PHOENIX—Skills acquired while working as an NCUA consultant who worked with troubled credit unions have helped Jane Dobbs turn things around at the formerly troubled CU where she is now CEO.
Dobbs, a former consultant working on NCUA conservatorship teams to turn around Camel 4 credit unions, took over as CEO at the $186-million Canyon State Credit Union here in 2013. It is her first time leading a credit union.
Canyon State had suffered through a number of unprofitable years prior to Dobbs’ arrival. But in her first three full years the credit union has posted net income gains of $969,666 in 2014, $587,330 in 2015 and $545,774 last year.
Dobbs, who won the 2017 Southwest Alliance for Excellence Leadership Award, transformed the credit union with the improved income numbers driven by a boost in net membership by 2,026, net new checking accounts by 2,816, loan growth by 39%, and deposit growth by 14%.
Dobbs said her five years spent on the turnaround teams, all of which resulted in saving each troubled CU, taught her that decisions at struggling institutions need to be made quickly and accurately.
“When I came to Canyon State I felt I arrived with a lot of different tools to help me in my new role, maybe some tools that other CEOs don’t necessarily have,” Dobbs said. “When you get introduced to a conservatorship situation you have to move fast, because you are trying to preserve capital and a declining membership. You have to move fast with as much accuracy as possible, while addressing the competing priorities of just keeping the credit union afloat.”
Same Trends
Dobbs was not brought into Canyon State as a turnaround CEO, she said. But the CU exhibited some of the same problems of CUs that fall into conservatorship.
“When you work with conserved CUs you spot trends over time,” Dobbs said. “Expenses are high, income is usually low, staff are often in the wrong positions and vendor contracts are typically poorly constructed. Vendors are also not being held accountable for their performance.”
One of the biggest issues, according to Dobbs, was Canyon State’s declining membership. She dug into the reasons why the CU had slipped from 23,000 members in 2008 to 16,000 by the time she took over. She said key reasons were the credit union spent very little on marketing, had pulled back from its community involvement and had a relationship priced checking account that was alienating members.
Dobbs said she quickly got the credit union advertising again, as well as involved with numerous community activities and organizations. But the biggest change that has led to the membership increase, Dobbs said, was eliminating the relationship-priced checking.
“The product we had was simply too confusing for members to understand and even staff to explain,” said Dobbs, who feels relationship pricing can work if it is simple to understand and explain. “Since members did not understand how the account really worked, their relationship positon would change almost monthly, resulting in new fees and pricing. It was confusing and upsetting to the membership.”
Instead, the credit union has simplified its checking offering, going with Cash Back Checking, a free account that gives members cash back on their debit transactions.
“It’s a simple and easy account to sell, and members like it. We simply share our interchange income with debit cardholders,” Dobbs said.
Another issue Dobbs has had to address is getting staff in the right positions, which she did with a reorganization.
Then there was the issue of the vendor contracts the credit union had signed.
“I found we are in a lot of long-term contracts that are poorly priced, and our hands are tied,” explained Dobbs. “You can’t fix those things right away, but what you do is start holding vendors accountable (to performance standards in the contracts). We had a lot of optimization calls with vendors saying, ‘The product is not doing what it is supposed to do. I need you on my team to help me figure out what is wrong.’ Most of the time vendors are very willing to help you figure out what has happened along the way.”
Recession Issues
Some of the other challenges at Canyon State, Dobbs recognizes, were caused by the severe recession in this sand state. She understood how the credit union had to find ways to cut back during the difficult times.
“I have lived here almost all my life, and I know the impact the recession had here,” said Dobbs, who resides only minutes from the CU’s main office. “So one thing I had to do when I stepped in is evaluate if the problems were recession related. But, as I said, when I got here I saw that other things, not related to the downturn, were going on.”
Dobbs said she is glad to be leading a credit union, and also not living in hotels every week.
“When I interviewed for the job I asked the board if they were looking to merge the credit union, and if they were to remove my name from consideration,” explained Dobbs. “But they said they were not and would be behind me as we turned things around here. We have been very successful, and we have moved quickly. But getting people on board when you are trying to change things can be hard. You are the new guy on the block and see all the things that need to be changed. But it’s a delicate balance as to how you implement the change and how you win over people and get them to embrace change—especially when they have not changed for ling time.”