Glatt Consulting, LLC

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2011-11-02T15:47:00.001-04:00

Welcome to Glatt Consulting, LLC.

We are a consulting resource for credit union leaders nationwide. Executives and directors alike turn to us for strategic planning assistance, to identify and analyze growth opportunities, and to improve team performance.

Blog Move

2009-10-30T09:57:00.003-04:00

You may have noticed, but the Glatt Consulting website (www.glattconsulting.com) has moved! As part of the move we have made a few site adjustments, modifications, etc. This was part of a bigger transition of email hosting and other back-office functions.

It is important to note, however, that the move has impacted the blog as well. This blog site will no longer hold our captivating thoughts on credit union leadership and management issues. But wait! We have simply moved the home of our comments to the new website.

If you want to move your subscription with it, simply check out the following link:

http://www.glattconsulting.com/blog

Simple! On that page you will find the links to subscribe to the new blog location.

We are looking into how to easily transfer existing subscriptions to the new location, but in the meantime you can take control of that process by visiting the new site and subscribing yourself.

FDIC Woes

2009-08-27T10:23:00.002-04:00

Just received a notice regarding the low level of the FDIC insurance fund (see below). It seems most credit union CEO's I have worked with this year hold the belief that the NCUSIF will run into similar issues - and once again hit the industry with an assessment. Here's hoping that won't happen, but given the overhang of delinquencies and earnings issues how can it not?

The Federal Deposit Insurance Corp.'s fund that protects more than $4.5 trillion in U.S. bank deposits fell to just $10.4 billion at the end of June, as the banking industry continues to struggle with souring loans and regulators brace for pain in trying to clean up the mess.

The level of the FDIC's fund, the lowest since the savings and loan crisis, almost guarantees that the government will have to hit the banking industry with another special fee to recapitalize its reserves. The agency said it had 416 banks on its "problem" list at the end of the second quarter, up from 305 at the end of March.

-Wall Street Journal

http://online.wsj.com/article/SB125137695691263385.html?mod=djemalertNEWS

Healthcare Reform

2009-08-11T22:44:00.003-04:00

Though not a credit union-specific topic, I thought I would share a few comments I recently posted to a news publication regarding healthcare reform. Healthcare costs are certainly an issue for the industry, in fact I spoke yesterday with a credit union leader about the cuts they were making to benefits in response to the economic environment. In any case, here is my position (which, fundamentally, supports the further expansion of the HSA gains credit unions have made in recent years).

I happened to visit my doctor the other day and we got to talking about the healthcare issue. He is not in favor of the currently proposed plan(s). I asked him his opinions on a more effective solution. He said we already had one - Health Savings Accounts. I agree with him, and I have a HSA (self-funded as I am a self-employed small business owner).

His is one of the few doctors offices I have been to where they actually divulge the cost of the treatment BEFORE the treatment. With them, at least, you can match what you were told up front to the myriad bills, EOBs, etc. that come flooding through the mail as a result of the visit. You can also make more informed decisions about your treatment options.

Contrast that to an antibiotic recently prescribed for a family member. Their doctor handed them the prescription, and when they went to fill it they found it to be VERY expensive - about $300. They called the doctor back and asked about alternatives. His comment was, "I thought you had a good prescription plan." He then prescribed another antibiotic at about $250 less - which turned out to be no less effective.

We need healthcare reform, but mainly in the way doctors communicate options and the way consumers pay for those options. If cost is out of sight, then it is out of mind. What we have before us now is unsustainable change - a simple consolidation of the current problems into one location rather than a lasting solution.

Upping the Planning Ante

2009-08-04T11:18:00.004-04:00

I am, at the moment, in Las Vegas preparing for a session at the National Director's Convention. My session is called "Black Belt Planning." I will be covering two methodologies for planning, one called Strategic Pathing and the other called Strategic Positioning. While both methods aim to elevate the strategic discussion at the top level of an organization, each has a unique starting point.

Strategic Pathing is structured as in inward-out experience, with the development of strategic opportunities (paths) generated via an internal starting point. Positioning, on the other hand, is structured as an outward-in experience, with a market-defined starting point used to uncover strategic opportunities.

While planning is more art than science, these methods add some "science" to the process, enabling organizations to make more informed (and less risky) strategic decisions.

Once the session is wrapped, I will share more of the methodologies in the blog and on the GCLLC website.

No Obligation Necessary! It's Free!

2009-07-14T11:48:00.006-04:00

I saw a press release on an upcoming event being held at a large west-coast credit union. The event covers mergers (among other topics) and is open to any credit union. Even better, it is free.

What it reminds me of is the old pitch process for timeshares.

"All you have to do is sit through this interminable exciting presentation, get your free tchotchke TV, and that's it! No obligation whatsoever!"

Right. People signed on the dotted line just to get out of pitch purgatory. And, if they didn't sign up right then they were quickly ushered to telemarketer hell.

So, this large (troubled) credit union is hosting an event for credit unions to discuss mergers, free! Do participants also get a free t-shirt with a target on the front just for attending?

FDIC Actions Stir Bank Resentment

2009-04-10T09:30:00.002-04:00

I thought I would share two interesting articles from NPR. The first covers the banking sector/FDIC pain of covering the insurance costs of failed banks. Sounds like a familiar story. The article is here:

http://www.npr.org/templates/story/story.php?storyId=102918606

The reason I share it is that during many of the NCUA informational webcasts they fielded questions about whether banks faced the same dilemma. Clearly they do, but this article gives some perspective on scale.

The second article is called "The Anatomy of a Takeover." It profiles the FDIC takeover of The Bank of Clark County, offering an interesting insider perspective of a conservatorship, though in this case the bank was quickly given away to Umpqua Bank.

The article is here:

http://www.npr.org/templates/story/story.php?storyId=102384657

One can imagine when reading the article how the WesCorp conservatorship went down. When I close my eyes I can see NCUA staff hiding in the bushes along Overland Court, ready to swarm, with Blackberrys poised like pistols.

Take note of the reader comments at the end of the article.

Happy reading!

Seven Year Spread - NCUA Responds to Booking NCUSIF Replenishment

2009-03-26T16:37:00.003-04:00

The NCUA just released a media advisory suggesting that they intend to seek congressional approval to allow credit unions to book the NCUSIF replenishment over seven years. This is certainly good news, and credit unions everywhere should follow the NCUA's suggestion of actively communicating with congressional leaders to ensure the required legislative changes are passed into law.

This does not, however, address the lack of transparency with regard to the WesCorp/US Central conservatorships. My fear is that credit unions, seeking to avoid a fight, will consider this seven year spread a victory and call it a day. We cannot let that happen if only because the relationship between the NCUA and the industry is in such poor condition. The complete breakdown of trust in the NCUA (as referenced in my earlier post today as well as by CUNA's Dan Mica and Callahan's Chip Filson) will make the entire regulatory and supervision process ineffective and potentially harmful.

I implore all credit unions to consider the NCUA's decision a blessing, but to not rest on the decision.

Closed-Door Transparency

2009-03-26T14:07:00.004-04:00

A few weeks ago, two NCUA representatives went on camera at NAFCU and said that the industry needed to come together to save the corporate system. In fact they urged that industry cooperation was the only way to salvage the system. They indicated that every federally insured credit union, in the spirit of industry cooperation, would have to contribute even if that meant widespread negative earnings and potentially the sacrifice of hundreds of credit unions.

Let us all be clear on the definition of cooperation. It means the process of working together for the same end. What we have so far is not even close to cooperation. NCUA so far has not only failed to meet the specific definition of cooperation, they can't even claim to be working within the spirit of the definition. Just today they met in a closed-door session presumably to discuss how to further compel the industry to "cooperate" with their directives.

If cooperation is what they want, why the closed-door deliberations?

If cooperation is what they want, why not release the PIMCO details?

If cooperation is what they want, why not call together leaders of credit unions from around the country for town hall meetings?

If cooperation is what they want, why hide behind audio-based "webcasts" that spare them from seeing the true emotion their actions have stirred up?

I have talked to many credit unions, from New York to California, and the position each has taken is that the process that the NCUA has utilized in its corporate efforts is wrong. One credit union even likened the steps taken with regard to WesCorp specifically as taxation without representation. Back in the day, those words were enough to start a revolution.

This isn't cooperation. This is compulsion.

Perhaps a revolution is what we need. It is time to put right the relationship between the NCUA and the credit union community, and a peaceful yet forceful revolution may be the catalyst for long-needed change. The NCUA exists because of credit unions. Credit unions do not exist because of the NCUA. Last I checked, the NCUA came to being in 1970. Long before then the credit union community was, cooperatively, seeking to serve member-owners.

I am certainly not arguing for the NCUA to go away. I am not arguing that the US Central or WesCorp conservatorships should not have happened (after all, how would I know without any supporting data). I am not arguing that we should go back to the credit union community that existed in the 1960's. What I am saying, and what I firmly believe, is that we need to get back to a peaceful and intelligent, cooperative, relationship with the agency. That means that the agency must be true to its desire for industry cooperation, actually seeking to cooperate rather than mandating poor policy.

While I feel bad for the fine folks that work hard at WesCorp and US Central, many of whom I know personally and count as friends, this may be the best thing to happen to the industry in some time. NCUA, through its own efforts, finally forced into the sunshine the poor relationship that exists between itself the credit union community.

For the sake of 89 million Americans, this must be corrected.

Power to the People

2009-03-03T14:35:00.007-05:00

When we conduct strategic planning sessions, a key agenda item is working through the major political/regulatory, economic, social/demographic, and technological trends and issues confronting the industry. This puts strategy into perspective, and also helps to identify potential opportunity.

Since late 2007 one of our presentation slides covering regulatory issues has included this statement:

The trend is toward more regulation and oversight of traditional services. “New” credit union services may face a more reluctant regulatory audience, and income-producing products such as courtesy pay may be under the gun.

Interestingly, Bloomberg today had this to say about Fed Chairman Ben Bernanke's testimony to legislators:

In another sign of tighter regulation to come, Bernanke said supervisors should have authority to bar new financial products that may be destabilizing to markets.

Chairman Bernanke is certainly talking about such exotic products as credit default swaps and the like, but my concern is what could be defined as "destabilizing." It really depends on the person writing the definition. Taken to an extreme, there are credit union products that could be classified as "destabilizing" and therefore subject to a greater regulatory scrutiny.

I know that there are many leaders within the credit union community that believe certain products (such as courtesy pay and payday loans) should be purged from the credit union system all together. Whether that assessment is right or not, I think we can all agree that members should have the say over what should and should not be offered at "their" credit unions rather than politicians/regulators far removed from having to serve the day-to-day needs of consumers making that determination.

I believe that consumers can be the greatest regulator if given the chance. They are already responsible for the rise and fall of many a company. If they don't like something, they move on - enriching the new while teaching a lesson to the old. The problem, as I see it, is that they have been taught not to worry about that responsibility for a range of services and activities. They have been taught not to care about the strength of their financial institutions, because regulators have taken on that responsibility. They have been taught not to be concerned with the safety of airlines, because regulators have "made sure" that every plane in the air is in top condition. They have been taught not save for the future, because the Washington is "saving" for them.

The net result is a misplaced trust that drives consumers to accept certain promises as truth even when those promises have no such foundation.

To be honest, I trust the wisdom of members to tell us what we should and shouldn't offer via their basic consumer response to true competition. We need to make sure, however, that they are aware of their responsibility and encouraged not to abdicate it to anyone or anything else.

The alternative is more misguided regulation, which in my opinion only serves to further remove people and institutions from the responsibility of their actions. We cannot afford any more of that.

