"Standing in the lobby and asking questions of members and staff in my opinion is not micro-managing," declared Bob Kravetz, chairman of Department of Labor FCU who spoke on a governance panel last week.

Kravetz's view sparked a debate among audience members with one challenging the D.C. chairman that indeed interfering in the teller line with questions directed to members amounted to micro management.

"Certainly not," declared Kravetz, maintaining he routinely spends time in the lobby chattering with members about CU services. Volunteers, he said, need to be curious and probing to find out what members really think of the CU and what kind of service they are receiving.

Kravetz emphasized that when he receives negative or positive information he simply passes it on to the CEO.

Supporting Kravetz was Mickey Hayes, CEO of Sweetwater Teachers FCU in Texas who said he would not mind at all if one of his directors did the same. "I think it's good PR for the chairman to be in the lobby," said Hayes.

Kravetz, who is in his ninth year as Department of Labor chairman and recently moved near Tucson, Ariz., said he expects to retire from the board next May but will stay on as "director emeritus."

That title is one developed by the CU, he said, to make use of the experience and talents of retiring board members, like himself. The director emeritus will not have voting powers.

A spokeswoman for the CU said she was unaware of any other CUs in the D.C. area having the "emeritus" title.

"I think that is as rare as term limits," she said. "I have only heard of director emeritus on league or association boards."

In his talk, Kravetz stressed the need for new directors to become quickly familiar with CU lingo and policies. A Department of Labor career administrator, Kravetz said one of the most difficult parts of the job just a short period after agreeing to be a director and then elevated to chairman was to fire the president/CEO.

Regulators found the CU underperforming and told the chairman action had to be taken quickly. "We did have a dysfunctional credit union," recalled Kravetz who also spent a year and half of litigation brought by the ousted president against him and the CU.

"We won," concluded Kravetz.

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Coakley of St. Agnes in Maryland Is 'Director of Year'

LAS VEGAS — Paul Coakley, chairman of the $35 million St. Agnes Employees Federal Credit Union, Baltimore since 1982, has been named "Director of the Year" at the annual National Directors Convention.

Coakley, a retired administrator at St. Agnes Hospital and now a community college professor in Baltimore, was honored for his "vision, dedication and passion" to the industry and his willingness to teach others about CU worth.

During his tenure, "he has worked with 53 different directors," said Ben Rogers, conference chairman who awarded Coakley a plaque from the stage at the Rio Hotel/Casino.

Coakley, who has been a volunteer since 1972 and who helped introduce share drafts and Visa to the CU, performed extraordinary but "quiet service" to his CU and the industry, said Rogers.

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Glatt Tells CU Directors Last Year 'Quite a Ride'

By JIM RUBENSTEIN

CU Times Senior Correspondent

LAS VEGAS — Tom Glatt, the president/CEO of Continental Federal Credit Union, provided credit union directors last week a primer on the travails of leadership and also called his clash with Wings Financial FCU a sobering testament to the strength of the CU movement.

In a critical look back at his year at the helm of the El Segundo, Calif. CU, Glatt warned anew of "parasites" which want to subvert the industry urging CU directors and managers to work hard at protecting CUs against more "hostile takeovers."

At the same time, the California CEO gave grudging praise to Wings management for its skillful use of blogs and other techniques geared to a youthful audience in managing to get as far as it did in pursuing the Continental merger before the NCUA stepped in.

"Their use of blogs was smart and well planned," in delivering its pro-merger message to young people, he told attendees in a wrap-up speech on the closing day of the four-day conference at the Rio Hotel/Casino.

Glatt also repeated his jabs at Wings for its unorthodox methods in pursuing the merger and he again pointed to Wings' own logo as raising questions about the ultimate intentions of the Apple Valley, Minn. CU.

"Do you notice the difference?" he asked the audience as a slide appeared on screen showing side-by-side logos of Continental FCU and Wings Financial noticeable without the name, "credit union."

As he has done here and in earlier talks across the country, Glatt said he was "very proud to be the CEO of a credit union" and despite the national drumbeat of alarm over declining member growth "America wants its credit unions," remarks that drew applause from the Las Vegas audience of nearly 1,900.

The former CU consultant, formerly based in San Juan Capistrano, Calif. and a favorite speaker at NDC meetings, called his Continental tenure "quite a ride" and the Wings bid a debacle but added also that not everyone in the industry "was on our side."

Much of Glatt's talk was devoted to understanding the tools of leadership and the need to "embrace change" by both directors and fellow CEOs.

He stressed the need for cooperation and complete honesty between boards and CEOs noting also the problems he has had understanding his own Continental volunteers who sometimes seem to vote on issues "as though they were employees of the airline" rather than of a CU.

One thing the year has taught him, however, said Glatt, is that CU management needs to quickly eliminate the staff naysayers who openly resist change. At the same time, the CU needs to appreciate those quiet individuals who may have the needed technology or youthful skills required for the CU to move forward.

