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Glatt Consulting, LLC Welcomes Gen-Y Consultant Justin HoWe would like to welcome
Justin Ho, a new addition to the
Glatt Consulting, LLC consulting team. Mr. Ho is currently a full scholarship recipient majoring in Business Administration at the University of Southern California (USC). He serves as a member of the board of directors of the
USC Credit Union, a $300 million financial institution. His key responsibility at Glatt Consulting, LLC will be to assist credit unions in developing "next generation" membership outreach and growth strategy.
"Credit Unions have been told time and time again to go out and get younger members," says Glatt Consulting, LLC Executive Consultant and owner Tom Glatt, Jr. "The problem they face in reaching that group is that the products, services, and outreach strategies perfected over time for the baby boomer market really do not work as well for the next generation. By bringing Justin's perspective and expertise to the team, we are positioned to offer an authentic next generation resource to help credit unions draft new strategies for a market many have a hard time understanding and reaching."
According to Mr. Ho, "There is no question that the credit union movement is in real danger as banks gain the upper hand in just about every service a financial institution can offer to a member of Gen-Y. The competitive advantages that credit unions had in the past are no longer perceived as prominently as before. The foundation of this problem lies in the fact that few people of Gen-Y even understand the underlying differences between credit unions and banks. The average of a credit union member is 47 - capturing members outside of this demographic remains a daunting yet necessary task."
Mr. Ho has already used his entrepreneurial and marketing experience to help develop programs that allow the USC Credit Union to compete with other financial institutions for members of this demographic through means such as reward programs and web channels. "I heard Justin speak on this very topic at the Director's Conference this past August. Within minutes of the end of his session we began hashing out the consulting relationship. The successful programs on which he has worked at USC Credit Union, and the trust the credit union has placed in him as a full member of the board, made the decision to connect him to the broader credit union market very easy," says Glatt. "He is a great addition to our team, and will certainly prove to be an extremely valuable consulting resource for our credit union clients."
The Glatt Consulting, LLC program spearheaded by Justin starts with the “Gen-Y Strategy Report Card,” a rating calculated following an in-depth review of a client credit union's current Gen-Y outreach efforts and product and service parameters. The results and key findings of the initial review are the utilized to help the credit union better understand the current extent of their Gen-Y membership base, to understand if the credit union's services are ready to support Gen-Y needs, and to build the credit union's foundation for developing strategies and launching products that will help the credit union capture this pool.
"Because the program is intensive, we plan on initially serving a select number of credit unions before expanding to a broader client base," says Glatt. "The next generation of credit union members is very important to industry survival. Each client going through this process deserves dedicated attention; the kind of attention that will result in the most rewarding next-generation strategies. By limiting our rollout, we will be better positioned to exceed our client's expectations."
The consulting program will be restricted to between five and seven credit unions during the fourth quarter. Credit unions interested in discussing the program in depth are invited to contact Mr. Ho directly via e-mail at
jho@glattconsulting.com or via telephone at (888) 217-5988, extension 803.
"Whatever you call them, be it gen-y, millenials, or next-gen, the fact is this group represents a substantial but untapped potential for growth," says Mr. Ho. "I am excited to help our clients distinguish themselves from other financial institutions through creative strategy, so that they are better positioned to tap this once-in-a-generation opportunity."
9:03 AM
September 12
A Dormant Industry?To quote a New York city expatriate, moonlighting as a shuttle driver in Hawaii, "credit union's are a dormant industry." After a couple of weeks spent thinking about this man's perspective, there may be some truth to his observation. He contends that credit unions have this great opportunity to reach out to a variety of people in the context of shared interests because of credit union common bonds, but that the industry does not take advantage of its unique structure. There are very few shuttle drivers who have an understanding of credit unions, fewer still who can diagnose an industry's challenge.
Perhaps credit unions are dormant. Sure, there are a few credit unions growing leaps and bounds, attracting new members (not just churning members from other CUs), but it seems more and more that these are the exceptions rather than the rule. We can certainly see how those on the outside might see credit unions as a bit sleepy, and even out-of-touch.
One statement this driver made that we found particularly interesting is that "credit unions have no national mouthpiece." Where the investment crowd has Warren Buffet, and technology has Bill Gates and Steve Jobs, credit unions have nothing. Even milk, at a mere $2 per gallon, has a national publicity campaign. Sure, there is the America's Credit Unions logo, but where do you see it? On credit union websites? How effective can that possibly be?
