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VERNON HILLS, Ill. – Baxter Credit Union was only founded in 1981 and has already joined the Billionaires Club. It’s sort of like learning that your nephew, who graduated from college just a few years ago, is now a billionaire. What’s going on here? “For us, I really think it comes down to the fact we were in the right place with the right company, Baxter Healthcare,” says BCU President/CEO Michael F. Valentine. “It was a growing company and they embraced the credit union. We then took that and ran with it as far as understanding what had to be done. We’ve always been known as a loan machine. Lending has been the mainstay of what we’ve tried to do. I think we’ve stayed by that and by what’s right for the members.” While many credit unions are looking at community charters to spur growth, BCU has decided to continue aligning itself with large companies. Recently the credit union added Cardinal Health and Boston Scientific. The two companies represent a potential 50,000 new members. Putting that in perspective, Baxter Healthcare employs about 20,000. “We’re opening five new offices this year, and we’re branding the name. In other words, Boston Scientific Service Center provided by Baxter Credit Union. I think it’s important for these companies to think it’s their own – and it is.” The result – Valentine expects BCU to reach $2 or $3 billion in the next seven or eight years. More important than growth, he believes, will be keeping member satisfaction levels at the current 95% level. After completing his undergraduate degree in finance at Western Illinois University, Valentine hired on at Household Finance “selling 36% interest rate loans,” he recalls. “I knew Household Finance was going to be a great starting place for me because they were known for training people to really understand the lending side of the business.” In 1984, after Valentine had been at Household Finance for three years, then BCU CEO Rex Johnson recruited him. “When Rex and I were in the interview process, he asked what my plans were for further education. I knew the right answer was, `I’m going to get an MBA, Rex.’ ” Johnson indicated that was fine, and he’d like to see Valentine start earning his MBA during his first year at BCU. Valentine was hired, and exactly one year later Johnson appeared at his cubicle. Johnson noted he had not yet written a recommendation for Valentine to enroll in an MBA program. Was there something wrong? Valentine quickly began working on his MBA at Lake Forest College. Going It On His Own In 1994 Johnson and Valentine decided to leave the credit union and start a company called Lending Solutions Inc. Valentine spent about six months helping launch the firm. “ It was probably the best six months of my life, in that I really figured out what I wanted to do. It was Rex and me and an office. I was just five minutes from my home, so that was nice. The bad news is I was traveling a lot. The worst thing was most of the time it was just me alone in the office. I figured out very quickly I needed people around and enjoyed people.” Then one of the BCU founding board members, Samuel O’Kelly, called. Johnson’s job as CEO hadn’t been filled. Was Valentine interested? Valentine was interviewed and got the nod. At that point the credit union boasted $300 million in assets. It’s grown steadily since, despite impressive competition. In addition to large banks not only in the U.S. but institutions like Banco Popular in Puerto Rico, there are a number of community banks serving specific niches. On the deposit side, there are rivals such as ING and the major brokerage houses. As for other credit unions, “I think we work well together. As I say, we play well in the sandbox,” Valentine quips. But that doesn’t mean simply clicking on the cruise control and zipping smoothly along. “I think the whole taxation issue is still looming, and I don’t think you can’t not have that on your mind,” Valentine says. “I think the other thing that’s near and dear to us is our employees. Our employees are one of our key success factors. Retention and development of our employees, and getting them ready for the next stage, is important. “The growth we’ve had keeps a lot of people. It is about money, but it’s also about challenges. If you’re in a business that’s growing 15 to 20% a year, you’re going to get some people who see the opportunities.” When it was launched the credit union only offered deposits. Then after six or 12 months personal loans were introduced. More complicated loans were added, and BCU became one of the first to provide credit cards with a reward program. With Baxter Healthcare as a sponsor, the credit union began reaching outside Chicago, as far as Puerto Rico, to serve the company’s employees in various locations. About 20% of the membership is Hispanic, primarily in Puerto Rico where BCU now has seven offices. That has required not only developing bilingual printed material, but also a bilingual call center in Chicago. In addition, growth has also meant taking into account differences between each branch location. For example, Valentine notes a typical member in Cleveland, Miss., is likely to be a blue-collar worker earning perhaps $9 to $12 an hour. Some may be living paycheck to paycheck. A member visiting the branch in Deerfield, Ill., where Baxter Healthcare has its corporate headquarters, is more likely to be a white-collar employee interested in certificates of deposit and looking for investment advice. That demographic variety helps the credit union run at about 105% loan-to-share ratio. In Illinois the ratio is probably about 50 or 60%. In Puerto Rico it may be 250%. Deposits in Illinois can be put to work in Puerto Rico or Cleveland, Miss. To help members struggling to afford homes, especially in high-cost areas, the credit union is participating in a pilot 40-year fixed-rate mortgage program. It appeals to conservative members attracted by a fixed rate and lower monthly payments. “It’s not a huge program for us, and we probably do a handful a month. It was member-driven. We have a lot of members out in California where housing prices are very high, and at least they’re paying some of the principal,” Valentine says. “I think one thing we’ve always said is offer it to members and let them make the decision. Let’s not try to make the decision for them. It’s something we have on the shelf we can offer.” Off the job you’ll often find Valentine, who is married and has three children ranging in ages from 8 to 19, busy coaching his kids’ basketball teams. As soon as one of his offspring graduates from a team, another joins. Valentine describes himself as a mixture of Type A and Type B behavior. He’s always on the go, antsy in meetings, and a neatnick. But at the same time he’s patient with people and likes to stop and chat with people in the hallway. “We know he’s coming,” laughs one employee, “because he has a booming voice.” -

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