By Ray Birch
ALEXANDRIA, Va.—What are small credit unions most in need of in order to grow?
According to NCUA’s Office of Small Credit Union Initiatives (OSCUI), it’s strategic planning and marketing assistance.
To fill those needs, small CUs have been reaching out to NCUA’s consulting services program, according to Martha Ninichuk, OSCUI acting director. NCUA’s consulting services, which fall under OSCUI, have 160 credit unions enrolled in the current six-month consulting cycle. Last year 456 credit unions went through the program.
Consulting services are offered in about 12 different areas, explained Ninichuk; areas that include—outside of strategic planning and marketing—internal controls, field of membership expansion, and development of new products and services.
“New products and services are very important to small credit unions,” said Ninichuk. “Small credit unions need to be ready to implement new services that their members will demand or are demanding, especially digital services.”
New Product Development
But new product development currently ranks third in the frequency of small CU consulting requests, with strategic planning being No. 1 and marketing No. 2.
With the most requests coming in for strategic planning, NCUA said growth is the focus when the agency consults in this area.
“So membership growth and loan growth, typically,” she said. “We know that many small credit unions are struggling with loan volume.”
While credit unions may make the request, they do not get the final say on how NCUA will assist them when they reach out with a request.
Ninichuk told CUToday.info that the agency carefully evaluates each request, looking at the credit union’s Call Report, assessing its financial condition and strengths and weaknesses. The agency also speaks with the credit union’s examiner to get an opinion on where assistance is needed.
“Then we have an exchange, back and forth between our team and the credit union’s leadership to arrive on our areas of focus,” said Ninichuk.
Each six-month consulting cycle covers three areas, no more.
“We used to try to cover a lot more, and allowed credit unions to select many more areas of consulting,” said Ninichuk about the program that began in late 1999. “But we learned that we can’t cover too many topics in one consulting cycle to be effective. We felt three is the right number.”
NCUA Makes The Call
While any low-income designated credit union (LICU), newly chartered CU, or credit union of less than $100 million in assets can apply for the consulting services, NCUA ultimately makes the call on which CUs it can best serve with its 16-person team of economic development specialists (EDSs)—who deliver the services.
Ninichuk said once all requests for a consulting cycle have been submitted through the agency’s website, NCUA then looks at each request and chooses those credit unions that have the greatest need.
Ninichuk emphasized, however, that the consulting programs are not intended by the agency as a means of propping up a credit union that is struggling and likely headed toward merger. Instead, NCUA focuses on those CUs that are most likely to grow to grow. She also said most CUs being supported are about $25 million in assets.
The team of EDSs are not regulators, stressed Ninichuk, and are truly consultants. Their services are provided through face-to-face meetings with the credit union’s management and board, as well as remotely. Ninichuk said consultants work with the credit union’s examiner as needed.
Ninichuk said NCUA saw a need for consulting services as the demand on its field examiner team became too great for examiners to provide much consulting assistance.
Results?
Is it working? According to Ninichuk, NCUA has not closely recorded the results of the program, but she added that its EDS team and examiners feel that many small credit unions are growing from the efforts. She said that consulting programs can take years to measure their true effect, and that NCUA is now starting to document results, which she called a very “manual” and time-intensive process.
Ninichuk said NCUA does measure credit union satisfaction with the program. CUs receiving assistance are asked to rate the service/support on a scale from 1 (lowest) to 5 (highest). Among six questions that range from focusing on directions, results and benefits to communication between the CU and EDS, for all of 2015 NCUA averaged over 4.8 in the surveys, she said.
“This consulting program is absolutely necessary,” said Ninichuk. “As the regulatory environment has changed, and become more demanding, there is a greater need for consultants to support small credit unions. In the past examiners may have had the time to act as a consultant, but not today as resources across the board are stretched thin. Our team of consultants play a unique role in the industry. They have a unique perspective on credit unions—they are consultants with a regulatory background, as many are former examiners. And, most important, they have a passion for LICUs and small credit unions.”