Power to the people.

Consulting the Social Network

2009-02-25T12:59:00.004-05:00

I am a member of a few different "social networks." Every day I try to determine whether it is worth the time to keep my profile active, and to feed the network with the awe-inspiring details of my life (in case you were wondering, that was a bit of sarcasm). My recent deliberations got me to thinking about how professionals have started using these networks.

On one of my networks, a large part of the professional appeal seems to be posting "help me" questions. These are questions people ask when they want help with a vexing problem, but they don't want to pay a consultant for an answer. I can respect that. Consultants are an expensive option, especially for simple issues. The social network is inexpensive and places the "wisdom of crowds" at your disposal.

One thing that gets me, though, is when people post more complicated requests to their social network, then trust the advice they receive. Yes, people defend the practice by saying "why reinvent the wheel?" I can buy that, but only to a certain extent. If someone has encountered the exact same problem in the past, for the exact same circumstance, and have the exact same underlying corporate structure (strategy, organizational design, culture), and subsequently offer a response to your challenges, then by all means use the suggestion. It should fit. But how many institutions in the world are exactly the same?

Every organization is different, in fact every organization should strive to be different. Compelling and calculated differences form the basis of competitive advantage. If you have an organization that truly strives to develop an advantage, why would you ever make use of someone else's response to similar challenges? All you end up with is a second-class implementation.

Furthermore, who is to say that what your network proffers is actually right? What if you need wheels for your cart, and the best your network has created are square wheels. With a firm "try this - it has worked great for us and should work just as well for you" recommendation, you are on your way to having a cart just as bad as everyone else's.

This brings me back to consultants, and their value to organizations. A good consultant should never apply turn-key solutions to your institution. A good consultant should work to assess your strategy, build an understanding of your organizational design, and get to know your culture. A good consultant should develop a relationship with you so that their recommendations are deeply related to your organization and crafted to succeed, given your own unique infrastructure.

Social networks are not that deep. You may find, via a feed, that someone in your network is off on a trip across country to visit a long-lost aunt. That knowledge does not make their relationship with you any deeper, and it certainly does not make their uninformed recommendations to you informed, accurate, or correct.

Interestingly, social networks and consultants start from the same basic point - experience. Those with experience in the stated challenge rise to answer, but here is where they differ: The social network response is, "Here is what worked for me, it should work for you." The consultant response is, "Here is what I have seen, let's determine how it applies to you, given the unique circumstances of your situation."

I suppose I will continue participating in these social networks because they do encourage me to think, even if the thought they inspire goes against some facet of their proposed usefulness. And besides, I feel like that long-lost aunt of a friend, of a friend, who was recommended to a friend of my friend, is a member of the family. Saying goodbye would just be too hard....

A Stabilizing Punch in the Face

2009-02-02T14:03:00.003-05:00

I just returned from a credit union planning session. One of the topics of discussion was how much of an impact last week's NCUA decision on the "stabilization" efforts of the corporate credit union system would have on the industry's future. The concern this credit union shares with credit union leaders across the country is that the NCUA is destabilizing natural person credit unions with their corporate rescue efforts.

A widely held perspective in the circle of clients we support is that hundreds of credit unions will be driven to untenable financial positions if this plan is enacted. That every corporate credit union will "survive" while 500 credit unions are driven out of business.

It is certainly too soon to tell if this ill-conceived plan will have such consequences. Perhaps they will revise the plan with something a bit more sensible, though I have my doubts. Unfortunately, every credit union that spent the fall deliberating deeply on the most sensible pathway through this downturn just had their well-devised plans dealt a blow.

I suppose that Mike Tyson is worth quoting here. He apparently once said "everyone has a plan . . . until they get punched in the face." Well said Mr. Tyson. Well said.

Bye, Bye Citi...

2009-01-13T15:27:00.003-05:00

The recent announcements and news articles covering Citi are truly interesting. Take this headline delivered via the Wall Street Journal a few minutes ago:

"Citigroup, under pressure to rapidly downsize, is preparing to unveil a major reorganization that will mark a further step toward dismantling the financial conglomerate..."

I wonder where this pressure is coming from!? Just kidding. I have an idea from where and by whom. In case anyone was wondering, this is what happens when the "banking experts" elected to Congress begin running financial institutions. To say that I am a bit concerned about where this all may lead is an understatement.

Here is an example of the factors driving my concern: the recent decision on the cramdown option proposed by enlightened Senators and now "endorsed" by Citi. This option would allow bankruptcy judges to set the principal value of homes in bankruptcy court. I find it hard to believe that this is the best idea available for stemming nationwide declines in home values.

In any case, the cramdown option was first proposed last year by Senator Dick Durbin of Illinois. It was rightfully met with resistance by lenders and other housing groups at the time. This year it is now seen as the best path forward. Citi changed its tune and is on board, perhaps because of the small payment of $25B awarded the institution as a result of the bailout.

Anyone who has read Ayn Rand's "Atlas Shrugged" likely sees the interesting parallels between the fictional Washington of the novel and the Washington of today.

I am no conspiracy theorist, and generally believe most people in government try to do their best, but often policy-makers are ill-informed (this includes policy-makers of all kinds, including a number of financial institution boards). Ill-informed decision-makers make ill-informed decisions. I believe that the folks at Citi know this isn't the right path, but given their newly minted allegiance with Washington they have no choice but to follow it to its end.

While credit unions have been largely locked out of the bailout game, perhaps this is the best thing going for the industry. We owe favors to no one but the members who own us.

A 2002 Web Leader!

2008-12-18T10:09:00.004-05:00

We are currently researching a selection of credit unions for a client project. We came across something in our research that I had to share. One of the websites supporting a credit union we reviewed proudly proclaimed that the credit union was the 2002 recipient of NAFCU's "Best Credit Union Website" award. From the looks of it, nothing on the site has changed since.

It's as if they were so proud of that moment, they decided they would go out on a high note. It seems like the reasoning is, "It can't get any better, so let's not even try."

If the world had not changed since 2002, especially with regard to online activities and advances, I would have no problem with an institution that made minor or even no adjustments to a website. But we all know that is not the case. 2002 was six (nearly seven) years ago! Even within the last two years we have seen incredible change in the online world. Look back over the last six years and the changes are astounding.

One of the major, non-technical changes with regard to the online world has to do with design. I was in New York City over the weekend and came across an interesting book that reflected on the transition in web designer skills. It used to be that the majority of web designers had print design training, and they had to adapt their skills to the unusual world of online design and layout as requests for web sites came in from clients. Now, there are professionals trained directly in online design who have never had the challenge of adapting skill sets from one medium to another.

My point is that website design, as much as the functional elements of financial institution web sites, has changed greatly over the last few years. Especially since 2002. Any website that holds on to designs favored more than five years ago is jarring to look at, as it stands out starkly against other more updated sites. Were this a branch I was talking about, it would be similar to a credit union holding on to its look from 1975. Lots of strange color combinations, shag carpeting, etc.

No successful credit union, to my knowledge, still has 1975 decor proudly displayed throughout its branches. Why? Because to date ourselves in such a way shows those that might open accounts with us that we are not up-to-date with the latest in financial services and professionalism. Yet when it comes to the online world, many still hold the mistaken belief that just having a web presence, whether well-designed by today's standards or not, is enough. It isn't. Design is important in the online world.

Let's take pride in our appearance - online as well as in the real world. Our members deserve no less than that because as owners, the way we look is really a reflection on them!

The Youth Shall Lead

2008-12-10T12:06:00.005-05:00

I've been carrying around a newsletter excerpt from State Farm Insurance for a few months. I've been meaning to comment on it in the blog.

For awhile now, credit unions across the country have talked rather openly about the challenge to attracting "young" board members. I "quote" young, because young is a relative term. In any case, young board members are hard to come by for the industry as a whole. Some credit unions do well with Gen-Y board members, but they tend to be credit unions that have a field of membership largely composed of Gen-Y individuals.

USC Credit Union, the credit union for the University of Southern California, is a good example. They have a board seat reserved for a USC student to ensure that the credit union's governance process takes into account that vital membership demographic. In fact, it is through USC that we got to know Justin Ho - our resident Gen-Y expert and strategy consultant.

What I found interesting about the State Farm piece, pictured here in the blog, is the depth of their effort to incorporate the youth. Rather than just talk about the need to incorporate youth into their strategy, they put action to words and desire. For example, they have the State Farm Youth Advisory Board, which is tasked with the responsibility of overseeing a program called the Signature Service Learning Initiative and the program's $5M budget. Imagine that! A youth board with real responsibility.

I was curious, so I searched for additional information on this board. I found more than I expected at http://www.statefarmyab.com. This initiative is working. I encourage you to check out the page listing the board members. I believe there are 29 young board members spread across the country.

There is something to learn here. The push-back I get when talking to credit unions about youth board members, or volunteers in general, is that the youth are not all that interested in serving on boards and/or volunteering. That youth don't have time to participate. That the value of their participation may not be equal to long-standing board members. So on and so forth.

What the State Farm effort shows us, what we can learn from, is that all we really need is the institutional will to actively recruit the next generation. The youth will participate. The youth will volunteer. The youth will engage. Now, maybe not in ways familiar to long-standing boards - but who cares about that? When it comes to deliberations on strategy and governance, tradition can be an albatross.

If your credit union has the desire to incorporate the youth perspective at the highest level of the organization, make sure you have the will to proceed. The old saying "where there is a will, there is a way" rings true. Without the will, there is truly no way. If you don't have institutional will to proceed, then don't bother with a youth strategy because there is no way it will work.

Slowing Economic Activity

2008-12-03T14:45:00.002-05:00

Throughout the fall we often referenced the Federal Reserve's Beige Book during the various strategic planning sessions in which we participated. The Beige Book is a report published by the Federal Reserve Board that provides perspective on current economic conditions in each of the twelve Federal Reserve districts. It is usually updated eight times a year.

The latest update was recently posted and is available on the Federal Reserve's website at:

http://www.federalreserve.gov/FOMC/BeigeBook/2008/20081203/default.htm

As you might expect, the report is not all that rosy. In any case, if you haven't read the latest, or were not aware of the availability of the report, it is a good resource to use in the consideration of market strategies.

Puttin' on the Ritz

2008-11-26T10:27:00.003-05:00

From a CU Times story posted today:

"Mica said he was unsure but hopeful that despite belt tightening and travel costs the GAC conference would top the 5,000 from 2007 noting, however, the trade group is running a heavy ad schedule “doing mailings, videos, using league publications—everything we can” to ensure a strong industry presence in February."

Hello!? While I do agree that this is certainly a good time to tell the credit union story to new, incoming congressional leaders, why don't the powers that be use their marketing budget to subsidize the attendance of credit union CEO's and Board Chairs. If the message is truly the most important part of the outreach, then a simple "the trip is on us" offering would speak volumes about what the GAC is truly all about - the personal interaction between credit union and congressional leaders.

From my perspective, a marketing effort to encourage credit union leaders to attend a conference at this time seems like money wasted. The credit union leaders that I know are diligently working to cut all expenses that do not directly support members in this time of need. While meeting congressional leaders is important, it is certainly not more important than meeting member needs.

Which brings me to subsidizing the event. Why force credit union leaders make the choice? Drop the $895 attendee fee and run the conference at break even - or even a loss? If this is all about credit unions, then this time of "belt tightening and travel costs" should serve as an opportunity for the association to give back to credit union members.

This enhanced spending on marketing seems like an effort merely to break an attendance record than to truly serve the industry.

Lender of Last Resort?

