I'm asmall-credit-union guy and I'm proud of it. I spend a good portionof my consulting and volunteer time working with and supporting avery diverse group of smaller credit unions: rural, urban,single-sponsor, community, low-income, etc. It's the most rewardingwork of my credit-union career.

Dennis Fisher's comments in the Jan. 27, 2015, CUTimes article, “CEOWorries Industry Ignoring Loss of Small CreditUnions.” fairly represent a common theme that I frequentlyhear from smaller credit unions. Small credit unions, the majorityof total credit union shops, are frustrated. They feel overlookedand undervalued. They frequently feel like they are “trotted out”to the spotlight whenever the taxation issue rears its ugly head;then, when the fear has passed, they overhear comments from creditunion folks that smaller credit unions should just go away.

I agree with Dennis that healthy small credit unions are veryimportant to our movement and deserve greater attention. Fightingthe tax threat is important, but I believe their most importantrole is that they are most frequently the credit union locatedwithin a community that is still very actively involved in servingthe underserved market. More than a tax argument, the impact thesesmaller credit unions have on people of modest means in their localareas is the true benefit.

Here are five things smaller credit unions need or need todo:

1. Affordable access to resources, services, andexpertise

As a group, the net margin is very thin at smaller creditunions. Yet, they have the same regulatory requirements as largercredit unions and they have to keep up, the best they can, with newtechnology. It's simple: expenses that seem small to a largercredit union are large to a smaller credit union.

Technology, compliance, human resources, marketing, planning,you name it. An easy example is the required compliance audits forBSA/OFAC/ACH and the Safe Act. Trying to find an affordableprovider for these services can be tough. There is no shortage ofquality consultants in our movement, but, unfortunately, many smallcredit unions can't afford them.

2. Seek out and utilize the resources that are alreadyout there

The NCUA Office of Small Credit Union Initiatives is a hugeresource to many small credit unions. The annual capacity-buildinggrants for low-income designated credit unions and the EconomicDevelopment Specialist consultants provide valuable and affordableresources. However, access to these resources is limited whenconsidering the large number of smaller credit unions.

CUNA and many leagues are focusing more on smaller credit unionswith league products like free policy compliance and small creditunion councils, both good resources for smaller-member creditunions. The National Federation of Community Development CreditUnions provides access for members to community development tools,expertise, and secondary capital.

3. Mentors

Many smaller credit unions aren't as well connected as theirlarger counterparts. I have seen many success stories where alarger credit union or an executive from a larger credit union tooka smaller credit union under its wing. Their mentorshipstrengthened the credit union and increased member impact. Twogreat examples that inspire me are BECU and SECU.

I encourage smaller credit unions to seek out mentors at largecredit unions, but many are afraid the larger credit union willjust want to merge them – this is rarely the case. I have so muchrespect for the larger credit unions that provide support tosmaller credit unions. These leaders humbly serve and are the bestexample of credit-union collaboration.

4. Do a better job of sharing their stories

It may be surprising to some, but small credit unions can beinnovative too. For example, my small credit union clients couldteach a thing or two on how to access and leverage secondarycapital. There are untapped stories of serving the underserved thatneed to get to our legislative advocates, nationally and locally.It's inspiring stuff, and it keeps us connected to our roots.

5. Profitably grow if they are to survive

In spite of how they feel or the challenges they face, thereality is that small credit unions must figure out how toprofitably grow or they will eventually die. The credit unionmovement will continue to lose a large number of smaller creditunions that cannot figure this out.

The good news is there are many small credit union rock starsout there that are among the most innovative, profitable, andfastest-growing. Check out the phenomenal results at PacificNorthwest Ironworkers Federal Credit Union and Greater AbbevilleFederal Credit Union. They are small credit unions today, but willnot remain that way forever. Struggling small and mid-sized creditunions that want great guidance should check out Filene's “ThrivingMid-Sized and Small Credit Union” study.

The bottom line

I believe the heart of the matter is relevance. We're going toeventually run out of small credit unions. There are not enough newcharters formed to make up for the successful small credit unionsthat become mid-sized credit unions, and the small credit unionsthat don't make it.

Our primary focus should be on impact and I believe the greatestimpact is made in serving the underserved, overlooked, andlower-income target market. This is what the smaller credit unionsdo so well, and why they become so important for our collectivebrand, taxation, and CRA arguments. The more credit unions of allsizes reach out and serve these groups in our local communities,the stronger our collective brand and greater our relevancy asnot-for-profit financial cooperatives.

Scott Butterfield is principal at the Seattle-basedconsulting firm Your Credit Union Partner. He can be reached at253-507-2443 or [email protected].