We're not sure where to take this man's overall comments, but we do know one thing: other's likely share his opinion, and industry numbers support his assertions. Non-existent membership growth, an ever-increasing average age for members, and limited youth representation on Boards. Sure sounds like dormancy to us.
At a planning session just last weekend, a wise Board member said that in order to succeed the credit union would have to "maintain its fire." The decision for many is not to maintain, but to start a fire. In order to truly climb out of dormancy and into national relevance, we need to find a way to connect with those we serve. We need passion and excitement and a true belief in our right to stand shoulder-to-shoulder with every other financial services charter type. We need outreach, broad membership representation on our boards, and a desire to succeed.
That is, of course, if we truly see perceived dormancy as a problem.
10:38 AM
August 26
Hawaii CULI am on my way back from Turtle Bay in Hawaii afer speaking for the Hawaii Credit Union League. I had the most interesting conversation about credit unions with the shuttle driver who took me to the airport. After I get back to the office I will write it up. His perspective? Credit unions represent a dormant industry.
Tom
5:08 PM
August 13
Thoughts from the Director's ConferenceIn between exhibit hall commitments and meetings with clients we managed to take in a few of the educational sessions provided during the conference. Here are a few of our thoughts and takeaways from the sessions attended.
NCUA Board Member Gigi Hyland
We enjoyed Gigi's remarks. Her statement to attendees that "it's about the members" resonated with us. The thought that popped up when she made the statement, however, was what happens when member needs run afoul of the wishes of examiners? It seems that for many credit unions the hard choices they make to expand services to meet the demands of members are often met with pushback from examiners. Any credit union whose strategic plan calls for temporary negative earnings, and certainly those credit unions in the midst of the realities of such strategies, have certainly had heart-to-hearts with their favorite government employees.
To Gigi's credit she addressed this issue by saying that the agency is pushing to get examiners up-to-sped in understanding credit union strategic plans. She also told the 1,700 people in the room that credit unions have the right to challenge their examiners, taking their appeals to examiners findings through an analysis channel. In this commentary, she encouraged dialogue vs. combat when it comes to examiner/credit union relations. Hopefully the examiners themselves have head the same speech.
In conversations related to Gigi's speech, many attendees we talked to were unanimous that the Board is saying some very good things - but that it is truly time for action. There is a widely-held belief in the industry (one that should not come as a surprise to the agency) that the staff is running the agency and that the Board has lost quite a bit of its control. True or not, perception is reality. The Board needs some public wins that help reestablish "lost confidence" in the regulator.
Here is a case in point. A few weeks ago we heard Gigi's fellow board member Rodney Hood's speech at at ALM First's conference in Colorado. A concern raised at the meeting was with the bid process used by the agency when a troubled credit union is put 'on the block' so to speak. At the meeting there seemed to be a unanimous belief that cronyism exists in that process, and a few recent examples were provided to Rodney in his Q&A session. Rodney suggested he had heard similar concerns voiced at other venues and that he intended to look into the issue. It is precisely this kind of challenge that, if resolved publicly and to the betterment of the agency, could improve agency standing in the minds of the nations federally insured credit unions.
Generation Y
There were two sessions designed to help attendees understand the Gen Y/youth market. One was a panel moderated by the ever-funny Patrick Adams. Pat posed a variety of questions to four 20-something's on the panel. It was an interesting session, and perhaps the most interesting were the responses to Pat's question about the difference between credit union's and banks. Not one of the four panelists (two of which were apparently credit union members) truly articulated the difference. One panelist suggested that credit unions were more secure than banks because they were "federal" while another suggested that banks charge fees, credit unions do not. Our takeaway from he session was that this demographic doesn't get credit unions, and that even if they did they probably would not care about the true differences between banks and credit unions.
While this session was more or less billed as an informational exchange and as such was not designed to offer solutions, the second Gen Y program featuring Brass's Brian Simms was. We can't say that the product matched the advertising. The session itself was very well designed, with lots of multi-media clips and featurettes, but at the end of the session many of the attendees we talked to sitting nearby were unsure what they learned about Geny Y. It seemed to many that the whole endeavor was a big Brass commercial. Not to take anything away from Brian and Brass, but the takeaway lacked depth.