2008-11-25T09:20:00.002-05:00

I just saw the headlines that the Federal Reserve is creating a facility to support consumer and GSE debt. Here is the statement:

The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF), a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).

At some point, you have to wonder whether in the future we will need financial institutions at all. The way this seems to be headed is to a "central bank" system. That is one institution, owned by taxpayers, chartered to lend directly to the american population. Good bye banks, credit unions, thrifts. Who needs them when you can get a subsidized loan from your local FedBank?

Okay. I am being a bit dramatic here, and leaning to a belief not entirely supported by the facts as they stand today, but it sure seems that the government is getting closer and closer to stepping on the toes of traditional banking institutions. True, we have a short-term problem in need of attention, but I am more or less drawn to the conclusion that in the haste to push more credit out the door in an effort to "fix" the economy we are throwing caution to the wind, making decisions that could leave a long-lasting scar on our banking system.

Yes, the efforts of a few (relative to the many fine financial institutions chartered to serve the credit needs of Americans) have "left a mark" as they say. However, in Washington's attempts to correct those mistakes, the sound business practices and efforts of surviving banks and credit unions are being undermined. In negatively impacting solid strategy, Washington is serving as a cause of the demise.

Consider the case of IndyMac. IndyMac failed, sort of. In a preemptive effort the bank was put into conservatorship. It is essentially being run by the FDIC, a government regulator. The FDIC has an aggressive pricing policy at IndyMac. The rates for most of their deposit products, especially short-term certificates, handily beat national averages.

Here is why that is a problem. A recent Wall Street Journal article covered the increasing competition for consumer deposits. They called it a deposit war. IndyMac is undeniably a participant in this war. Because of the FDIC's own efforts at IndyMac, the cost of funds for institutions working the same market have to be higher just to retain existing accounts. In establishing an above-market pricing strategy the FDIC is directly competing with institutions that they regulate. Competition is absolutely a good thing, but it isn't really a competition in this case.

Back to my original doomsday perspective. I truly believe that the banking system will be forever changed due to the efforts of regulators. To be clear, I am not talking about investment banks, et. al. I am referring to the ABC National Banks and XZY Federal Credit Unions now serving people in communities across the country.

The real question for me is not whether the system will be changed, but just how drastically. Unfortunately, that question will likely remain unanswered for some time. We won't know until the dust settles, the sky clears, and we see what we have left.

Courage and Grace

2008-11-20T15:38:00.002-05:00

Over the last four months I have traveled the country working with credit unions on strategy and direction. In many ways it felt like being on a campaign trail. In one stretch, I went from Northern California to Southern California to North Carolina to Southern California to Oregon and back to North Carolina - all in a seven-day period. Like I have said to many people over the years, I truly love what I do but I am not all that fond of the "getting there" part of the job!

In any case, I thought it important to share a perspective I developed this year of the character of the leadership in the credit unions with whom I have worked. The words courage and grace come to mind.

It is no secret that a number of credit unions are facing the unpleasant prospect of mounting loan losses. To be sure, this is not due to lax standards, fraud, or mismanagement. Rather, the housing slide has had unforeseen consequences in certain markets, severely impacting members and the credit unions to which they belong.

In working with credit unions on the response to members' needs during this crisis, I have seen impressive, selfless, courageous, graceful decision-making as leaders evaluated and chose from options that no one would ever desire.

Some argue that the CEOs and boards running a number of our nation's credit unions are not "professional grade." These naysayers suggest that many are in positions of leadership only because of natural attrition in a segment of the financial industry that lacks aggressive, competitive pressure. I don't buy it. I never will.

The leaders I have seen, in action, defining the strategies that they feel will give their institutions the best chance to succeed in meeting the needs of members (a novel concept) are some of the best I have ever come across, and I have met some very interesting, well-known business titans in my travels.

I think that the key to their effectiveness, and what ultimately leads to the right decisions with regard to strategic direction, is that they understand the core focus of credit unions. It's the people. They get that words like "members," "customers," and "staff," describe a human element, not some lifeless, faceless group.

To our clients, and you know who you are, regardless of how the economy goes or the pain that it may cause your members and perhaps your bottom line, rest assured that the credit unions you lead will emerge stronger than ever because of you.

Still Living

2008-10-30T07:14:00.002-04:00

For those that know about our services, it should come as no surprise that I have not posted a blog entry in a few weeks. This is high season for strategic planning, which means lots of airplane flights, all-day sessions, etc., which leave little time for updating the blog. In fact, I suppose I have some degree of frustration that I don't have 36 hours in the day to get to all the "fun" stuff like blog posts and podcast recording sessions!

There is so much to write about these days, especially with regard to strategy. These "unprecedented" times are driving perhaps the most thoughtful and intense strategic planning sessions I have seen in some time. Rest assured that I have notes galore and will catch up soon!

In the meantime, it's back to the airport and on to California.

The Rise of the Credit Union

2008-09-30T08:58:00.002-04:00

There is a good article in today's Wall Street Journal by Jason Zweig. It is in the "Intelligent Investor" section. This was my favorite quote:

Even though Wall Street is dead, innovation is not: In the months to come, clever new financial go-betweens will spring up and find a way to get that cash flowing again. It's hard to see how a depression could get under way when so much capital is waiting in the wings.

In his article, Mr. Zweig argues that non-financial entities have approximately $1 trillion in cash on their books. It is this cash, he states, unlocked as investments in innovative ideas, that will fuel growth. He is probably right, and since I am no economist who am I to argue, but I do think that credit unions should be counted among the entities to which he refers. True, credit unions are not new, and the industry certainly does not meet the definition of non-financial institution. But the industry does meet two of the qualifications identified on Mr. Zweig's article.

First, the industry is full of clever institutions. Credit unions have long prided themselves on "knowing" their members. By combining this knowledge with clever creativity there is no reason why the borrowing needs of small businesses and consumers alike cannot be met by the industry today.

Second, the industry has the capital. True, there are credit unions that made unfortunate decisions over the last two or three years, and as these stories make the rounds other credit unions reflexively tighten up, but by-and-large the industry is well capitalized. The argument can certainly be made, even in the midst of bank failures (I mean, preemptive purchases!) and general financial uncertainty, that this capital needs to be unlocked for the benefit of members today.

Remember this?

The crop failure and famine of 1846 caused Schulze-Delitzsch to organize a cooperatively-owned mill and bakery which sold bread to its members at substantial savings. Schulze-Delitzsch took this cooperative notion to address the needs of credit. In 1850, he organized the first cooperative credit society, known as the "people's bank."

While we are not now suffering from literal crop failures and a resulting famine, we are in the midst of a financial failure and famine. Members and businesses need credit, like food, but credit is scarce, as in a famine. These people may not be "A" paper, but they are members. Their character is likely similar to the character of those joining that cooperatively-owned mill. Good people, but suffering from unfortunate circumstances not of their own making.

If, as Mr. Zweig's article asserts, the path out of today's dark forest will be cleared by innovative businesses making clever use of their cash, I say that credit unions should position themselves as a key part of this group. History shows that credit unions have consistently risen to the occasion, meeting the needs of members during tough economic times. This year, and into 2009, is a time for credit unions to do what they do best.

Danger Ahead

2008-09-25T11:31:00.002-04:00

I've found two interesting, and somewhat related, items on the Internet this week. The first is an article referencing regulator displeasure with a campaign put on by Texas Dow Employees Credit Union. Apparently the credit union put forth an effort to ease member fears about the safety of deposits--and the institution in general--with a dedicated website called www.tdecusafeandsound.org. Regulators, notably the FDIC and the Texas Credit Union Commissioner, felt that the credit union was suggesting that bank deposits were not as safe as credit union deposits. This led to demands that the credit union remove the site and the "offending" references.

The second item, featured boldly on the home page of CNN today, presents a detailed story on shady bank practices. The story focuses on two former employees who, I believe, worked for BofA. The tell of their efforts as employees, at the direction of their employer, to max out customer credit lines. They call it a great big con. In fact, the title of the story is "How banks sucker customers for big $$."

What I find so offensive here is that while certainly some entities engage in practices that I would consider borderline immoral, the tone taken by the story suggests these practices are more common than an aberration. In fact, these practices (if they are true at all) are decidedly uncharacteristic of most of the credit unions and community banks in the country.

That leads me back to the efforts of TDECU. I didn't see the site before its removal, but my understanding is that they were trying to suggest that their strategic decisions kept them away from taking the kinds of risks that are diving certain banks towards insolvency. Compared to such banks, the credit union is safe and sound. The regulators didn't like that, but I wonder where their outrage is when it comes to such news articles that paint a picture of an entire banking system built to gouge/sucker/rip off consumers.

Either regulators need to set the record straight for jaded journalists, or go easy on the banks and credit unions trying to keep their good names from faltering due to the actions of a few.

Banking on Mass Hysteria

2008-09-18T08:37:00.001-04:00

This just in from the Wall Street Journal:

"The problem with trying to separate perception from reality in the confidence crisis gripping global finance is that perception is the biggest factor shaping reality."

I find it interesting how, when planning strategically, we often we fail to truly consider the impact of "news" on the psyche of local consumers. I have facilitated a fair number of sessions, and in many cases the local economy in which a client operates is not as bad as national averages. This leads to a false sense of security for planning participants - not because they feel they are immune to downturns, but because they believe consumers are immune to the constant hum of negative perspective. My concern is that consumers will begin to believe they represent the average if they hear it enough. Perception then becomes reality regardless of the real economic situation, ultimately having a measurable impact on the performance of their trusty credit union.

More than ever, we are encouraging planning clients to consider strategy for effectively informing members of the status of the "real" economy - that is, the economy in which members live and the credit union operates. It is critically important that members be given informative guidance on local trends that are meaningful, and, no matter whether the trends are positive or negative, how the credit union can play a role in helping members make situationally-appropriate financial decisions.

In your planning session this fall, make sure your participants understand both the local and national economies, and certainly the differences between the two. Then, ensure discussion on how to maximize the uniqueness of your own circumstances. With big-name banks suffering huge declines (imagine your response if a few years ago someone told you that WaMu might have to sell off its branch network just to survive!), your ability to flexibly adapt to the local scene might just make for one banner year. If effective strategy is defined and executed, you will undoubtedly be able to offer localized support to members unmatched by national competition.

The old saying "all politics is local" certainly can apply to economics as well. Take advantage of your local knowledge, communicate your advantage to members, and in the process build long-lasting relationships that members will come to appreciate and treasure for years to come.

Lovin' the Merger Comments!

2008-09-17T11:59:00.002-04:00

I don't know how many people saw the recent SignOnSanDiego article on the home banking problems experienced by California Coast Credit Union. This is the credit union emerging from the "merger of equals" between California Coast Credit Union and First Future Credit Union. If you haven't, it is worth a look - not because of the article itself but because of the reader comments associated with the article. You can find it here.

Mergers are rarely perfect, and the process itself can often be messy, but it has been awhile since I have seen such interesting back-and-forth commentary tied to a news article on the subject of a credit union merger and resulting member service. Welcome to the world of user participation, where your words and actions as a financial institution can be used against you in a very public way.

While this is a minor example, it serves nonetheless as a classic example of the "reputation risk" brought by Internet comment boards. California Coast appears to have managed it well, but these comments will take years to go away, if ever. This means that potential members looking for information on the credit union could turn this up in a search. I wonder if the comments would influence the decisions of such potential members?

If you haven't done so lately, it is worth visiting the major search engines for a quick query on your brand. Hopefully everything you find will be positive!

Fire Your Compliance Staff!

