and how eager they were to meet service standards and compliance requirements. Overseas branches even have the same sales goals as domestic branches, despite language barriers. “I’m happy to say our investment of time over there paid off,” Walters reported. “Our overseas branch staff are often in the top 10 in our service and sales program, as branches and as individuals, and oftentimes they’re outpacing our stateside employees. Several of them have been in our President’s Club for top sales, and the first branch that completed our internal financial services certification was an overseas branch.” USA Federal’s overseas branches are less profitable than the institution’s domestic branches, but it has more to do with operational limitations than a lack of interest or staff performance, Walters said. “Our overseas locations are slightly more expensive, because you don’t have the same revenue stream to offset expenses as you would domestically,” Walters said. “The base dictates what you can charge for certain services, and access is limited to base personnel.” USA Federal must bear the cost of all operational expenses overseas, unlike the contracted Community Bank, which is subsidized by the U.S. Government – ironic, given current banker claims that credit unions are unfairly subsidized. Even the facilities themselves present a challenge, Walters said, recalling one branch in Korea that was located in Quonset hut in a former MASH unit, and didn’t have working plumbing until recent renovations. Walters recognized the staff’s dedication to serving members, saying, “Despite the things they can’t control, they still make it work and take pride in how much they can do for members no matter the conditions.” USA Federal contracts with Zapper Services, an international payroll company, to handle payroll for Korean employees. Because Korean employees are prohibited by SOFA from maintaining personal accounts at USA Federal, they must be paid in Korean currency, converted each pay period based on current exchange rates. Zapper also provides Korean employees with a website to review pay stubs online in Korean, and files their income taxes with the Korean government. Although overseas branches present a number of challenges, Walters said her overseas personnel provide unique service to foreign spouses of military personnel, who sometimes need assistance in their native language. “It can be a difficult time if a spouse has never traveled to the U.S. and isn’t familiar with U.S. law, but is faced with making financial decisions if the soldier dies,” Walters said. “Our employees work with the spouses to assist them so they know what to do with the life insurance check, or what they need to do to receive death benefits.” Although the credit union offers roughly the same product and service mix as any credit union of its size, USA Federal does require some unique insurance products, particularly for vehicles purchased overseas and funded through the credit union. Walters said CUNA Mutual has been very helpful in seeking out international service providers if it is unable to provide what the host country and U.S. military requires. CUNA also provided credit protection training for USA Federal staff located in Korea, while the organization happened to be in the country working with local credit unions. Credit unions with members located internationally owe thanks to USA Federal, which was the first credit union to link its overseas branches to the CU Service Center network. Walters noticed members from other credit unions were forced to use the base’s Community Bank for branch service, so she approached the FSCC and asked them to expand the network internationally. “Now, credit union members can make a deposit in Korea or Japan that their family can access stateside, without having to go through the whole nine yards of wiring the money,” Walters said. -

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