He had high praise for his El Segundo staff for keeping the operation running smoothly while he was out front devoting all his time to the merger controversy and its wide industry ramifications.

A former U.S. Army captain, Glatt compared CUs to the military and its emphasis on discipline mentioning the need for leadership skills. Those skills were most evident, he said, in Continental FCU's chief operating officer, Alistair Harper, who he praised as having performed yeoman's duty.

Over the years and in his Continental experience Glatt said he's learned a lot about how boards function and warned directors to be wary of those "parking lot meetings" following the conclusion of a formal board meeting.

That is where real policies are decided and personalities discussed.

He also urged CUs to keep those directors on board who fully appreciate the rapid changes impacting CUs in technology and the internet, for example, even though those directors may not be fully computer literate.

Glatt cautioned directors to wean out those who say, "if it ain't broke, don't fix it" or 'we've always done it that way."

He joked, "those are the people I want to hurt."

Sounding a melancholy note, Glatt, who has spoken at NDC conferences for 11 years, said the 2007 session would be his last formal talk stating it was time for directors to hear other views and voices.

"Next year I want to be sitting down there with you," said Glatt who recalled the prayers he received from CU executives at his first NDC appearance when he had to suddenly alter his speaking schedule to take care of his daughter, Allison, who came down with hepatitis.

There were a few tears in the audience as Glatt relayed to the group that while the disease had been in remission, now it has come back "and I ask you put Allison on your prayer list."

As he has in earlier remarks, Glatt said he knew when he took over Continental FCU in August 2006 that his work in improving member service would be forbidding in light of 16.8% capital.

"16.8% capital can hide a lot of problems," he concluded

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Dames Details Huge SEG Growth at Mountain America

By JIM RUBENSTEIN

CU Times Senior Correspondent

LAS VEGAS — To hear Gordon Dames tell it, his success at the $2.3 billion Mountain America Credit Union indeed rests on charting explosive SEG growth unparalleled for any CU and follows those fierce banker attacks five years ago aimed at putting the so-called "mega CUs" in Utah and across the U.S. out of business.

And today Dames, the president/CEO of the suburban Salt Lake City CU, is not a bit shy of doing an "I told you so" thumb-in-the-eye kind of speech which could have been delivered to bankers but rather was directed at CU volunteers during the annual National Directors Convention.

Speaking at a breakout session at the conference, Dames voiced particular pride at Mountain America's astonishing four-year record of landing 1,500 SEGs serving 15,000 businesses in four western states.

At the same time Mountain America has witnessed 20% loan growth, is adding 2,000 net new members a month, and has 1.64 ROA and 8.8% capital, Dames told the NDC.

In fact, Mountain America has to be careful how it handles any new business "so it doesn't come back to bite us," declared the CEO of the Utah CU headquartered in West Jordan.

As for the bankers and success they've had in the Utah legislature and courts in curbing CU field of membership expansion, Dames stressed that his CU simply converted from a state to a federal charter in 2003 and opted for SEGs as the most feasible growth route.

And as for Harris Simmons, the CU nemesis in Utah and chairman/CEO of Zions Bancorp and the immediate past head of the American Bankers Association, Dames told Credit Union Times he has little interest in banker doings.

"Look, Zions is a great bank but my job is to make Mountain America a credit union that serves its members well and so I don't spend one second of my day thinking about Harris Simmons," chimed Dames.

While CUNA in its advocacy campaigns repeatedly reminds CUs nationally about future bank attacks, Dames simply says that in Utah "Harris Simmons has lost his bully pulpit" once his ABA term ended last fall.

Moreover, in his remarks to the break-out NDC session at the Rio Hotel/Casino, Dames also said he relishes Mountain America's SEG ability to keep pace with Utah banks when it comes to picking up business accounts.

On that score, Mountain America works hard at making contact with major business groups in communities where it has its 48 branches, said Dames adding "we've made sure we are represented at every one of those chamber meetings and my managers tell me they simply smile at the bankers when they meet up with them,"

And still Dames said he has had to lose some of those very small home-grown small business to Zions and other banks "but I don't mind since I know some of the companies we've nurtured now need services that only a large bank like Zions can provide."

He cited a small Kanab, Utah manufacturer that had to be switched over and

he found out about the newfound bank connection "when I ran into the CEO at a chamber dinner."

In addition to chamber events, Mountain America also mines its media contacts on business journals and also concentrates on women's business groups, considered a prime area for new SEG development, said Dames.

The Utah CU holds family style events for "Company Sign Up Days" including outdoor barbeques as it promotes its complete shelf of products including direct deposit, checking, health savings accounts and 401k offerings.

Mountain America also has greatly expanded its SBA niche earning itself the top SBA CU lender in the country and repeatedly being honored by the agency for its lending prowess. Mountain America has also organized an SBA CUSO in Utah signing up 23 CUs as participants.

"I'd hope we can get 100 CUs to join the CUSO," said Dames.