2008-09-02T14:24:00.004-04:00

I just wrapped up preparation for an upcoming workshop on credit union collaboration and cooperation. The workshop, a pre-conference activity held in conjunction with the upcoming National Director's Roundtable Conference in Las Vegas, is designed to work attendees through the arguments for credit union cooperation.

One frequent argument for cooperation focuses on compliance. As the argument goes, this function, while critical, is really not a core function. In other words, success as a credit union is not mandated by a high-functioning compliance department. Success is really defined by being in touch with member needs, and offering competitive rates and terms on both deposit and loan products - not by completing suspicious activity reports. Rather than devote precious resources to compliance personnel, the argument continues, share the burden and costs of compliance with other credit unions.

I've heard the same argument related to human resource and information technology departments.

I am really looking forward to this session, which I am told is gaining serious traction for a pre-conference workshop. I plan to work with session participants in getting to the root drivers of cooperation, and to discuss if these drivers strengthen the competitive advantage for cooperating credit unions. I believe there are compelling reasons for cooperation, which is truly good news for credit unions feeling competitive pressures or looking for greater efficiency without going through a merger. I think you can gain a 50bp advantage, or more, with specific cooperative efforts.

Sorry, but I won't divulge the contents of the session and the support for cooperation. For that you will have to register to attend the workshop! Suffices to say, it will be a dynamic session with active participation for all who attend. I hope to see you there.

Need to focus?

2008-08-19T15:16:00.003-04:00

If you are looking for focus with regard to the next generation of credit union members, we've got you covered. Justin Ho, our Gen-Y/Marketing consultant has drafted and built a new consulting program that gives credit unions (and any other type of institution for that matter) an opportunity to receive feedback to product initiatives, marketing campaigns, etc. direct from the minds of Gen-Y members.

The press release on the service is available on our website, so I won't take up space here simply redrafting the material. My interest in writing this post is simply to say that, based on the concerns voiced at the recent Director's Conference at which Justin spoke and we exhibited, this service will fill a very important need in the industry. We are very excited to see this service launch!

The Metamorphosis

2008-08-13T07:20:00.002-04:00

In addition to being my 8-year old son's challenge spelling word for the week (incredible - I don't think I ever heard that word until I was in high school), a metamorphosis is what experts are saying is happing to American behavior in regards to how oil is consumed. Rather than temporarily changing our habits to accommodate the higher price of oil, they argue, we have permanently altered how we think about and use oil. Hence the use of the word metamorphosis, which means a permanent change from one form to another. In this case, from has guzzlers to gas conservers.

I don't know if I buy it; after all, if we should have learned anything about the impact of general scarcity and price fluctuations we should have learned it back in the 70s. Funny story, but in the face of rising gas prices and long lines at the pump, my Grandfather had it in his head that he could build his own supply stock of gas. Something of a personal Strategic Petroleum Reserve. Apparently, there is an art to storing oil and gas. Every heard the term "water and oil don't mix?" There is some truth to that, and he found out the hard way when water condensed inside his storage tank, ruining his well-planned reserve. Rather than change his behavior, he looked for a temporary shortcut.

With regard to consumer credit, experts have long predicted that the consumer debt market would explode. In this I include consumer real estate debt. Obviously the mortgage market problems are well documented, and consumers indeed have buckled under the pressure of increases to the interest rates on their ARMs and HELOCs. There are now signs that the credit card market may suffer similar consequences. What are the experts saying? That we may now see a permanent change in consumer behavior when it comes to the use (and abuse?) of credit.

I suppose a real, and strategic question for all credit unions to address is whether these experts are correct in their assumptions. Are we really seeing a metamorphosis? Will American consumers truly alter, forever, their behavior when it comes to oil, and more importantly, credit?

Banks, and certainly credit unions, have ridden a solid wave of consumer spending to record profitability and growth over the last few years. In one recent planning session, a management team member described it as being able to run on auto pilot. You could grow double-digits without having to do much of anything. Obviously the current situation has changed that perspective. We now need, more than ever, deft management skills, steely nerves, and modified expectations.

The question remains, however. When the dust settles, will we be dealing with a changed consumer? Will they borrow reluctantly? Will they define value based on fixed rates versus variable rates with low teasers? Will they shop around more for the best deal? Will they ask for less credit?

I am looking forward to the fall planning season, which begins in earnest within the next two weeks. I imagine that these questions will drive the discussions of our clients around the country. I wish I knew the answer to what lies ahead, but predicting consumer behavior is a tricky thing. The best we can do is discuss, debate, and make the best, most informed decisions possible.

If that doesn't work, I can always corner the market on petroleum reserves. I think I have a storage tank around here somewhere.

Saying Hello to 1,700 Family Members

2008-08-11T16:21:00.005-04:00

1,700 credit union family members, that is! I just returned from the 2008 National Director's conference. It was a blazing good time, and was a perfect opportunity to catch up with clients and potential clients alike.

Let me say one thing for the record. Justin Ho is good, and I am very grateful to call him a member of our team and, especially, a friend. He spoke on attracting next generation board members, and based on the buzz in the back of the room where I was sitting he hit a nerve. I thoroughly enjoyed watching seasoned board members find common ground and purpose with this 21-year old college student. Justin can be a real asset to any credit union interested in working with him on recruitment strategies, not only for board members but credit union members as well.

I have quite a bit more to "blog" about, but I am still collecting my thoughts after five intense days of strategic conversation. I will recap soon.

In the meantime, I have real concerns about the tone of recent trends in the financial markets - specifically with regard to headlines announcing yet more tightening of lending standards. Yes, we need to make prudent lending decisions, but you have to wonder if the trend is more overreaction than prudent decision-making. Is the banking community incapable of moderating its business practices? Wild swings in standards show a complete lack of sound strategic planning.

It seems to me that though considered more risk averse than the typical bank, credit unions are simply making good lending decisions. Yes, there are those credit unions that have made substantial errors in judgement over the last few years and that are paying dearly for it, but overall I see that many credit unions "losing money" due to provisions for loan losses are more or less taking market-based precautions in their loss calculations. They are not compensating for years of lax lending standards.

Over my consulting career I have encouraged clients to take on a bit more credit risk, expanding the pool of members to which they would approve loan requests. However, I would never suggest, nor should any credit union ever, take on risk that is not understood or for which adequate compensation for assuming such risk be unavailable. Furthermore, the level of risk assumed by the credit union must be a strategic decision, and the board and management team must operate within the boundaries of that level of acceptable risk.

I hope that credit unions keep making informed decisions on credit requests, decisions that take into account the full range of underwriting criteria. My fear is that many will tighten up as a reaction to "industry" trends, and in the process make the lives of the very people for which we were chartered to serve more difficult than they should be. I would love to be wrong!

Man Up!

2008-07-18T12:21:00.002-04:00

Man Up? Popular slang meaning "be strong, rise to the moment." It's time for our credit union associations to do just that. On a call yesterday with a California-based client, the CEO said they were getting crunched with calls and questions about the credit union's deposit products. Apparently safety and soundness is on the minds of many Californians, and in droves these concerned individuals are seeking out local credit unions for advise. Thank you IndyMac!

My questions is, "where is national credit union campaign targeting these banking system refugees?" This is no doubt a man-up moment for the national and local credit union leagues and associations. Lobbying, hill-hikes, and the like are much-appreciated activities, but isn't it time for a credit union show of force on the national advertising stage targeted to potential members?

Let's face reality here. Membership in credit unions is growing very slowly, if at all (I believe much of our growth is in existing credit union members expanding the number of credit unions to which they belong rather than in people new to the credit union movement). What better time than now to introduce the great value, and sensible business practices, of the nation's credit union community to disaffected bank customers?

I think it is time for CUNA, NAFCU, and the various leagues to pool resources for a broad awareness campaign. How about testimonials of how credit union's are helping the financially downtrodden? How about stories of credit union's helping the underserved and/or forgotten? How about video of iPhone-sized lines of people waiting to open their credit union accounts.

We can do this. I know many say a national campaign won't work, but I beg to differ. It will, but only if we have the will to make it happen in the first place.

To Teach, or To Impart?

2008-07-11T11:30:00.002-04:00

I receive a daily e-mail, a devotional of sorts. The message today shared an interesting idea; essentially posting the thought that it is the responsibility of a teacher to impart rather than simply teach. It made me think about the philosophy governing Glatt Consulting, LLC.

The best way to describe what I think makes us different than many consulting firms is to say that we have a strong desire to impart rather than teach. Put another way, if you impart wisdom on someone then they can carry that wisdom with them from that point on. Simple teaching does not have the same staying power. Often consultants do not like the idea of imparting their knowledge because it lessens the need for the consultant's expertise. It's much better for business to leave crumbs of knowledge because it means that, ultimately, the client will need your services again.

Glatt Consulting, LLC is truly an "imparter" when it comes to our services. Even with our recently-launched net promoter service, the long-term idea is that clients take on the administration and management of the program themselves. If they own it, then it makes it more valuable to them and the concept becomes a strong part of their culture.

Computer systems are known/suspected to have "planned obsolescence" wired into their DNA. Microsoft has built a nice little business on software obsolescence. We plan obsolescence as well - but for the need for our firm. As we complete a consulting project, our hope is that we leave the client with the skills, tools, and especially the know-how to carry on without us. Only then do we, as consultants, truly serve a useful purpose.

My hope is that as we grow (and we are growing!), we never forget that our clients deserve the lasting value that comes with imparting the knowledge we provide.

Speaking of growth, the growth of our firm is in large part why we have been a bit behind on blog posts, podcasts, etc. Believe it or not, in just over 1 1/2 years of existence, we have doubled gross revenues and income as well as the number of clients served. I know, I know! When you start from scratch, you can add one client and double your numbers, but the growth I am talking about is over all of 2007 - and 2007 was a great success. In other words, little more than halfway through the second year of operations we are way beyond the numbers for all of last year.

This certainly deserves a heart-felt "thank you" to all of our clients who have trusted the firm with the many important projects on which we have worked.

A Good/Great Management Team

2008-06-19T18:21:00.003-04:00

I was working earlier this week for a credit union, helping with their strategic planning. I mentioned to their board chairman that the credit union had a "pretty good" management team. It was a sincere compliment - for me "pretty good" is akin to great. "Pretty good?" said the CEO, standing nearby and clearly unimpressed with my assessment.

I corrected my vocabulary - quickly! This was certainly a great team, and they deserved to know it. What makes them great? A deep desire to build trust with one another.

Sure, each person on the team has challenges just like any other person in the world. I imagine sometimes people on the team wake up on the wrong side of the bed. Certainly the daily frustrations of management responsibility gets to each one of them on occasion. They thing is, though, they recognize these challenges and work to ensure that overall they can speak openly with one another, challenge each other, and debate the finer points of strategy and priorities even when they might not feel like it, and even when the subject matter may be uncomfortable to discuss.

The saying "culture eats strategy for lunch" is true because organizations that lack trust end up with "things unsaid." What are "things unsaid?" Simply put, the thoughts, questions, challenge statements, and behavioral corrections that, if uttered, would be good for the organization but because of a lack of trust never leave the inner sanctum of an individual's mind. The result? Poor decisions are never corrected. Bad behavior is never changed. Product enhancements are never suggested. Etc.

Trust is important. If you have trust, the fear of feeling like an idiot for making a suggestion falls away. None of us want to make mistakes, especially in front of our peers. We certainly don't want to say anything "stupid." When people are put at ease because of trust, they will more readily bring up the uncomfortable which will undoubtedly strengthen the institution and lead to better management performance.

