Point West Credit Union’s Amy Nelson and Nick Hodson: Ready to Pay It Forward
March 11, 2014
March 11, 2014
Editor’s Note: With 2013 in the rear-view mirror, Anthem asked Northwest credit union presidents and CEOs to reflect on the past, consider what lies ahead and talk about the challenges — and the opportunities — that await credit unions in 2014. Look for “The CEO Perspective,” an occasional series of interviews from the corner office, in upcoming Anthems.
“It’s hard to see what’s on the horizon when you’re dancing in the middle of a raging bonfire.”
That’s how co-CEOs Nick Hodson and Amy Nelson describe the atmosphere at Point West Credit Union in 2008, when the nation’s financial crisis and a barrage of regulatory issues took a toll on the credit union’s membership and, ultimately, on its financials.
With net-worth ratios teetering on the brink and no “silver bullet” in sight, Point West initiated prompt corrective action with regulators and began the process of creating a Net Worth Restoration Plan. Initially approved by the NCUA in 2009, the plan was revised three times before being reapproved in April 2010.
“Internal and external factors compounded so quickly, our first approved plan was swiftly moot,” Nelson says. Retooling Point West’s lending program, rebranding with a tight budget, replacing outdated technology, closing a branch and re-structuring the organizational chart were all part of the plan.
In July 2013 — two years ahead of schedule — Point West completed its Net Worth Restoration Plan. Today, the credit union is focused confidently on the future, with new initiatives and even better service. Point West recently received its Low Income Designation from the NCUA, and it is rebuilding its technology infrastructure to better serve its 9,500 members in the Portland metro area.
Hodson and Nelson say credit for the turnaround rests on many shoulders, but few people will argue that it was the co-CEOs’ tandem leadership that piloted the ship through a very nasty storm.
Hodson, who joined Point West in 2004, oversees accounting, investments, business services and lending for the credit union in addition to his co-CEO duties. Hodson’s passions span multiple disciplines — he currently serves on the Multnomah County Business Advisory Council, providing business-community input on county government decisions, and is an avid cyclist and member of the Team Lazy Tarantulas cycling club in Portland.
Nelson joined the credit union in 2007. She oversees human resources, technology, marketing and member services for Point West, in addition to her co-CEO role. Nelson is a long-time employee of the credit union movement, having previously worked at Advantis Credit Union and, before that, at PACE. She received her HR Management Certificate from Linfield College and her certification as a Senior Professional in Human Resources (SPHR). She also serves on the board of Financial Beginnings, an organization dedicated to student financial wellness.
Together, the co-CEOs sat down with Anthem to talk about Point West’s path through Net Worth Restoration. Not surprisingly, they also shared their vision for the credit union’s future.
Q: A lot of financial institutions teetered on the brink five years ago as the U.S. economy suffered through its worst downturn since the Great Depression, but not all of them self-initiated prompt corrective action in an effort to survive. What were some of the key factors that led you to take that step, and what gave you hope that you’d be successful?
Hodson: The benefit of being pushed to the brink was that it offered clarity in both strategic and financial initiatives and levers. As our team began to execute and believe that we could achieve our goals, the momentum and confidence began to build and compound with each success. We have an amazing staff who were able to achieve amazing things during a very difficult time
Hodson and Nelson: We have a savvy, business-oriented board of directors and supervisory committee who understand the financials and are experienced at taking calculated risks, because several are successful business owners themselves. Their leadership, vision and critical understanding were key factors in our proactive prompt corrective actions.
Q: You won approval from the NCUA for your Net Worth Restoration Plan in 2009 – and then had to revise the plan three times. What were some of the unexpected roadblocks, and how did you find a way around them?
Nelson: The most challenging roadblock at the time was bandwidth. How do we get more work done — keep the credit union moving forward while everyone (including us) is learning new jobs — with 40 percent fewer people? Our culture today is stronger than ever, thanks to a team who believed in rebuilding the credit union for the members.
Hodson and Nelson: Writing four Net Worth Restoration Plans in four quarters is its own challenge, but we never wavered from achieving the end goal of net worth restoration. Our mantra during 2009: “Just a little more.” In other words, keep investing the time; seek creative, durable solutions; partner with champions; and realize that at the end of the day, your efforts will produce a positive end-result if you choose to “learn and leverage.”
Unexpected and multiplying roadblocks fired in quick succession: a six-month-old mortgage program was cut by Fannie Mae; lines of credit were cut in similar fashion; we wrote off $1 million due to the corporates debacle; our core system was given a sunset date during the first year of our net worth plan; our website coding language became obsolete and needed an update; ATMs went through an ADA upgrade; and so on.
Agility and creativity became key attributes within our organization. Cutting internal products and services birthed a “trusted business partner” program which continues today as a success strategy for us. Having state examiners and NCUA regulators on site every four months helped streamline monitoring and reporting. Increased frequency of reports — three times a year for credit migration, for example — provided a strong foundation for our pre-approval campaigns.