While not billed as a Gen Y session, those who attended the presentation by USC Credit Union CEO Gary Perez were treated to an in-depth how-to when it comes to Gen Y outreach. Gary brought one of his Board members along with him as co-presenter. We know the visual image you may have now, but this Board member is a twenty year-old engineering student at the University. The presentation dealt with student lending (which Gary presented) as well as with how to communicate to the Next Gen market. Justin Ho, the board member, really took attendees to task for current credit union youth outreach. We believe attendees would have been better served to have heard Justin and Gary on the main stage.
The Great Debate
The panel session on hostile mergers, featuring Continental CEO Tom Glatt Sr., Filene's Bob Hoel, and an attorney named Peter Duffy, was fun to watch - particularly the exchanges between Tom Sr. and Bob. The funny thing is that Tom Sr. and Bob believe the same thing, even though they were representing opposite perspectives on the Wings/Continental flap. The common theme? Credit unions need to be doing all they can to serve members. A capital ratio soaring into double-digit range, per the debaters, does not indicate an institution dedicated to delivering value to the membership.
Bob did make this interesting comment. He said that the Continental Board "did not want to allow members to vote on the merger proposal." apparently indicating a belief that members should do just that. We don't believe they should. If you take that line of thinking to its logical conclusion then members should be making policy decisions and setting interest rates. Imagine the chaos! The real question is how do credit unions better engage members so that they become active in the credit union governance process? If members were more aware of their ownership status, perhaps credit unions would be working harder to deliver a more consistent value. If that were the case at continental, for example, members long ago would have demanded better service and could have forced management corrections.
Another way of looking at this, and a way more relevant to the audience at the conference, is to address whether credit union Boards nationwide are truly representing their respective memberships. As elected member advocates, shouldn't Boards be more demanding of management, taking them to task when real value isn't returned to members? Now that would be an interesting debate.
One final thought on this session. Peter remarked during his portion of the session that banks may be doing a better job delivering convenience because they are adding branches at a far faster clip than credit unions. The comparison was a 7 to 3 bank advantage. He seemed to suggest that as a result of their dedication to branches on every corner, banks are delivering better service. While we do not doubt banks' advantage in adding new branches, we should all keep in mind that not every credit union holds a community charter. Single sponsor credit unions (yes - they do still exist) should not invest in extraneous branches, and as far as we can tell they are not. It makes sense, then, that banks would outpace credit unions in branch expansion.
All in all, the session was well done.
Serving the Underserved
Jim Blaine did a fine job talking about how his credit union takes risks to deliver cost-effective savings and loan programs to his membership. Without a doubt his credit union, State Employee's Credit Union in North Carolina, is a winner. Not only that, they are more than forthcoming with information when asked by their credit union peers to share the secrets of their success. Should all credit unions do it Jim's way? Probably not, but all credit unions could stand to learn more about his perspectives.
9:15 AM
August 08
Live from the Director's ConferenceLast night we kicked off our attendance at the 2007 Director's Conference. According to the program notes there are around 1,700 people here. From the look of the crowd in the general session this morning we believe it. What great fun it is to be with so many fine credit union people.
We've had wonderful conversations at our booth so far. One item on our table being snapped up in mass quantities is our planning catalog. The catalog covers the variety of planning options we provide. Of interest for many is the process of structuring a value chain. It seems that many credit unions have a strong desire to better deliver their value proposition to members and other key stakeholders, and a value system and corresponding value chain helps you do just that. You can read more about our
value chain program on the main GCLLC website.
This morning we will be sitting in on the general sessions. On the agenda today are sessions covering innovation, service to the underserved, and hostile mergers. We'll blog our perspective on the sessions we attend.
August 03
Advisor Noted in Local PaperThomas D. Simpson, a close advisor to Glatt Consulting, LLC, was featured in Wilmington, NC's Star News newspaper. The article covered the Iraqi currency project. It is an interesting article, and draws upon information published in former Treasury Undersecretary John B. Taylor's book
Global Financial Warriors.
To read the article, visit
http://www.starnewsonline.com/article/20070801/NEWS/708010478/-1/XMLTom, a 30-year veteran of the Federal Reserve in Washington, D.C., currently teaches Economics at the University of North Carolina at Wilmington. At the Fed he advised the Board, and worked on the widely read Beige Book (read the latest report:
http://www.federalreserve.gov/FOMC/BeigeBook/2007/). We have applied his insight and perspective in projects ranging from the creation of credit union alternatives to payday lending to strategic planning.