The team I had the opportunity and pleasure to work with knows this and, more importantly, makes it an important part of their culture. I wish I could take them along with me to other credit unions on a trust-based training roadshow (yes guys - even Mike!).

It would be a great program!

On an unrelated note, I just left the CUNA Mutual Discovery Conference where I spoke on Next Generation issues as a stand-in for Justin Ho. Justin is our real next-gen expert, but was unavailable to conduct the session. In any case, I had the opportunity to catch up with another speaker who had covered the challenges in building relationships with indirect members in an earlier presentation. I thought her observation was interesting and wanted to pass it along.

As any credit union knows, it is a long, hard slog to build deposit-based relationships with indirect members. But we try, and try, and try....... It seems to never work, save for a few rare examples.

This person's contention, based on background study and a pilot research program, is that what we really need to do is immediately being working additional lending-related business as soon as the ink dries on the indirect loan docs. She suggests a rather quick (within days) follow-up call to the indirect member to ask about other loan needs. Do they have other auto loans that could be refinanced? Do they need an equity line? How about a credit card with better terms than the one they have?

This approach makes good sense. People don't easily switch deposit relationships because it is a pain to do so. This is especially true when the "switch to" institution isn't very well known. Loans relationships, however, are a very different story. The switching costs are rather low, and often product tie-ups do not exist (such as with direct deposits, etc.).

Sure, there are those institutions with loan pricing tied to deposit balances, but remember these are indirect borrowers who probably do not have those kinds of account relationships in the first place.

It was an interesting conversation, one certainly worth sharing.

Remote Deposit Capture

2008-05-21T09:08:00.002-04:00

I am on the receiving end of a lot of industry-related press releases, product announcements, get-rich-quick schemes, etc. Most of these messages end up a victim of the "delete" key before I even read them. One message that came through today, however, I found interesting. It was a marketing piece from a vendor specializing in image hardware, software, and applications. Here is a key sentence from their release:

The application enables the mobile workforce, and even consumers, to scan and deposit checks using their cell phone cameras.

How cool is that?

So many of today's credit unions are searching for that next "great" location for a branch. Since all of the corner lots are taken or too expensive, we end up settling for the next best thing - which doesn't really fit the definition of "best."

In our search to make ourselves more convenient to members who are pressed for time from the moment the alarm clock rings in the morning until the lights go off at night, we give them branches with difficult-to-maneuver entrances and exits, in out-of-the way locations that add to their daily frustrations and time crunch.

The service mentioned in that e-mail is precisely the kind of program credit unions should be considering for the immediate future. As phones evolve to smart devices (we may be there already - try finding a plain old cell phone), consumers will begin using more of the features of these phones. If we position ourselves at the crest of this wave, we will undoubtedly be heros to the moms and dads trying to get from work to t-ball to dinner to bed in the shortest amount of time and with the fewest stops along the way.

I know we like to see our members face-to-face, but they don't always share the same love of a personal visit. I think they would appreciate it much more if our branches were in their hip pockets instead of at the end of a $4.00/gallon drive.

Fed Futures

2008-05-19T11:30:00.008-04:00

One item we often discuss in strategic planning sessions is the rate environment. Board and management team members are rightfully concerned with rates, as strategy can often be undermined if rates move in unexpected ways.

In preparing for planning sessions, we take a look at Fed Futures as a means of working through various interest rate scenarios. In this post, I thought I would share the graphing process we use in our preparations.

30 day Federal Funds Futures are published by the Chicago Board of Trade, and are readily available via the CBOT website. If you browse to the site, however, you won't see what you would consider an actual representation of where the fed funds rate is today vs. where it is headed. If that is what you expect, you will be surprised to see that fed futures are listed at 98.0250. Imagine a fed funds rate that high!

In our graph, and this is the first thing you need to do if constructing your own graph or spreadsheet, we take the latest price and subtract 100. The result is something more much more familiar. Given that calculation and today's CBOT number for May, 2008 we see a rate of 1.975 - very close to the current fed funds target rate of 2.00.

At this point, you could carry that calculation through each month listed on the CBOT page to get a rough approximation future fed funds rates, but a common practice it to add a basis point to the rate for each month following the current month. For example, in June you would add .001, in July .002. We track this in a table, and add the basis point premium to the last posted price for that month, and then make the subtraction mentioned above.

Here is an example of the table:

You can then graph the results, which is much easier on the eyes and, let's face it, a much better tool to use to facilitate a discussion on the rate environment. When using this process, the graph of the latest CBOT data will look something like this:

Now of course there are a multitude of factors and scenarios that can push rates in either direction and it is impossible to consider them all. However, the picture, given what we know today, is a reliable indicator.

Now, how can you use this data? In a strategic sense, you can discuss if you are positioned for the scenario pictured in the futures graph. Right now the market expectation is for rates to turn up in the October/November timeframe. You can question whether your balance sheet will positively withstand the increase. You can discuss how the change will impact your volume. You can also discuss whether certain strategies should be accelerated to either blunt the impact of rising rates or take first advantage of the rise.

Just to be clear, I don't suggest taking the rate "prediction" at face value. Rather it is a tool to use to spark executive-level and board-level discussion about possible scenarios and the appropriate strategic response.

Happy charting!

Vendor Value

2008-05-01T08:02:00.003-04:00

In today's CU Times e-mail blast there is an interesting headline about Digital Credit Union. It seems they have given an award for "business partnership excellence" to one of their vendors. I like this. If you look at the general structure of Michael Porter's value system concept, you see that vendors/partners are an important component of the value you deliver to customers (or members).

To add real value vendors have to adequately support, if not enhance, your competitive standing. This means that they have to be tied in to your strategy, what you value, the consumer "message" you broadcast to members, so on, and so forth. If vendors understand you, then they can better support you.

So many vendor relationships seem to me to be adversarial. I often hear complaints about core system providers (one is as bad as the next), leagues (they deliver very little value), indirect lenders (nothing but junk paper), etc. I think the root of these complaints is that expectations, and philosophy in general, have not been communicated to the vendor in a clear way. Expectations not verbalized will certainly mean expectations not met.

Way to go Digital in recognizing that vendors are deserving of a reward for their efforts at truly partnering in your strategic success. In publicizing this award, I hope other credit unions learn from you that vendors do not have to be enemies - and that vendors learn that truly listening to customer needs and strategy is not a wasted effort.

Consultants

2008-04-29T06:48:00.004-04:00

Every now and then we receive requests to describe for a potential client what products we offer. I find that an interesting question because I don't really see consultants offering products. I see products as packaged goods - essentially, something you can take off the shelf, unwrap, and put to use. This, I think, is really what they are after. I believe the term is "turnkey."

In a "former" life, I worked for an institution that was all about trying to create the perfect turnkey solutions. And why not? Offering a repeatable process can, over time, make you more efficient. You get better and better each and every time you perform such a process, gaining efficiencies in delivery that allow you to drive better margins and profitability.

There is only one problem. Consulting is really not a "product" you can put on a shelf. While good consultants and consulting firms build on the knowledge gained over time, and reapply such knowledge to subsequent engagements, true consulting is never turnkey. To be effective, useful, and ultimately worth the investment a consultant must review each client's unique situation and then draft a unique response/solution.

Not long ago we received a very complicated RFP requesting assistance in devising a growth plan for a credit union. There was very little room to outline a creative consulting solution. The questions were rigid, and at the end the credit union stated a desire to see samples of the engagement output. We tried on a few occasions to draft a response, but found the going slow and frustrating. It took me awhile to put my finger on the reason, but ultimately I figured it out. There was no way we could possibly describe, let alone deliver, the output of a credit union's growth plan up-front without substantive conversation about the reason for the RFP, the credit union's available resources, their ability to execute, etc.

In the end, we passed on submitting a proposal response (I mention that just in case you thought we were bitter about losing the bid). What that credit union wanted was an easy way out. They wanted turnkey. They wanted a growth plan that could be dropped right into their environment so they could be off and running. They probably found a firm that responded with a packaged growth plan, but I wonder over time how successful they will be with that plan. I've been a consultant for twelve years, and my guess is that they will either scrap that "plan" or will end up having to customize the various components. In either case, they will end up wasting their money.

If consultants do nothing more than reapply the same solution they implemented at the last client's shop, then where is the real value to each client? What makes consulting exciting, at least for us, is taking a look at the underlying needs of a client and then working with the client to define the best pathway for success given their resources, capabilities, market, and culture. For any institution using a consulting firm, this is really the only way to derive value from consultants assigned to the project.

If the consultants with whom you work are not willing to get their hands dirty, following cables in your server room, rooting around the file room, shopping your branches, sitting in your meetings, then they are not real consultants. They are simply the clerk at the shoe store, the fast food order taker, or the salesman at the local electronics store wearing a consultants uniform taking orders and delivering a product.

I can guarantee we will never offer "turnkey" solutions. Yes, we do have parameters that define our areas of expertise, but every service we offer is ultimately customized to a client's specific needs (particularly with regard to the outcome). As a consulting firm, this is truly the only way to go - and it is what truly makes the job fun.

Outlook

2008-04-22T16:51:00.003-04:00

Late last week I heard Tom Simpson's perspective on the economic outlook for the remainder of 2008 at a presentation he gave at UNCW. I thought I would pass along the top key points.

At present, output is likely contracting.
For the year, output is likely to be flat to down.
Recovery will begin later this year and pick up steam in 2009.
Nonetheless, the level of output is likely to remain below potential through 2010.
Slack should result in lower inflation.

Though challenges remain, I think Tom's key points show the economy will support credit unions looking to make strong impacts in their target markets, particularly with well-designed consumer loan programs.

Risk Exposure?

2008-04-17T11:36:00.002-04:00

I am at a coffee shop in Wilmington, NC. I just finished a lively discussion with Tom Simpson, former senior staff member to the Board of Governor of the Federal Reserve. I've mentioned him before. We were talking about the "lessons learned" from the crisis afflicting the banking community. Lessons not only bankers learned, but regulators as well.

One line of conversation was the appropriate regulatory response. He for one believes that the Fed and other regulators (particularly the SEC) will be asking themselves how they missed the signs of the crises. He mentioned that one real problem is that the financial engineers working in these investment banks have tools and incentives that put them far ahead of the examiners assigned to make sure these institutions are not placing undue stress on the financial system.

As anyone who is on the receiving end of an examination from a banking regulator knows, examiners are perpetually behind the times. The question to ponder is, "should examiners be up-to-speed with current business practices?" I suppose at heart, none of us want examiners to be truly aware of just how far we are pushing the envelope. However, when they miss signs such as those that indicated this looming problem, isn't the retaliatory legislative and regulatory response much worse than sharing the scope of our strategy?

We do not need additional regulation. If anything, we need to loosen the strings a bit. What we do need is to provide examiners with better training, advanced risk analysis tools, and in general a concerted effort to broaden their skills. Adding regulation will be a vast waste of money. Equipping regulators with better informed and educated examiners is a much better investment.

On the subject of analyzing risk, we are putting the finishing touches on a risk analysis consulting program. Many institutions are not quite sure the extent of their exposure to risk. Our program provides an analysis of this exposure along with recommendations for mitigating the risk. Look for details soon!

The Free Market

2008-04-01T17:05:00.002-04:00

I had to laugh at a quote in a recent American Banker article. Here it is - with my emphasis on the last sentence:

"The Fed is relying on its own clients' view that these assets are now being underpriced in the market, and that is the root of the problem — that they are still good credits that are being underpriced. That line of reasoning undermines the Fed's belief in free markets, because investors obviously disagree, or they wouldn't be underpriced."

