The CEOs of the League of Southeastern Credit Unions and the NewYork Credit Union Association said Tuesday they signed a letter ofintent that will create the nation's largest league collaborationproject.

The trade organizations plan to establish a jointly ownedsubsidiary to consolidate their back-office operations and otherservices that are not state specific.

Bill Mellin, president/CEO of the New York association, saidover the first three years of operation, the consolidation isprojected to save each trade association millions of dollars.

“We have all kinds of numbers and projections, but we feelpretty comfortable that over a three year period we will be savingeach entity in excess of millions of dollars on either side of thepartnership,” Mellin said during a phone press conference. He alsosaid the partnership will allow both organizations to remainindependent.

Patrick LaPine, president/CEO of the Southeastern league, saidthe strategic collaborative partnership is different andunique.

“I think what makes this different than anything out there isthat most shared services companies really focus mostly onback-office operations, traditional finance, accounting, HR andIT,” LaPine explained. “What we are also doing here, which isunique, is that in addition to traditional back-office functions,we're also looking at anything between our organizations thatdoesn't have to be state specific. For example, communications,education and training, product development – those are allfunctions that don't have to be state specific.”

Both trade associations will continue to independently operatetheir local, state and federal advocacy programs as well asmembership relationship activities, LaPine and Mellinsaid.

“The other part is, and really is phase two of this wholeproject, is the creation of a new service corporation that would bejointly owned and jointly governed by both leagues,” LaPine said.“That would allow us to develop new products and news services forour credit unions, sign new remarketing agreements for creditunions and also liquid acquisition. That is what makes us uniquelydifferent than anything else that is out there.”

LaPine said the new partnership will establish the nation'slargest league collaborative structure that will include more than650 credit unions across three states, which manage $142 billion inassets and serve 12 million members.

“That [structure] is going to be a powerful voice in bothWashington and our state capitals, as well as with CUNA and othersystems partners that we work with and vendors that we do businesswith as we go out to try to find ways to bring new products andservices to our markets,” LaPine said. “Having that kind of scaleof who we represent and who the potential customer base is, Ithink, will be very advantageous to us.”

Shawn Wolbert, senior vice president of finance andadministration for the Southeastern league, will lead the yet-to-benamed subsidiary.

LaPine said the collaborative project will take two to threeyears to fully implement.

“This [collaboration] is something that we want to make sure wego through in a process to make good decisions the first time andto make sure that we are setting up our respective organizations aswell as this new entity for success,” LaPine said.

LaPine and Mellin also said they hope that in the future thiscollaborative model will attract other leagues that want to remainindependent but are facing increased pressures to consolidate dueto credit union mergers, which can lead to reductions in membershipfees and lower service revenue streams.

Despite these pressures, LaPine and Mellin envision leagues willbe able to remain independent through the cost savings andexpertise of the shared services model in back-office operationsand other service functions.

Another collaborative initiative that generated a lot ofinterest among leagues was Plexcity,a CUSO-like business established last year by the CEO of theCalifornia and Nevada Credit Union Leagues, Diana Dykstra; JohnBratsakis of the Maryland-District of Columbia Credit UnionAssociation and Greg Michlig of the New Jersey Credit UnionLeague.

The collaborative effort combined and standardized back-officeoperations including HR, IT, accounting and finance among the threeleagues. In August 2015, the Hawaii Credit Union League purchased ashared ownership stake in Plexcity.

Plexcity also serves one non-owner client – NASCUS.

All partners have seen a decline in the cost of back-officesystems, according to Tony Kitt, Plexcity's CEO.

“Our newest addition [the Hawaii league] immediately decreasesexpenses for every association we serve, which contributes to theirfuture stability,” he said. “All of our owners believe we arebetter at driving down costs together than we areindividually.”