August 02
The 2007 Credit Union Leadership ChallengeAs you may have noticed, we have launched a credit union-specific leadership challenge. The Challenge is a competition for credit union executives nationwide, and is designed to:
Showcase high-performing credit union leaders;
Define the general quality of credit union leadership in today’s credit union community.
The competition is open to any credit union executive with the qualification that they have a staff that they manage directly. The winners of the competition will be top four individuals with the highest scores/performance metrics as defined by the GCLLC Leadership Assessment System combined with other less heavily weighted metrics reflecting credit union financial performance.
We launched the challenge two weeks ago and are now starting to see a few interesting trends emerge. The first is that as of this posting the average performance index score, a metric we use to assess leadership skills, is hovering at 77. The best score is 100 - a score very hard to get. For a while the scoring average was 81 so perhaps we are just seeing a temporary dip and the average will rise once again.
In the reports we have reviewed, there seems to be quite the split between the perspective of direct reports vs those of our challenge participants. In other words, managers and staff do not see eye-to-eye. This did not really not come as a surprise, but what was eye-opening was that the Honesty/Integrity category was frequently out-of-whack. Hopefully this, too, is a trend that will reverse itself. As we dive further into the data we may uncover more about this disturbing disconnect. If we do we will post our findings here.
Some other interesting data with regard to Challenge participants:
Average Net Worth ratio of 12.8% (highest is 16.55%, lowest is 8.23%)
Average Asset Growth of 7.77% (highest is 17%, lowest is 1.8%)
Average Return on Assets of .285 (highest is .98, lowest is -.25)
The Challenge will be running until the beginning of October so you have plenty of time if you are interested in signing up. Details are available on our main website, which is
www.glattconsulting.com/leadership. We hope you participate. So far, this event has been a lot of fun not to mention very enlightening.
On an unrelated note, we will be exhibiting at next week's Director's Conference in Las Vegas, NV, booth number 318. If you are in attendance, stop by and say hello!
11:32 PM
July 31
Website UpdateThe GC website is back online. We apologize for the inconvenience.
1:33 PM
GC Website Technical ProblemsThe hosting company used to support the Glatt Consulting website and email systems is apparently experiencing technical difficulties. The problem will hopefully be corrected soon.
9:12 AM
July 14
Latest UpdatesAs you may have seen, we updated the Glatt Consulting, LLC website. It is 90% complete, with final edits on our multi-media training videos the final piece to deploy. The redevelopment project, plus the sizeable number of strategic planning proposals we have been requested to deliver, has meant our time has been optimized. This is truly an exciting time for the firm.
Now that the update is nearing completion, we can get back to issuing commentary on the industry. One thing that interests us is a league that believes the it has double the number of credit unions it should. Who ever heard of a credit union league, advocate for its members, trying to determine how best to usher in a wave of consolidation? There is one, and it has been in the news lately but for another issue. Expect more posts on this as we pick up additional details.
11:28 PM
June 12
Where Have We Been?It is painfully clear that we have not posted any new material to the blog lately. This is maily due to a recent upswing in calendar commitments. From attending the very good WesCorp Future Forum to working on client engagements to assisting in a NAFCU project we have indeed been very busy at the public expense of our blog. Nonetheless we felt it appropriate to post an update to let the world (or at least the credit union community) know that we are alive and kicking. In fact, we have a new program coming out next week that we hope will cause a great deal of chatter in the community.
Until then, stay tuned! New material will be coming to your computer very soon.
3:58 PM
May 11
Representing the Credit Union Movement?We love the “reputation repair” efforts of a certain law firm. We won’t name them directly given that they are lawyers and all, but they had a hand in the recent Wings/Continental flap. We just saw the recap of one of their attorney’s comments at NACUSO’s annual conference. He was speaking specifically of another credit union mess in which they had a hand, but he was clearly trying to position himself and the firm as truly supporting the movement. What he said that that had us laughing was that he had a “Jim Blaine” moment during the merger of this particular credit union with a bank, apparently meaning that he saw himself as a credit union protector and member advocate.
Apparently the moment was short-lived.
9:25 AM
May 09
The Credit Union Industry Expert?Every now and then you run into some interesting people at industry conferences and events. We recently ran across one such person whose marketing prowess is apparently well-regarded. What is interesting is that this person actually works for a credit union, not a marketing firm. We thought, “How refreshing that a credit union person rising through the ranks can emerge as a leader, presenting progressive thought and solid strategic ideas.” Then we did some research.
