After 30 years Dick Wellner knows a good thing when he sees it, and apparently, so do nearly 100,000 others.
Wellner is president of Corporate America Family Credit Union, an organization founded by 15 employees in 1939 as the Automatic Credit Union, named for Automatic Electric Co. Later purchased by GTE Corp., the credit union that began with $75 in assets has seen, as Wellner terms it, “explosive growth” in the past few years and now boasts more than $575 million in total assets, serving nearly 100,000 members employed by more than 500 sponsor companies nationally.
Smart Business spoke with Wellner about how the industry has changed and how he plans to move a much larger organization forward.
How did you get involved in credit unions?
I fell in love with the concept. Isn’t this a wonderful thing to do for people? It’s been a labor of love for 30 years.
How has the industry changed during those three decades?
When I first started 30 years ago, credit unions tended to be very, very small, they tended to be inside a manufacturing facility, inside a telephone company headquarters or something like that. There used to be the feeling that this credit union is only for the people of (a specific company). Nobody else could use it.
The hours tended to be very limited. They tended to focus on small, signature loans — they didn’t have a broad array of services. So the general public, unless they worked for that company, didn’t even know the credit union existed.
There was a time when people used to say credit unions are the best-held secret in the United States because they do such a wonderful job for the limited number of people they serve.
How has the organization grown so quickly?
The rapid growth is a function of our business plan, which is driven by our strategies and the mission as agreed to by the board of directors and our staff. One of the keys of that is diversification. Probably 20 years ago, we were pretty much a single-sponsor credit union that slowly, slowly was reducing its employment — substantial layoffs.
The strategies that the staff and board agreed on were diversification of the membership base, diversification of a concentration of assets, members and loans in one geographic area, and because of that, we started to expand aggressively on a national level. And because of the type of products that credit unions offer, it is a business recipe that is very, very popular.
When we started to present it nationally, it was received extremely well.
In what other ways has the organization changed?
It’s changed remarkably, and mainly from the delivery of a product. It’s one thing to say you are a not-for-profit financial cooperative, but how do you create that service and get it to the marketplace?
Back in the ’80s, they had the deregulation of interest rates and savings rates, which offered great competitiveness in the marketplace.
The Internet and PC banking, telephone auto-response systems, ATMs — all of these are service-providing methodologies. One of the reasons why our credit union is as successful as it is, we have been somewhat leading-edge when it comes to technology. We’ll embrace something that gives our members the very best service they can get without necessarily going to a branch office.
What is the ultimate goal for the credit union?
We are interested in becoming the primary financial institution. Equal to that is we’re interested in serving all of our members. And we’re very interested in working in an area where other financial institutions have been unwilling or don’t desire to work — and that is serving the underserved.
We’ve a full range of products. In Chicagoland and many other places around the country, payday lending has become one of the evils that regulators are trying to counterbalance and regulate. Credit unions are well-positioned to work into that area and offer an alternative to the payday lenders.
When we get somebody who qualifies for a payday lender, we want to bring them in and we want to give them some educational opportunities to have a checking account and an ATM card.
Why do so few who have the opportunity fail to take advantage of what credit unions offer?
The percentage is very low for two reasons. The main reason is that from a community charter standpoint, the 25 miles (the radius inside which those residing may join the credit union if they do not match other membership criteria) that is somewhat new for us. If you look at just the Chicagoland area, there are 4 million people in Chicago. We’re just scratching the surface from that standpoint.
From a sponsor-company standpoint, which is our majority focus, we probably are in the area of 30 (percent) to 35 percent. In some places, it may be 80 percent. The selection opportunity is very broad.
What is the growth plan for CAFCU?
With the help of HeisleroGordon and our marketing department, we are constantly going to the sponsor companies, putting on employee orientations, talking to people about the opportunities credit unions offer from a financial services standpoint. We have a desire to improve our penetrations. We are constantly looking for ways to make ourselves more and more convenient for more and more people.
We have a department with 21 people in it whose only purpose is business development — to communicate what we do, the values and purpose of credit unions, to employees that are currently in our field of membership, our sponsor companies and to future perspective sponsor companies.
How was the organization able to absorb so much growth in a one-year period?
Probably half to two-thirds of that growth came via merger (with three other credit unions). Along with the additional members, we got some pretty excellent staff people. A lot of that seed work, to build and develop relationships, was already done.
We received the mergers mainly because we have the economies of scale, we have invested in the future in terms of all of the service delivery aspects that we have, and so by merging with these three different credit unions, they were able to give their members all these services, which we have invested in without going through all that R&D.
What is the benefit of that growth?
There is a certain definite economy of scale. You only need one data processing system; you only need one president. The interest structure that backs up the services to the branches has a limited fixed cost.
Once you’ve covered that, the incremental advantage is enormous. You can grow and prosper based on that limited infrastructure.
What is your approach to strategic planning?
The strategies tend to be somewhat long-term. Our strategies tend to be 10 to 15 years out. These are not ‘I want to reach a certain asset size; I want to reach a certain income level.’ These tend to be strategies relative to diversification, in terms of where geographically the company wants and needs to go.
We deal with a strategy of service delivery. That strategy mainly is there so we are saying to ourselves continually, we constantly need to be leading edge technologically; therefore, our long-term strategy is to be at the highest level of technology.
What is the biggest business challenge you face?
I’m going to say to handle growth, to be very honest. We have had explosive growth. So we bring a lot of new people through merger or through new branches, and I want to make sure that every person knows why we are in business and how we are different than other financial institutions.
It’s an ongoing effort, and to reinforce that fact that when we are dealing — and here’s another difference — with a member, we are dealing with an owner; we’re not dealing with a customer. And we have to understand that our business is to do their business, not the other way around.
We even have signs that we post in every person’s workstation, in every branch, in hallways. It goes something like this: A member is the most important person in this office, whether in person, on phone or by mail.
HOW TO REACH: Corporate America Family Credit Union, (800) 359-1939 or http://www.cafcu.org