What is so funny is that the "quotee" seems to miss the very real thing that make markets work. If we live by the quote above then no one would ever buy in a down market. If the market for a particular asset is down, it "must" be underpriced and therefore not worth buying or investing in.

Time and time again, however, savvy investors see opportunity in underpriced assets and end up making a lot of money when others come to their senses and the value of the asset snaps back into line. Warren Buffet comes to mind here.

I don't see how the Fed's view that an asset used as collateral that is, for the moment, underpriced undermines their belief in a free market. If anything, it shows their strong belief in just the opposite.

Consumer Credit Poised to Grow?

2008-04-01T16:39:00.002-04:00

By many accounts, consumer spending is slowing and we see parallel weakness in the %change in consumer credit. However, there is compelling (though anecdotal) evidence that we are poised to see a rebound in the growth of consumer credit. Here's why. Over the last few years, much of consumer spending has been fueled by the use of home equity lines of credit. In reviewing the trends, it has been awhile since we saw consistent double-digit growth month-to-month in consumer credit. Now that the equity tap has been turned off for many consumers, consumer credit vehicles may once again be the go-to credit source for Americans. If this happens, we will no doubt see a return to decent growth in non-equity credit lines.

In fact, institutions trading in securities backed by credit card receivables are feeling pretty good about the stability of the market.

What does this mean for credit unions? Opportunity. Many credit unions shelved or curtailed heavy marketing of traditional consumer credit products while in hot pursuit of equity business. Now may be the time to dust off portfolio growth strategies for consumer credit programs and grab some of that opportunity for ourselves.

Subprime Exposure

2008-03-28T10:09:00.002-04:00

This week I attended a seminar at the University of North Carolina at Wilmington on the why and how of the subprime mess and resulting credit market freeze. The panel consisted of Dr. Thomas Simpson, Executive in Residence and former senior official at the Federal Reserve Board and FOMC, Dr. Nivine Richie, Assistant Professor of Finance and former trader of mortgage pass-through securities and collateralized mortgage obligations, and Dr. Edward Graham, Associate Professor of Finance and commercial real estate investor.

It was quite the informative session. Here are a few of the thoughts that went through my mind as I listened to the three presenters:

It is the people who put cash down when purchasing their homes who stand to really lose the most from house value declines. We're talking real economic loss here. While those that lose their homes because of 2/28 adjustable, no money down loans will certainly suffer, at least they aren't out-of-pocket thousands of down payment dollars. Not that this comes as a surprise, but it was interesting to hear.

Rating agencies were as much to blame as anyone in this mess. What I found interesting to ponder is that investors were relying on the agencies to have a clear understanding of what they were rating and insuring, while agencies were relying on the investment banks to convey a clear understanding of what they were packaging. In the end, no one understood what they were packaging, insuring, or investing in. Obviously the insurers have been punished by the markets, but perhaps the punishment was too little too late.

Congress is looking for an election-year victory, and where better to find one than in the depths of the housing mess. The White House is trying to blunt perhaps an overzealous response by congress with its own proposals and actions to prevent future meltdowns (read Bloomberg perspective on Treasury Sec. Paulson's March 26 speech). In any case, look for overly ambitious rhetoric and new, entrenched regulation.

The three presenters really put forth good material, particularly with regard to what some of these investments contained (loans with mismatched payment streams, risk ratings, etc.). I enjoyed the program thoroughly.

Regulatory Redux

2008-03-24T11:46:00.002-04:00

At planning sessions I facilitated last fall up until the most recent one I worked on last weekend, I have been discussing the looming regulatory redux. Specifically, the increasing likelihood of an overreaction by policy makers to the financial crisis. I seem to be reading more and more about that very issue in various news publications. Even today, the Wall Street Journal is reporting that "stricter regulation gains favor."

No doubt, good regulation with a mix of fairness and sound guidance would be a good thing for the financial community. Furthermore, consumers should have an easy means of comparing financial products and services across various providers. The problem, as we in the industry know all too well, is that "good" regulation is never an outcome of the process. It is either too far-reaching, presenting a crushing cost of compliance (read SarBox), or too vague to make any sort of impact on process.

As congress gears up for regulatory considerations, let's all hope they take a deep breath, and consider these two key points before acting:

Consumers should be held accountable for their decisions. I know I'm not the only person whose parents passed on the "if it's too good to be true..." pearl of wisdom. Consumers need to ask questions before leaping into something they do not understand. And if in thinking through this issue our public officials find that consumers just do not possess the knowledge necessary to make informed decisions about financial products, the answer is certainly not to dumb-down the products. Rather, it is to invest in the education consumers need to better support themselves financially.
Risk exposure must be considered in the context of compliance. Many credit unions are still very risk-averse. They have basic checking and savings accounts, offer auto loans, and perhaps a credit card or two. Yet, in many cases they are subjected to the same level of compliance required of institutions offering on-site brokerage services, investment advice, mutual funds, and insurance. Any regulation should index for risk exposure, based on factors such as products offered, market served, geographic diversity, portfolio structure, etc.

Of course there are hundreds of other considerations lawmakers should review before acting, but starting with two is probably an easier burden for them to bear. Who knows, such simple advice may help drive an outcome we can all live with.

An Open House? What a Novel Idea!

2008-03-03T11:08:00.002-05:00

Mountain America Credit Union recently hosted its third consecutive open house for business members. I'm impressed. In a day when many credit unions are looking for ways to minimize human contact with members, here is a credit union actually working to bring members in to meet the people behind the products and services they use on a daily basis.

To be sure, I love the convenience of technology and the speed with which it allows me to conduct my financial business, both personally and for the company. I would just as soon hit the ATM to post a deposit than get out of the car and walk in to see a teller. However, institutions that work to merge the convenience of technology with a human touch are ones I think will survive the current competitive landscape.

Technology, at least the technology that we are apt to use in delivering our financial service offering to members, is a "leveler" of the playing field. People are what tip the balance in favor of one institution or another. If you have a good team, maybe you should take a page from the Mountain America playbook. Bring the members in, and in the process let them get to know the great professional team they have at their disposal - that is, if you have one.

An Excessive Survey

2008-02-28T11:12:00.002-05:00

I just opened a letter from one of the credit unions to which I belong - and was confronted by a monstrosity of a "member survey." This thing is four pages with 32 questions, many of which have multiple parts. I gave them my opinion - but not exactly how they expected. I thought about posting a copy of the survey on the blog, but I'm not sure I have enough storage space.

Why the overkill? While surveys have their place, surveys like this turn people off. It is amusing to me that they are asking what branch I use - the one closest to my home or my office. This credit union's nearest branch is more than 500 miles away. I don't use ANY branch! The questions they feel they need answers to seem redundant to me. They can't tell from their systems how often I use the branch? If not, then perhaps this would be a better place to their spend time and resources.

One of the solutions we are launching in the very near future is a program to assist credit unions in deploying a Net Promoter Score survey process. Why a survey after just bashing the one I received? Simple. NPS makes use of one single, yet important, question. In this one question you can tell a lot about how members see you. Furthermore, by asking for a response to only one question, even the busiest of members can find time to respond.

Look for the details on our NPS program in the very near future. In the meantime, I'm off to lug this incomplete - but notated - survey response to the mailbox.

Podcast Library Up and Running

2008-02-27T11:27:00.002-05:00

The GCLLC podcast library is up and running, available at the following URL:

http://www.glattconsulting.com/Glatt_Consulting,_LLC/Podcasts/Podcasts.html

You can also find and subscribe to our programs via iTunes by searching Glatt Consulting in the iTunes store.

Fed Positives

2008-02-26T20:18:00.004-05:00

Here are are few of the positives mentioned by Vice Chairman Kohn during the speech today, along with our thoughts and commentary:

"The level of business inventories does not appear worrisome at present." Interestingly enough, both Sam Zell and Jack Welch echoed similar thoughts earlier today on CNBC.

"International trade continued to be a solid source of support for the economy through the end of last year. The worsening financial conditions and slower growth in the United States have had some effect on the rest of the world, but the prospects for foreign growth remain favorable."

"Credit is still flowing from banks and other lenders." This was good to hear, because it seems that most headlines lately have focused on how tightening in lending standards have eliminated classes of borrowers from credit consideration.

"Lower rates should facilitate the refinancing of mortgage loans, and they will hold down the cost of capital to business." Perhaps this heralds a golden opportunity for credit unions, allowing us a chance to increase market share at a time when many banks beholden to secondary markets are pulling back.

"Inflation expectations generally have appeared reasonably well anchored, giving the FOMC room to focus on supporting economic growth." This is a comment many have hung their hat on to suggest that the Fed will keep rates low for the foreseeable future. If you look at other comments from the speech, it would appear that Fed concerns about growth would support a low-rate environment or a very slight tightening at worst (or is that best?). In particular, the above comment coupled with the statement below seem to suggest such a direction.

"The decisions of policymakers must take account of not only the most likely course of the economy, but also the possibility of very unfavorable developments. Doing so should reduce the odds on an especially adverse outcome not only by having policy a little easier than otherwise, but also by reassuring lenders and spenders that the central bank recognizes such a possibility in its policy deliberations. Whether the Federal Reserve has done enough in this regard is a question this policymaker will be weighing carefully over coming months."

"By midyear, economic activity should begin to benefit from several factors. One is the fiscal stimulus package that the Congress recently enacted. The rebates that households are scheduled to begin to receive in May should provide a temporary boost to consumption. Second, the decline in residential investment should begin to abate later this year as the overhang of unsold homes is worked off, reducing what has been a significant drag on economic growth over the past two years. Finally, the declines in interest rates that began last summer should be supporting activity over coming quarters, and their effects should show through more clearly to improvements in economic activity as the stress in financial markets dissipates."

To be sure, there are several risk factors mentioned in the speech that cannot be overlooked, but unlike some of the pessimistic viewpoints I read following the speech I believe that for my clients this is an economic environment that presents perhaps more opportunities than roadblocks.

Fed Speak

2008-02-26T15:30:00.003-05:00

I just returned from listening to Federal Reserve Board of Governor's Vice Char Don Kohn. Many of you likely have seen the broad write-ups about the speech, in which Dr. Kohn seemed to suggest that while inflation is very much a concern of the Board, the greater concern is on slowing economic growth. The full text of the speech is available via the Board's website at:

http://www.federalreserve.gov/newsevents/speech/kohn20080226a.htm

Interestingly, as Dr. Kohn began his remarks the wind and rain picked up in earnest. Perhaps that is why many who were in attendance focused on the trouble spots highlighted by Kohn during the speech rather than some of the economic "positives" I felt he conveyed. While there is no doubt that the current crises will continue for the foreseeable future, perhaps not all is as bad as it seems.

I am reviewing my notes from the session, and will pull out the positives to post on the blog this evening.

Meeting Fed Board of Governors Vice Chair

2008-02-26T06:25:00.002-05:00

Today I have the opportunity to meet Federal Reserve Vice Chairman Donald L. Kohn and sit in on a speech he is giving to the University of North Carolina Wilmington's Cameron School of Business. The keynote address is entitled "The U.S. Economy and Monetary Policy," and I will blog on the details of his speech later this afternoon.

New GCLLC Website Launching This Weekend

2008-02-22T15:50:00.003-05:00

Glatt Consulting, LLC will be launching a new website this weekend. The new site, our third iteration since the launch of the firm, promises to make the creation of podcast and blog content much easier. It will also better showcase the range of GCLLC consulting services available to the financial community.

As with all site changes, we expect there to be a few minor bumps along the way. Most notable will be the inevitable disconnect between search engines and the changed page structure. We appreciate the patience of all looking to find us online via the variety of search engines in use today, and rest assured that in short order the site will be properly indexed.