This person has a website that presents the “brand,” offers tapes, videos, whitepapers – you name it. What you see on the screen is quite impressive. Various testimonials are scattered throughout the site reflecting how wonderful this person is, how their strategic support was such a benefit to various client’s planning processes, how the event would not have been the same without this person’s input, so on and so forth. We wondered, however, how the credit union for whom this person works was itself performing.
In a word: pathetic.
Share growth presents a negative trend since 2003, loan growth presents a substantial negative trend since 2003, ROA presented a negative trend until just this year, but that may have had more to do with declines in assets than any real strategic growth. They can’t get loans out the door, and when they do the quality of the credit has often come back to bite them.
While we are not privy to the strategies of that particular credit union, we cannot imagine that they planned to perform this way. This leads us to believe that they have a problem with marketing, with brand awareness, and generally with the execution of their strategies. In summary, the very areas in which this person is perceived to be an expert define the very real failings of his primary employer. What is our point? There are two. The first is that an engaging speaker does not necessarily make for a good consulting resource. The reason is that true speakers want to end their session on a “happy note.” Applause and accolades, and apparently testimonials, are what define success. Consultants, on the other hand, want their clients to succeed – and this definitely means that on occasion sessions end with the consultant being the bad guy. Such a scenario defines failure for the speaker, even if the client emerges from the process stronger and more united with regard to the future.
Our second, more critical point is that credit unions can no longer be followers of “industry experts” when it comes to strategic decisions and direction. As we have seen so much more frequently over the last few months, the competitive landscape has changed. It is time for credit unions to each individually take the future into their own hands and develop strategy that makes sense for the market and the members. Going through a planning process with a speaker who makes you feel good about yourself may offer a nice short-term morale boost, but it does nothing to improve the prospects for long-term success.
Of course, the speaker in question is likely engaging in the dual career path simply to make money. Hopefully he is successful; we certainly do not wish him ill will or personal failure, but we would prefer if the self-indulgent exercise be left on the speaking circuit and that the material presented be tagged with a “for entertainment purposes only – do not try this at home” disclaimer.
So to the true leaders in the movement. These are the people who know their markets, who make shrewd decisions, and who run their credit unions as though they had shareholders who expected real value in return for their investment. You may occasionally see them presenting at a conference, or participating on a panel, but more often than not they are unknown to the industry at large. Day in and day out they spend their time making their credit union better, improving financial performance, and making a difference in the lives of members.
4:31 PM
April 26
The Importance of Contingency PlanningA Glatt Consulting, LLC credit union client is facing a challenge that could undermine a multi-million dollar loan program. The situation, unfortunately, is being fueled by market forces beyond their control. While they have a stay-and-fight personality, something that has enabled them to grow as much as they have over the last few years, they have no choice at this point but to sit back and wait for the final outcome. That is not to say, however, that they have abdicated responsibility for their future. Instead of sitting idly by, they are busy with an exercise that we believe serves as a cornerstone for successful organizations the world over. That exercise? Contingency, or scenario, planning.
The essence of scenario planning is painting broad pictures of potential future operating scenarios, and then devising strategies (contingencies) that can be plugged in as needed to maintain growth and to support service level expectations when/if those scenarios materialize. In our travels, we find it amazing the number of credit union management teams we meet that feel scenario planning is a waste of time and effort. In this day and age, with so many uncertainties and "unexpected" challenges, planning for uncertainty seems to us more wise than waste.
Fortunately the situation for credit unions isn't all dire. The industry is filled with credit union success stories, credit unions that because of their diligent planning successfully countered potentially devastating bombshells.
One example is StarTrust Federal Credit Union, formerly Enron Federal Credit Union. In talking with Jack McAdoo, StarTrust's CEO, he indicated that one of the reasons they survived Enron was their pre-defined response to an Enron failure. While Jack and his board had no premonition of Enron's rapid collapse (their scenario involved a longer-term decline in Enron's business), the mere fact that they had a prepared response to Enron's demise put them one step ahead of the "anything-Enron" backlash. Jack and his team quickly beefed up the tactics behind the scenario and executed in record time, dispelling beliefs that the credit union would be dragged down with Enron and keeping most member relationships intact.
It doesn't take much guesswork to determine where the credit union would be today without the team's intelligent consideration of scenarios and contingencies.
