SAN DIEGO - Keeping remote branch staff working together as onecohesive unit is a struggle for many credit unions, especiallythose with branches located in multiple states and time zones. Butthat struggle seems like a cakewalk compared to the challengesfaced by the $677-million USA Federal Credit Union, which operates11 branches in Japan and Korea, outnumbering the credit union'seight domestic branches. Overseas branch service is an importantniche market for USA Federal. Although the multiple sponsor creditunion counts both military and non-military SEGs in its field ofmembership, many of the credit union's 61,000 members are active orretired military personnel. USA Federal was originally chartered in1953 to serve Naval personnel in San Diego. Following WWII and theKorean War, the U.S. military set up permanent bases in Japan andKorea, and in response, USA Federal opened its first overseasbranch in 1969. Janet Walters, Vice President, Branch Support,explained that military personnel overseas usually have only oneoption for branch service: the military's contracted CommunityBank, owned and operated by Bank of America. However, credit unionsmay petition the Department of Defense to request a geographicalfranchise, which allows them to operate overseas as a guest of theU.S. military. Upon military approval, the credit union works withthe NCUA to add the military base to its field of membership, muchthe same way it would add a new SEG. Walters was put in charge ofoverseas branch operations in 2002, as part of the institution'seffort to get overseas branches in compliance and more involved inmain office activities. To meet this goal, Walters visited all ofUSA 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 tostateside regulatory requirements, organizations operating inforeign countries must adhere to a Status of Forces Agreement(SOFA), which is negotiated between the U.S. Government and thehost country. Although Japanese branch employees are U.S. citizens,per SOFA regulations in Korea, USA Federal must give preference toKorean nationals when hiring for non-management positions, and mustallow foreign employees to observe Korean holidays. In order tobridge the gap between foreign employees, military commanders andcredit union headquarters, USA Federal created two RegionalDirector positions to oversee branch operations: one located inKorea, and the other in Japan. Both Regional Directors havemilitary experience, as well as experience speaking the nativelanguage and understanding local culture. Thanks to their militaryexperience, Regional Directors and Branch Managers provide valuableassistance to young military personnel, developing a sense of trustwith the young members thanks to their "been there, done that"perspective. "We see a lot of 18-year-old soldiers who have neverhad a checking account or a loan before, and here they are goingbuck wild in another country," Walters said. "Our employees can sitdown with them, speak their military language and share theirexperiences. When they (soldiers) come back stateside, they see usas a service provider they trust, and a good deal are still with usyears later." Managers overseas also provide valuable stafftraining assistance, especially for foreign employees. "We musttrain all branch employees to offer products and services tomembers in English, as well as communicate with our main officestaff," Walters said. Walters said she was impressed with howoverseas branch employees embraced organizational sales objectives,and how eager they were to meet service standards and compliancerequirements. Overseas branches even have the same sales goals asdomestic branches, despite language barriers. "I'm happy to say ourinvestment of time over there paid off," Walters reported. "Ouroverseas branch staff are often in the top 10 in our service andsales program, as branches and as individuals, and oftentimesthey're outpacing our stateside employees. Several of them havebeen in our President's Club for top sales, and the first branchthat completed our internal financial services certification was anoverseas branch." USA Federal's overseas branches are lessprofitable than the institution's domestic branches, but it hasmore to do with operational limitations than a lack of interest orstaff performance, Walters said. "Our overseas locations areslightly more expensive, because you don't have the same revenuestream to offset expenses as you would domestically," Walters said."The base dictates what you can charge for certain services, andaccess is limited to base personnel." USA Federal must bear thecost of all operational expenses overseas, unlike the contractedCommunity Bank, which is subsidized by the U.S. Government -ironic, given current banker claims that credit unions are unfairlysubsidized. Even the facilities themselves present a challenge,Walters said, recalling one branch in Korea that was located inQuonset hut in a former MASH unit, and didn't have working plumbinguntil recent renovations. Walters recognized the staff's dedicationto serving members, saying, "Despite the things they can't control,they still make it work and take pride in how much they can do formembers no matter the conditions." USA Federal contracts withZapper Services, an international payroll company, to handlepayroll for Korean employees. Because Korean employees areprohibited by SOFA from maintaining personal accounts at USAFederal, they must be paid in Korean currency, converted each payperiod based on current exchange rates. Zapper also provides Koreanemployees with a website to review pay stubs online in Korean, andfiles their income taxes with the Korean government. Althoughoverseas branches present a number of challenges, Walters said heroverseas personnel provide unique service to foreign spouses ofmilitary personnel, who sometimes need assistance in their nativelanguage. "It can be a difficult time if a spouse has nevertraveled to the U.S. and isn't familiar with U.S. law, but is facedwith making financial decisions if the soldier dies," Walters said."Our employees work with the spouses to assist them so they knowwhat to do with the life insurance check, or what they need to doto receive death benefits." Although the credit union offersroughly the same product and service mix as any credit union of itssize, USA Federal does require some unique insurance products,particularly for vehicles purchased overseas and funded through thecredit union. Walters said CUNA Mutual has been very helpful inseeking out international service providers if it is unable toprovide what the host country and U.S. military requires. CUNA alsoprovided credit protection training for USA Federal staff locatedin Korea, while the organization happened to be in the countryworking with local credit unions. Credit unions with memberslocated internationally owe thanks to USA Federal, which was thefirst credit union to link its overseas branches to the CU ServiceCenter network. Walters noticed members from other credit unionswere forced to use the base's Community Bank for branch service, soshe approached the FSCC and asked them to expand the networkinternationally. "Now, credit union members can make a deposit inKorea or Japan that their family can access stateside, withouthaving to go through the whole nine yards of wiring the money,"Walters said. -

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