The Utah CEO told the NDC session Mountain America makes use of NCUA's 24-hour computer-driven approval process on SEGs. The process is lengthier for SEGs with 5,000 employees requiring more documentation.

"Eighty percent of the SEG applications are approved automatically," said Dames with other applications periodically delayed for more audited data. Mountain America concentrates its SEG expansion on businesses within 25 miles of a branch and focuses on the largest businesses first.

Dames, in his NDC remarks, recalled the historical battle with Utah bankers culminating in Mountain America's decision in 2003 to convert to a federal charter along with nearly 20 other CUs in the state including the largest, the $3.9 billion America First FCU of Ogden.

On FOM, he said, "we went in Utah from having the very best charter in the nation to having the worst" prompting an agonizing decision by the board to convert unsure of the outcome.

The Mountain America decision surprised Utah lawmakers and on that front, "the bankers lied to them" of what might happen, said Floyd Tanner, the chairman of Mountain America who joined Dames in the NDC panel presentation.

In his comments, Tanner, a retired state tax agency executive, said that once given the facts about the SEG potential, directors agreed to pursue the conversion course and obviously have no regrets.

Touching on other areas, the outspoken Dames is not a fan of indirect lending calling it a "weakness" in the product chain.

"I think it is killing the auto loan business for many credit unions," he declared.

But on new SEG members and its contribution to the bottom line, Dames is prideful of Mountain America's record since the 2003 conversion. Its 25% new member growth has climbed every year since 2003 when it stood at 13%. Its 20% loan growth in 2007 has also doubled from the 10% rate in 2004.

–[email protected]

NCUA Seeking Advice from Other Regulators on Merger Disclosure Rules

By JIM RUBENSTEIN

CU Times Senior Correspondent

LAS VEGAS — NCUA is looking to other financial regulators like the Securities and Exchange Commission, for one, on disclosure and communication rules so they can be related to credit union mergers, NCUA Board Member Gigi Hyland told CU directors last week.

In a speech to the 30th annual National Directors Convention here, Hyland said her agency, which had to deal with the unprecedented Wings/Continental FCU case last March, is seeking the guidance to help chart future NCUA policies.

The rules being sought would apply to any type of CU merger "whether it be unsolicited mergers or credit union-to-bank conversions," she said.

"We want to look at the situation," she said noting that the SEC is being contacted because of its long experience on mergers.

In discussing new NCUA policies, Hyland said the agency encourages CUs within reason to challenge Camel rating designations when management thinks they are wrong. She said her office does not object to a "combative" stance provided the CU has good reason to stick up for its findings.

She also urged greater due diligence with third-party vendors on new products and services, an issue of long standing concern in the agency. She said CUs need third-party vendors to stay abreast of new products "and they can't do it alone."

She also urged greater development of strategic planning within CUs.

"Take the time to ask the questions," she told directors.

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Blaine Hits 'Mortgage Mess,' Plus ARM Product

By JIM RUBENSTEIN

CU Times Senior Correspondent

LAS VEGAS — The growing "mess in mortgages" is giving State Employees' Credit Union of N.C. a chance to promote a profitable ARM that can really help its members and win praise as a community service during a difficult time, according to Jim Blaine, president/CEO.

In a speech to nearly 1,900 directors opening the National Directors Convention here recently, the head of the Raleigh, N.C. CU said it "has not had a single loss" on its 100% ARM financing on a product directed to first-time home buyers . . .

"Now you tell me whether you would make 6-7% on these loans to first time home buyers or 4% at the corporate?" asked Blaine in describing the product as retaining those important "warm and fuzzy" characteristics.

He said the borrowers who ordinarily would be credit worthy renters "will end up loving you and their credit union."

While Blaine touched on the mortgage crisis and subprime problems, he stressed the need for CUs to look harder at payday products also as profit centers and a market that CUs can fulfill if handled carefully.

State Employees' own "Salary Advance" alternative is doing well categorizing the loans as also "warm and fuzzy" and appreciated by lawmakers. The 18% rate with a 5% savings feature has made State Employees the biggest payday lender in the state but it also has earned the CU "kumbaya praise."

Blaine said there are any numbers of areas where CUs can provide extraordinary service to less than blue ribbon borrowers citing loans on used autos.

He said these members could pick up a $7,500 car avoiding deals "with Fast Eddie" and instead pick up a former leased vehicle from Enterprise Car Rental. He said Enterprise has over 800,000 vehicles with turnover on 600,000 leases a year He said the CU has been working successfully with Enterprise after a Hertz Car Rental CU tie-in was dropped.

He also revealed plans for a linkup with the IRS on tax preparation help plus the need for providing trust services for those with under $25,000 in assets, plus products for the growing Latino market.

"Remember the sons and daughters of illegals are U.S. citizens," he told the directors convention.

For the industry as a whole, Blaine acknowledged that with tight margins these are really tough times for CUs joking thus it is realistic to say that CUs are "really non-profit".

–[email protected]