In light of the Wings/Continental scuffle, and the increasing competitiveness of the financial industry, we have to be prepared for more uncertainty than ever before. While planning should not be solely an exercise in developing scenarios, defining real vision and supporting objectives should still be the main focus of planning efforts, scenario analysis must be a non-negotiable commitment by all who are responsible for the future and stability of a financial institution.
11:07 PM
April 20
Wings WithdrawsIn a posting on the infamous continentalwings.com website, Wings states that it is throwing in the towel on its bid to "merge" with Continental Federal Credit Union. While Wings suggests it is withdrawing due to NCUA's recent rejection of its planned $200 payment to Continental Members, other sources tell us that there were other reasons pushing the credit union to call it quits. Although regulatory roadblocks certainly provide a convenient excuse, what we hear is that the Continental member response to the offer has been less than stellar. In fact, during their last great push to generate petition signatures, which included on-site visits to Newark and Houston complete with cookies and punch, their efforts generated a mere fifty additional signatures. This may explain why Wings was so reluctant to release even general statistics regarding participation in their petition. While we applaud Wings' withdrawal, we still stand by our call for an industry confab on the future of credit unions. Why not hold a real debate on what our nation's credit union industry should look like in the future? We're not talking about one of those "for show" debate farces, but a real in-depth, soul-searching exchange of philosophy. We believe it may help clearly outline the divisions that are already present, and perhaps could serve to define common ground between groups with considerably different viewpoints on credit union growth and consolidation. While the Wings announcement is cause for a brief celebratory pause, in no way should we all go back to business as usual. Now is the time for action; our future demands it and our members deserve it.
3:42 PM
April 13
Wings Taking Flight?Wings Financial has been relatively quiet lately, as have we, on the issue of Wings' takeover of Continental Federal Credit Union. In the meantime, it has been interesting to listen to those with ties to the industry weigh in on this groundbreaking situation. As we know from years of strategic planning engagements, sometimes it pays to sit back and listen to the conversations around you. Inevitably you learn something. One of the most interesting things we have learned to-date is that a few people are more than surprised at the industry's response. Apparently some thought that industry leaders were resigned to a slow decline, and as a result no one would really care about one credit union targeting another for takeover - hostile or otherwise. They must not have received the memo that people do still care about the core fundamentals of the credit union movement. Key players in this battle, such as the law firm representing the Wings brigade, certain Wings employees, and even the NCUA, were recently reported as lamenting the "hate" mail they have received since this story broke last month - "hate mail" apparently describing the various communications from concerned industry leaders expressing their opinions that this approach was wrongheaded. We are glad to see the groundswell of support for a more cooperative path to mergers, and that a large slice of the general credit union population has risen to make their opinions known, but we are not so naive to believe that this heralds a new cooperative movement for credit unions. We hope, however, that it has inspired the industry to invest in more dialogue and strategic discussion on the future of credit unions. Questions such as "Is there, or should there be, a core philosophy that will guide the industry in the future?" and "To what degree do we really compete with one another?" define critically important conversations we need to have. So to the headline of this post: Wings Taking Flight? Based on our analysis of Wings maneuvering, our best guess is that this is part of the long-term strategy for Wings to convert its charter. Whether or not the Continental approach succeeds (it won't - trust us), this credit union has moved itself out of the mainstream credit union community, and barring a change in leadership, won't be coming back hat-in-hand. It said its goodbyes to the industry's trade associations, it has expressed its public frustration with the "limitations" of the credit union charter, and has burned more than a few bridges that will be too difficult to rebuild. It is our true hope that as Wings' leadership plans their departure, they remember to thank the people who will undoubtedly be left behind - the people whose lives and trust formed the very foundation of the institution they now seek to change.
4:42 PM
March 29
The Growth of Glatt Consulting, LLCOver the March 23-25 weekend we convened the first Glatt Consulting, LLC strategic planning meeting. The meeting, held on Bald Head Island in North Carolina, was to define the future of the organization. While we have done planning before, it was short-term in nature and tied more with the set-up of the business and our 2007 tactical goals rather than real vision and strategy. Our efforts over the weekend were truly strategic and far-reaching.
The first thing we would like to say about the planning session is that, yes, we do practice what we preach. All of the tools we make available to our clients were put to use in our own planning process. From analysis of our competition to defining the motivations of our key stakeholders (our owners, investors, and especially our clients), we definitely broke a sweat.