We hope that next week you take a moment to stop by and see our new look!

Debit Card Stimulus?

2008-02-12T14:34:00.000-05:00

I just read an interesting opinion piece by Glenn Beck, a TV personality who appears on Headline News, on using debit cards as the means of distributing stimulus dollars. He suggests that the Government, rather than send Americans paper checks, send pre-loaded debit cards that have a time limit for usage.

Whether or not this is a good idea is arguable, but I do like the dialog. If the government promulgates regulation intended to diminish the importance and convenience of paper checks, why then make use of the check as a means of returning millions to taxpayers?

Another interesting issue in light of the proposed stimulus program is that many who do not actually pay taxes will receive a portion of the distribution. I presume that these people would be considered the "unbanked" that so may financial entities are desperate to serve. Would it be possible for the government to make use of banking entities to distribute such cards as a means of bringing these individuals into the mainstream banking community?

Finally, if our esteemed congresspeople really care so much about consumer protections, why not send out debit cards that can be used immediately, at no cost to the consumer, rather than checks that many will cash at unsavory check cashing facilities less the fee that is charged for the "service?"

Read all of Mr. Becks "Glenn Beck: Debit cards for everyone!" article to form your own opinions about the wisdom, and opportunity, of the debit card as a stimulus tool.

A New Kind of Data Theft

2008-01-29T16:30:00.000-05:00

I just heard about a disturbing occurrence in credit union land. It gets to the heart of the cooperation/competition dilemma facing the industry, and helps to explain why formerly useful and popular credit union round tables are now populated by tight-lipped, unwilling participants. Here is the deal. A credit union took a novel idea to a larger group of affiliated credit unions. The reason for taking this idea to the group was to expand the pool of resources that could be used to launch the project. NDA's were signed, etc. For whatever reason, a deal was not consummated.

Fast forward a few months, and the formerly uninterested large group of credit unions now has in development a strikingly similar (down to the minutest of details) offering. They are diligently working for a late-spring launch of this unique new idea that "they created."

I firmly believe in capitalism, competition, and the philosophy that to the victor go the spoils. But I also believe in adding fairness to the mix. Stealing, which this is, is wrong. Credit unions stealing ideas from other credit unions is even worse.

I do wish I could divulge the name of the group, and not doing so in some ways undermines our "unfiltered thoughts and opinions" objective for the blog, but I also want to avoid a legal entanglement - at least for now. The facts will emerge, and the organization that has the very real expertise in managing the type of product in question will undoubtedly run circles around this inexperienced collection of thieves. That may be payback enough. It will certainly be enjoyable to watch.

The real tragedy here, however, is that once again credit unions are splitting resources in launching a volume-driven product. We've been down this road before, particularly in the mortgage market. Suppose that these two groups both attract 50 new clients in 2008. Rather than bargain on price reductions based on 100 relationships, each will be stuck at a bargaining position half as much as what "could have been." Members are the ones hurt here, which in turn lessens the competitive standing of credit unions in general.

When will we as an industry come to our senses and stop certain bully's from taking credit unions off the table as a competitive option for members nationwide.

Rate Cut a Golden Opportunity

2008-01-24T10:06:00.000-05:00

So, the Fed jumped in ahead of their regularly scheduled meeting and cut the Fed Funds rate down to 3.5%. While there are many reasons for the move, one key Fed desire is to spur lending growth in the nation's banking community. This usually happens with a rate cut, but this time the response may be a bit different than in years past.

It seems not a day goes by that we don't hear about a mega bank writing down billions of dollars due to loan losses, bad investments, etc. This situation has had the broader impact of tightening lending criteria at banks across the country. Due to bank's uncertainty about their balance sheets, and to a large extent their uncertainty (or suspicion?) about their retail and commercial customer's balance sheets, they may severely cut back on loan approvals. The Wall Street Journal has a similar prediction:

A big worry now is banks' reluctance to lend to businesses and households. When last polled by the Federal Reserve, bank senior loan officers reported last fall that they were tightening lending standards. The steep losses stemming from the subprime debacle that many banks reported this month may mean that they will cut back further on lending -- especially if they are unsure what other losses they might be taking in months to come.

With Central Bank on the Move, Some Answers on What It Means
By JUSTIN LAHART, January 24, 2008

Does this not present a golden opportunity for credit unions to fill the void? If the rate cut inspires the consumer and business communities to borrow, and their traditional avenues are closed off because of simple reluctance to lend, would we not stand to gain by opening our doors wide to potential members with the message that credit unions are once again stepping in to help those who can't get credit elsewhere? It seems that for some of the financial institutions out there all borrowers are bad risks right now. That certainly cannot be completely true, and if it isn't true then there are great loans going unfunded.

We've got the strength to do this. By and large we are not directly exposed to the subprime crises (we've felt the slowdown in mortgage lending, but we've not had the write-downs from bad loans), and we have direct connections in the "communities" we serve allowing us to make the case that we have our member's best interests at heart. Yes, there is risk, but perhaps this is what our strong capital position has prepared us for - taking advantage of a perfect storm.

GC's Tom Glatt to Speak at Bottom Line Conference

2008-01-22T11:49:00.000-05:00

The 26th Annual Bottom Line Conference put on by CU Conferences will feature Tom Glatt, Jr. Tom will deliver a "Building Brand Equity" workshop as well as a session on analyzing competition. He will also moderate the conference sessions.

The conference is at the Paris Hotel and Casino in Las Vegas NV from February 19-22.

Complete details are available via the CU Conferences website.

The Death of Cooperation

2008-01-21T16:38:00.000-05:00

I was in California last week meeting with a few clients, catching up with friends, etc. One of the more fascinating discussions I had while on my trip covered the topic of credit union cooperation. It seems that there is a school of thought running throughout the industry that credit union cooperation is truly a thing of the past. We no longer really cooperate, and the cooperatives that were created to serve the industry in the past are really now more capitalistic than cooperative.

In any case, the discussion went from the concern over our lack of cooperation to ways in which cooperation really could return us to a pricing advantage over our competition. What if, my partner in conversation said, we took all non-member related functions and turned them over to a true credit union cooperative? What if, for example, we hired one compliance team to serve a handful of credit unions rather than a team for each? What if we hired one outstanding HR team rather than each investing in our own HR department?

The argument went on - and it was really hard to argue back. Let's take a look at the cost of compliance to see why I was at a loss to find any reason to disagree. A BusinessWeek clip from last week shed light on the cost of compliance for large banks. According to Mara Der Hovanesian, the Finance and Banking Department Editor at BusinessWeek, compliance spending grew 159% on average for the five years through 2006 at America's 50 biggest banks. The number is not really a surprise, as we've all had to deal with a near-crushing compliance burden for some time. In fact, I wonder if the percentage cost increase for credit unions hasn't been greater than the bank number. In any case, the breakdown of the increase shows that roughly 60% of the increased fees went to staff compensation.

Taking that very real situation as a starting point for discussion, suppose you could, by cooperating with three other credit unions on a staff member, reduce your compliance-related staff costs by 66%. Would that not be a great driver to really cooperate on compliance staffing? If that staff member cost $100,000 annually in salary and benefits is the effort not worth the $65,000 in reduced expenses?

Even at those credit unions where direct competition exists, cooperation of this nature makes perfect sense because there is very little direct competitive advantage to be had by keeping compliance in-house. Similar arguments can be made for other non-core functions.

Of course, options to "outsource" HR, compliance, IT, and similar functions exist - but not in the cooperative sense. The companies providing these options are most decidedly in it for the money, and that is not a bad thing. However, if the industry can come together and find cooperative solutions for support functions and run them at a true break-even, then the savings can be passed directly on to members in terms of better pricing.

There is a call to action here. My friend, whose credit union is north of $300M in assets, is looking for two or three credit unions who share his cooperative spirit to test out this concept. The initial foray would be solely focused on compliance costs. If you are interested in at least discussing the opportunity, give us a call at Glatt Consulting and we will provide you with the appropriate contact information.

Need a Mint?

2007-12-03T10:26:00.001-05:00

Not long ago I was presenting at CU Conferences InfoTech in San Diego. I've mentioned that conference in a prior blog post. In any case, during a break at the conference I had a short but interesting conversation with Craig McLaughlin of Extractable. He mentioned this new company called Mint.com. Mint, he explained, offered an online service that brings together all of your accounts for viewing - in one place. I thought, "great - account aggregation. Here we are in 1999 yet again." He went on to say that, unlike previous account aggregators (he must have sensed my jump to a conclusion), this was really more like an online Quicken with a twist. The twist? Mint can analyze all of your accounts and then present to you better deals than the ones you are currently getting at your primary institutions.

I was intrigued - but then I forgot about the conversation until I read an article in FastCompany magazine on Mint this weekend. I decided to try it out, particularly after recalling Craig's comments. It was rather simple to set up; within about five minutes I had one of my accounts online in Mint and it had tagged my spending by category and even set up a preliminary budget for me. Easy, straightforward, seamless. Then, it started telling me how much money - specific dollar figures - I could save with other providers. So far, based on their figures, I would save about $900 annually if I move one of my credit card accounts to another provider. I haven't even finished setting up my other accounts. I would imagine the savings opportunity will be greater when I am done with the full set-up.

I thought to browse the user forums just to see what kinds of questions people had about Mint. I was momentarily taken aback by what I found. You see, the point of this post isn't to shill for Mint (although I do suggest you check it out just for fun). Rather, it is to let our readers know that many credit union members are already happy users of Mint. Names like Golden One, Stanford, SECU, Pentagon, Austin Telco, Houston Federal, EDS, etc. popped up all over the user forums.

If Mint.com were a simple aggregation tool, then this wouldn't be such a big deal. Throw in the recommendations for new account relationships, however, and you have something that could be a real threat to credit unions and banks. What it does is remove the financial institution itself from the member's direct consideration. PayPal and uncoupled debit cards also pose similar threats.

The first strategic question for us to consider is whether such advances will have any impact on us at all. It would seem that credit union members are embracing these services - but who knows how many of the more than 90 million credit union members are testing out these company's offerings. Perhaps the real number is insignificant. But what if the real number is more than we can imagine?

The second question to answer is "how is this different than our push to offer better service?" A number of credit unions for whom I have facilitated planing sessions have targeted "service" as their differentiator. Service, if it had to be defined, would be something along the lines of a personal banker; that is a service that actively pursues moving members into accounts and programs that over all saves them money and time. Mint.com seems to offer the online equivalent of the service dream; a program that takes the guesswork and time commitment out of personal financial management.

I certainly don't know based on five to ten minutes of analysis whether their recommendations are really right for me, but at first glance they make a compelling argument just by flashing such a large amount of savings on the screen. Of course, if I need help I have to post my question on a forum, and it is not possible to talk through the account offers with a human just to make sure moving an account is the right decision. These are substantial drawbacks. I would imagine, however, that as their success grows the option to reach a human for discussion and support will be introduced. Perhaps for a fee.

In the meantime, our challenge as an industry is to keep working on making who we are, what we offer, and how we offer it meaningful and relevant to both current and future credit union members.

To read an interesting debate on the impact of Mint and other such services, take a look at the Open Source CU blog. A September post breaks down commenter's thoughts on how much of an impact these types of programs will have on the industry. Here is the link:

http://www.opensourcecu.com/articles/2007/9/19/mint-i-heart-you

Restaurant Thievery

2007-11-30T20:50:00.000-05:00

Here is a line from CU Times' At Press Time, a daily news update for the credit union community:

The $395 million First Citizens' Federal Credit Union has had to notify members who hold cards issued on roughly 70 card accounts that they will be reissuing their cards. According to a story in local media, the credit union cards were compromised when thieves tapped into local restaurant chains' payment systems.

