TALLAHASSEE, FLA./ALBANY, N.Y.—The League of Southeastern Credit Unions & Affiliates and the New York Credit Union Association announced today that they signed a letter of intent to combine many of their operations into a jointly owned subsidiary that will house all of their back office functions.
The announcement by the two associations is the latest by state leagues to deal with the shrinking number of dues-paying credit unions by reducing back office costs.
The leagues will also collaborate on core services that are not state-specific and can be shared. The goal of the shared services model is to enhance core services and expertise, reduce costs, become more efficient, and expand solutions for credit unions, both leagues stated.
The new collaborative structure represents more than 650 credit unions, $142 billion in assets, and 12 million credit union members. Shawn Wolbert, SVP of finance and administration for LSCU will lead the new effort.
A similar arrangement exists among four leagues spread across the U.S. where a shared services company is jointly operated by three state CU leagues. Plexcity, which is owned by the California Credit Union League, Maryland and District of Columbia Credit Union Association and the New Jersey Credit Union League, is handling accounting and finance, human resources, and information technology responsibilities for all three organizations.
Under the new LSCU/NYCUA structure, the individual leagues, CEOs, and their boards will be maintained, focusing heavily on advocacy and other core functions specific to their individual states. The majority of other functions will be shared between the two leagues, along with associated costs and any new revenue generated.
“Credit union trade associations are facing increased pressure to demonstrate increased value of affiliation while also controlling the cost of membership,” said LSCU President/CEO Patrick La Pine. “To remain relevant, leagues and their affiliated companies must continue to evolve to meet the changing needs of credit unions and the marketplace.”
“This was specifically intended to provide other state leagues with the option of participating in the future,” said NYCUA President/CEO William J. Mellin. “Our hope is to provide an alternative structure for leagues that are looking to become more efficient and effective, while still maintaining their local structure and identity, especially when it comes to advocacy.”
La Pine acknowledged that the financial services and CU marketplaces are changing, and that leagues and their service corporations face growing revenue pressures.
“We know that credit unions want their leagues and service corporations to be more efficient and collaborate more,” said La Pine. “This (agreement) allows both leagues to become more efficient, save money and stabilize the cost of membership—and to focus on what is most important to leagues, and that is advocacy.”
Mellin acknowledged that CU mergers that continue and will likely accelerate place league dues dollars under stress.
“This partnership will create a new virtual entity that allows us to move forward as an independent organization, but collaborate and cooperate among our staffs,” said Mellin, adding that those synergies will lead to greater product offerings and opportunities for member credit unions over time.
The new business model will be implemented in phases over the next three years.