The second thing to share about our planning session is that we emerged very excited about the ultimate direction of Glatt Consulting, LLC. A clear sense of purpose was defined, and we will be moving aggressively in the near future to fulfill that purpose.
While it would not be strategically appropriate to share all of the decisions we made, there are a two important things for our clients - and potential clients - to understand about Glatt Consulting. The first is that we plan to grow. Over the next two years we will grow our staff to meet the complex demands of the financial community. Our staff will be broad-based in their education and experience. We will not necessarily bring in new staff from the financial community. We want people who bring fresh perspective to the strategic challenges faced by our clients, people who understand the larger purpose of businesses, be they credit unions, banks, or otherwise. We also want people who believe in delivering unmatched service.
The second decision we made that we are more than happy to share is that Glatt Consulting, LLC will not be a "mega-firm" (in size or philosophy). We have no interest in being all things to all people, or a firm to be called upon for any general issue. We feel that firms, when so broadly focused, sometimes spread themselves too thin. They wear out their people and they drift slowly downward in service quality. The best term to describe our future philosophy is "boutique." As we see it, the word boutique captures our vision of who we are; a smaller firm offering an enhanced level of service and marketed to a select clientele.
As a result, Glatt Consulting, LLC will be a service-driven consulting resource delivering strategic development and product development services for select clients in the financial community. That is what we are, and what we will always be. Period.
As the months go by we will expand on the service material included on our website to better help potential clients understand how to use our services. In the meantime, know this: if you have needs, challenges, problems, etc. and they have anything to do with corporate strategy or the development/improvement of products, Glatt Consulting, LLC is a great resource for you to consider in your RFP or due diligence process.
As we begin the exciting work of molding the firm's infrastructure and output to the expectations of our vision, we invite the clients we already serve and those that we will serve to expect nothing less than the best from the resources at Glatt Consulting, LLC.
2:14 PM
March 20
The Path to Bank ConversionWe've been relatively quiet while waiting to see Continental's merger response strategy emerge. It seems they have been busy, with new information posted on their home page, media campaigns, etc. Speaking of the home page, they now have a claim that a Continental "acquisition" could be part of a larger Wings strategy to convert the entire organization to a mutual savings bank. We were curious how close that strategy might be to reality, so we did a little digging. While there seems to be no damning evidence to support the claims, there is anecdotal evidence that Continental's claims are valid.
For example, on December 14, 2006, the National Credit Union Administration issued a Board Action Bulletin. The full text of the bulletin is available online at
http://www.ncua.gov/NCUABoard/board_reports/BAB06-1214.pdf, but in summary it shows that the Board approved final rule Part 708a. Among other things, the rule is meant by NCUA to ensure credit union members are "fully informed of the reasons for a credit union's conversion to a mutual savings bank, have adequate time to weigh the pros and cons, and have an opportunity to communicate with one another and share their views with credit union directors."
As with most proposed rules, this rule was offered for comment to credit unions and other interested parties. One of the credit unions to comment was none other than Wings Financial CEO Paul Parish. The document, available via the NCUA website at
http://www.ncua.gov/RegulationsOpinionsLaws/comments/708A/8-23-06-PaulParish-WingsFinancial.pdf, provides the evidence that Wings has seriously considered the conversion process. Ironically, they had also begun their caveman courtship of Continental around that same time as the date of the comment letter, August 23, 2006.
We find the opening comments from Mr. Parish to be interesting, though not inflammatory per se, as many leaders in the financial sector often find their regulator to be too far reaching in their efforts. Nonetheless it does shed some light on the Wings mindest when it comes to charter conversions. Verbatim from the document, Mr. Parish's opening statement:
In general, we believe both the current and proposed disclosure requirements imposed by NCUA are overreaching and beyond the scope of regulator responsibility for safety and soundness. These disclosures force credit unions to provide their members with an imbalanced representation of a proposed charter change while limiting and controlling information. The required NCUA disclosures are neither full nor fair. Further, the proposed rules appear to be motivated by the self interests of NCUA's continuing as an entity rather than regulation intended to serve the public good.