While only 70 card accounts were compromised, it certainly supports our previous commentary on the problems with credit and debit card security at the retail level.

For the complete update check the CU Times post at: http://www.cutimes.com/section/credit-debit-atm/35293

Here is the original story published by the Cape Cod Times:
http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20071130/BIZ/711300311/-1/NEWS

Podcast Library

2007-11-30T16:16:00.000-05:00

Some of you may know that we have a library section on our website. Our original intent was to use the library for posting educational videos and also for referencing some of our favorite business books and publications. After doing a bit of research, it seems like creating audio podcasts is a better choice than running through the production process for video programming.

In any case, I wanted to test how to link up a podcast using our blog. This post represents our test with the podcast features a bit of commentary on the status of our library - basically a reiteration of what I just posted here. Once we get the logistics down we will begin posting the educational content we have already produced.

The Cost of "A" Paper

2007-11-26T09:41:00.000-05:00

I am working on cleaning up the carnage left in the wake of four months of travel related to speaking engagements, strategic planning sessions, etc. This time of year is great for catching up and reviewing notes I made to myself as I listened to people around the country talk about the industry.

One interesting item I found tucked away in my notebook was a reference to the behavior of "A" paper originated via indirect channels. According to Emily Hollis, ALM First Financial Advisor's President, "A" paper purchased from dealers is typically a loss leader for credit unions - apparently unbeknownst to many of the credit unions engaged in indirect lending.

ALM First offers a loan portfolio analysis service whereby the indirect portfolio is reviewed to determine the true profitability of the overall program as well as the profitability of each risk tier. What they found is that on average most portfolios suffer negative spread on their "A" tier. What are the drivers for this phenomenon? There are two. The first driver is loan prepayment. A much larger portion of "A" borrowers end up prepaying auto loans - especially those obtained via dealer financing. The second driver is the cost of loan acquisition, otherwise known as dealer fees.

Taken individually, each driver may not result in negative spread on "A" paper. When combined, however, you end up with a perfect storm.

Of course using "A" paper as a loss leader of sorts is, in itself, not bad strategy, but only if it is in fact a strategy. Perhaps a credit union is willing to suffer negative spread because they can make up the difference via deeper relationships with these indirect "A" members. Or, perhaps taking these borrowers results in greater dealer volume for more profitable "B" and "C" loans. As Emily noted, however, the prevailing problem is that many credit unions do not know about the negative spread in the "A" tier, which means that it is not a conscious strategy.

I would love to hear from any credit union that actively makes use of a "loss leader" strategy for "A" paper. Is it working? Can active relationships with indirect "A" members be developed to such a degree that negative spread can be overcome?

While feedback on this issue would be great, I'm not so sure I'll be hearing any any time soon!

Merchant Madness

2007-11-19T15:09:00.001-05:00

I was a speaker and panelist at Credit Union Conferences' recent InfoTech conference held in San Diego. I found the panel session particularly enlightening as it showcased a few of the major technology-related concerns in our industry. One of the audience member questions I found particularly telling had to do with member account security and fraud. The questioner was wondering what could be done to further protect credit union members from the risks inherent in the products and services we offer.

While there are certainly many steps credit unions and even individuals can take to protect against account fraud and identity theft, I felt it appropriate to point out one major flaw in the system over which we as members of the credit union community have little control. That flaw? The gaping security holes in our national retail infrastructure. Need an example? How about BJs and T.J. Maxx, to name two of the most recent "victims" of mass data theft.

I feel that security holes in retail establishments presents a far more grave threat than some of the data and identify theft perpetrated by individual criminals, if for no other reason than scale. T.J. Maxx (TJX Cos.) had over 45 million credit and debit cards compromised over an 18-month period. 45 million.

While this particular story is old news in the industry, one new survey should give us pause. A company called AirDefense recently released the results of an assessment of 3,000 retailers nationwide. What did they find? Take a look at this quote from their press release:

"AirDefense discovered more than 2,500 wireless devices such as laptops, hand-helds, and barcode scanners in use by retailers. Surprisingly, 85 percent of the devices could have been compromised or risk stolen data due to data leakage, mis-configured access points, poor naming choices for access points, outdated access point firmware and a “cookie-cutter” technology approach by large retailers. This type of approach occurs when the same technology is used in all retail locations so vulnerabilities will repeat themselves across the entire store’s chain."

The bottom line? Consumers are at risk, day-in and day-out, whenever they use their handy plastic payment alternatives - and they are at risk just as much in the "real" world as they are in the online world.

If you want to read the entire release, you will find it on the AirDefense website at:

http://www.airdefense.net/newsandpress/11_15_07.php

This is certainly not a plea to return to cash as the primary means of payment for goods and services. I believe that the efficiencies of plastics are worth the effort. What I do believe, however, and how I answered the conference attendee's question, is that the Visa's and MasterCard's of the world need to be better at policing the practices of retailers and merchants across the nation. They could start with simply enforcing the rules retailers agree to when signing up to take credit card payments in the first place. I am constantly amazed at the retail negligence I see when I travel.

I also answered that we have to be better as an industry at making members aware of the challenges they face when making purchases. Why? Because we get the blame whenever cards are compromised as we are the ones re-issuing replacement cards. Regardless of the fact that such reissues may be due to the mistakes of others, we are the ones "inconveniencing" members. Believe it or not, we bear the burden of reputation risk whenever a retailer makes the security mistakes described by AirDefense.

Hello from Justin!

2007-11-07T19:09:00.000-05:00

Let me take a brief post to introduce myself (although if you’re a consistent reader of this blog you’re probably sick and tired of hearing my name mentioned). I’m Justin Ho, a student at the real USC (Southern Cal, NOT South Carolina), a board member of the USC Credit Union, and a Marketing/Gen-Y Consultant for Glatt Consulting, LLC. I consider myself the luckiest 20 year old in the universe to be able to take on the responsibility of helping a team manage a $300 mil in assets credit union. My so called Gen-Y “expertise” stems from being born into a generation full of early adopters, opinion leaders, and technology oriented individuals. Beyond all my professional and academic credentials, though, I attribute more of my success in marketing and developing entrepreneurial initiatives to my internet junky, “nerdy” nature.

* Let me take a moment to explain how my “nerdy” and “business-minded” nature as a child has contributed to my growth into a full-fledged credit union director. First of all, I was never the average kid. In 4th grade, I was buying boxes of 10-pack baseball cards for $19.99 and selling them for $5 a pack (yes, this was above the market value written on the pack) and putting the difference in my savings account with a 3% interest.
* I was an early adopter of the first dial-up FREE internet service, NetZero. Free wasn’t good enough for me, though, as I was figuring out ways on how to hack it so the banner ad would disappear and there would be no time limit. After these steps, I would then sneak online at ungodly hours, against my parents wishes, to go chat with random strangers over the internet through mIRC about video games, piracy, and new technology.
* As a 6th grader, I founded a 850-member-guild/group on the virtual world of http://www.neopets.com (now a $160 million dollar company) called “LilJustin’s Neopet Guild,” gaining such accolades that I had daily conversations with the founder of the site. Recruiting, hosting, and managing a guild set me up with the fundamentals that I use today in creating and developing credit union initiatives.
* Does anyone out there remember freeipods.com? Well, before the “offers” on the site became ridiculous hidden cost subscription services, I was there when you could get 5 people to sign up for ebay.com and then receive a free ipod. Everyone, EVERYONE, thought the site was a scam but I showed them up when I showed up at school one day with my two brand new ipods.
* In college, I set up a partnership with the USC bookstore, buying out all authentic Reggie Bush jerseys during the USC run to the national championship in order to capitalize on the ebay demand for this outfit. I also contacted various manufacturers in India and bought their factory overstock for ridiculously low prices.
* There’s more, but I’ll stop for now. Nowadays, I have basically dedicated a good 5/6s of my life to 1) being a good student 2) serving as a board member and helping the USCCU continue to remain an industry leader in attracting/retaining members of Gen-Y, and 3) packaging my experience and services in a Gen-Next consulting package that I am offering to credit unions.

Ok. That’s enough about me. I’d truly appreciate it if any readers out there would take the time to say hello and leave a comment and subscribe to the RSS feed via reader or email (which will enable you to receive instant posts/updates via email, etc.). This is located on the right hand column of the website under the hyperlink “Subscribe to Glatt Consulting, LLC by Email”. It would be great to know that I’m not just writing to myself and there are people curious in exploring this market.

Future posts will not be about me, but rather, about a young board member’s perspective on the credit union movement and Gen-Next segmentation. My next post will be centralized around an interview I conducted with the rest of the USCCU board and their perspectives on the advantages, disadvantages, strengths, and fears of having a very young board member. An important topic in this post will be how to actively recruit a successful Gen-Y board member. Please leave a comment, subscribe to the blog, and stay tuned!

Justin Ho to Speak at Yes Summit

2007-10-15T16:01:00.001-04:00

Glatt Consulting, LLC Gen-Y marketing expert and consultant Justin Ho is slated to speak at the CUNA Yes Summit in December. His expertise on recruiting young board members (he is a Board member at USC Credit Union in Los Angeles, California) is the reason for his inclusion, but I have a feeling attendees will walk away with much more than what his topic suggests. Attendees would be wise to solicit Justin's opinions on Gen-Y-specific product and service information while he is at the conference.

Justin joined GCLLC just a few weeks ago and already he has attracted much attention for his thoughts and ideas on how credit unions can expand their relevancy to the "youth market."

He did an interview with one of the trade publications soon after he started with the firm and one of the questions had to do with the true importance of young members. Apparently some in the industry think that the youth market is no big deal. Their belief is that we will get them at some point. We have a classification for those who hold such opinions: merger candidates.

Just kidding - sort of. One of the major problems with believing that the youth will somehow find their way to the credit union promised land is that they really have no one to lead them there. Other industry charters and structures have a much louder voice, and are working hard using whatever avenues they have available to woo this market.

With thanks to Justin for my crash course in Gen-Y motivations, a driver of Gen-Y decision-making seems to be the leanings of peer networks. A great source of the general ranking of peer perspective is Digg.com. Try searching credit unions. One of the items that has a high level of "diggs" has something to do with a credit union leaking customer information. Is that the best we have to offer? If that is one of the sources of Gen-Y peer decision support and all they see is how credit unions leak information, then we are in trouble.

There is much more to explore here, but the bottom line is that this market has a much more broad horizon when it comes to financial service options. We need to do more to make ourselves relevant to, and beloved by, a new generation of American consumers.

New Blog Host

2007-10-15T15:11:00.001-04:00

We decided to move our blog to Blogger. The reason for the move is to make it easier for various members of our team to post to the blog when the spirit moves them. My hope is that we will continue our efforts at making our blog dynamic and a real source of opinion on credit union trends and activities.

Archive

2007-10-15T13:48:00.000-04:00

We've Moved! Our blog site is now on Blogger. Here are the archives from the old site:

Glatt Consulting, LLC Welcomes Gen-Y Consultant Justin Ho
We 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 CUL
I 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 Conference
In 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 Conference
Last 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 Paper
Thomas 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/XML
Tom, 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 Challenge
As 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 Update
The GC website is back online. We apologize for the inconvenience.
1:33 PM

GC Website Technical Problems
The 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 Updates
As 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 Planning
A 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 Withdraws
In 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, LLC
Over 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 Conversion
We'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.