While the first salvo is interesting, we find ourselves most intrigued by the very bold statement that comes on page two in the document, a statement that seems to proclaim Wings' current efforts with Continental AND outline their strong consideration of a change in charter. Again, verbatim:
While the Wings Board appreciates the membership and expansion opportunities granted with our TIP FOM, we are also very aware of the limitations. Like all prudent business leaders the Wings Board mandates alternative strategies be considered and prepared for execution in the event our current strategy is unsuccessful. Due to current NCUA restrictions, and the structure of Wings Financial, alternative strategies under either a federal or state credit union charter are limited and have been judged to be unattractive by the Wings Board. Although every effort is being made to succeed as an air transportation employee's credit union, we recognize that the current strategy may, at some time due to general lack of marketplace success, regulatory challenges, or legislative changes, cause Wings to choose another credit union charter, regulator and/or business model.
This argument does sound familiar. To those of us present for the many debates between former credit unions-turned-MSB and current credit union leaders, the argument always seems to be that regulatory challenges prohibited the institution's success.
The greater story here, however, is that Continental may be spreading truth, not rumors when it comes to Wings long-term strategy--and the source is none other than Wings itself.
9:30 PM
March 14
Where is the Plan?We see that Wings submitted its "suggested" proposal for merger to the NCUA this morning. For some reason the grand plan is not available for download via the continentalwings.com website. We wonder why. If members are supposed to push for a vote on this merger, shouldn't they have more facts provided to them than Wing's list of products and services? Shouldn't members be made aware, exactly, how the $200 incentive will be paid? Shouldn't they be made aware of the account conversion requirements? After all, we are talking about two different core systems here and one will most definitely have to go away. Members should understand what lies ahead should they follow Wings' advice, and they can only do that by getting the facts - all of them.
Just to be clear, Glatt Consulting, LLC is in no way against credit union mergers. Often mergers do make sense, and it could make sense in this case (though without the full proposal, who could make that judgement now?), but following respectable protocol is the right way to go about the process. We have assisted many credit unions across the country in crafting long-term corporate strategy, developing merger plans, defining new products, and contemplating name and charter changes. What we have learned is that the member relationship is more precarious now than ever, and that careful consideration must be given to the impact on that relationship as a result of executing strategic options.
In other words, driving a mobile billboard up and down the street hawking a merger without any forewarning or background information is extremely inconsiderate when it comes to credit union members. All it does is inspire fear in members that "their" credit union might be unstable or on the brink of failure.
As an industry we are suffering from nearly flat growth in membership. Engaging in the scare tactics we are observing in this merger fight is not at all the best way to stem the tide.
9:11 PM
March 13
Is Turnabout Fair Play?
The firestorm over the Wings/Continental hostile bid continues today, with most observers seemingly on the side of Continental. We know, however, that there are probably more than a few supporters of the Wings approach watching - and waiting. How do we know? An informant of ours attended a conference in 2006 also attended by Paul Parish, the now infamous CEO of Wings Financial. The topic of discussion at one of the breakouts/roundtables? How a financial institution could do an end-run around a credit union's Board and Management team with a direct-to-member solicitation in support of a merger. In all fairness, the topic apparently focused more on how a bank or thrift might execute such a strategy, but it looks like some people took more detailed notes than others.
Per our informant, whom we will refer to as "Denzel" to protect his identity, other credit union CEOs in attendence were weighing in on the topic. We have to believe that others are concocting similar strategies to spring on their unsuspecting credit union bretheren; Wings just beat them out of the gate.
While it seems a better title for this posting might be "What Did They Know and When Did They Know It?" given the intrigue in our opening paragraph, our focus is really on the retaliatory efforts credit unions can deploy to protect themselves. Here is one strategy, called Turnabout, again courtesy of "Denzel."
Countinental could, theoretically, propose a "counteroffer" to Wings members. We've reviewed the most recent call report and set of ratios via the NCUA website for Wings. Wings has greater than an 11% Net Worth ratio. Continental could turn right around and create a wingscontinental website (to counter Wings' slick continentalwings website) and make the following offer to all Wings members:
an immediate cash payout to all Wings members of $650! (do the math - it may be fuzzy but it works)
access to airport property branches in major metro areas, including Houston, Los Angeles, Newark, Philadelphia, and Charlotte!
access to more than 25,000 surcharge-free ATMs, 6,000 shared deposit and 5,500 ATMs in 7-Eleven stores across the country.
and much more!
While Wings seems to lead with their concern for offering Continental members greater service, the reality is that they want to buy Continental and the Continental branch environment for $200 per member. Money talks, as they say, so why not take the offer of cash right back to Wings members?
Continental, got your checkbook handy? Looks like there are members in need of your helping hand - and they live in Minnesota.