Q: You no doubt had a lot of help from business partners, regulators, staff members and credit union executives from throughout the Northwest. Talk a little bit about the role they played in moving Point West forward.
Hodson and Nelson: True to the cooperative movement, these valued collaborators affirmed for us and for Point West members that the ‘people helping people’ philosophy and cooperative principles we live by, on a daily basis, are very real. It’s hard to see what’s on the horizon when you’re dancing in the middle of a raging bonfire. Having trench-level help — not just a cursory 30,000-foot view — provided Point West multiple lifelines towards financial stability.
The list of collaborators — and the ways in which they helped Point West — is long. We’d especially like to acknowledge Janet Powell, the credit union program manager for Oregon’s Department of Consumer and Business Services, and Hilary Tormala, Region 5 supervisory examiner for the NCUA, for providing firm and clear direction for recovery and success.
Also: Tom Glatt Jr. of Glatt Consulting, for revamping our board governance in the face of unhealthy net worth and increased regulation; Unitus Community Credit Union CEO Pat Smith, for her mentorship and assistance in compliance, IT, lending and A/LM; and President/CEO Troy Stang and the team at NWCUA, for helping us navigate compliance, regulatory conversations and risk management of public perception (There was plenty to go around on that last item!).
We really could go on and on: James Alexander from Unitus and Mark Zook and the finance team at Maps Credit Union; Sean Robinson with CUNA Mutual Group; Russ Johnson and Sean Moore with Auto Mentors; Dean Knudston and Joe Reid with CSCU.
We know this list is far from complete. Needless to say, the outpouring of support we received from the credit union movement and our local community is indescribable.
Q: How about your roles as co-CEOs – how did that affect the process?
Hodson and Nelson: We found that two heads are better than one! We operate the co-CEO arrangement within a cadre of management documents, including Executive Limitations, Co-CEO Promises, and Venn Diagram and Social Capital Analysis assessments. These help us clarify our roles, gauge our effectiveness and assist the metamorphosis of this leadership arrangement, in addition to what we can glean from standard internal monitoring reports or external FPRs.
Safety and soundness considerations are in the DNA of every conversation. Our individual areas of expertise, as well as our change management styles, are vastly different. The net result of our arrangement has flattened our organizational chart and empowered the Point West team — managers and non-managers alike — to make decisions with the financial wellness of the member and credit union in mind. Each and every employee at Point West is critical to our mission and our future.
Q: Point West completed its Net Worth Restoration Plan two years ahead of schedule, emerging better and stronger than ever before. Compared to where the credit union was in 2008, what does “better and stronger” look like in concrete terms, and what does it feel like emotionally?
Hodson: The balance sheet and composition of the credit union is much more stable after years of monitoring, adjusting collateral exposure, improving asset quality and strengthening our policies and procedures. Clearly, it feels like a huge weight has been lifted. However, there is still much we need — and want — to accomplish.
Nelson: We have greater bench strength for compliance and regulation, as well as a team of cross-trained professionals who deftly navigate multiple job functions. Everyone is engaged in strategic initiatives and has honed their abilities in project management.
Hodson and Nelson: Emotionally, this tight-knit family is relieved to have cleared old milestones. We are engaged and eager to celebrate each day forward by improving the member experience for all members, present and future.
Q: What’s next? As you look forward to 2014 and beyond, what’s in Point West’s future?
Hodson and Nelson: We revitalized our technology infrastructure on a shoestring budget, so we’ll continue to place resources in this area for the safety and soundness concerns that keep all credit unions up at night — and, of course, to meet the 24/7 needs of today’s member.
Our team is focused on creating financial wellness for our individual and small-business members. Business lending was another program cut short during Net Worth Restoration, so we are excited to ramp up and serve small-business owners and their employees once more.
Our newest collaborator, the National Federation of Community Development Credit Unions, is a wealth of information and resources regarding community engagement and technical assistance to those ends. We encourage credit unions to check out the foundation’s website, www.cdcu.coop.
Q: Speaking of the future: What are some of the key issues facing the credit union movement? What legislative and regulatory issues will have your attention in 2014, and how will you and Point West respond to those challenges?
Hodson: The fluctuations in economic improvement and the resulting changes in asset demand will be a challenge in 2014. Interest rates cannot remain at near-zero forever, and when rates do start to rise, credit unions, including Point West, will need to take a hard look at the numbers to ensure they are meeting their members’ needs without damaging their bottom line.
In addition, line items within the NCUA’s risk-based capital proposal could have drastic and sustaining impact, depending on your business model and strategic initiatives. It is imperative that credit unions engage in dialogue to understand the implications.
Nelson: Collaboration and cooperation between credit unions, like-minded cooperatives and the communities we serve are essential to the survival of credit unions, and we see great benefit in how this model helps credit unions thrive. Clearly, there are scenarios where mergers and consolidations make perfect sense and significantly benefit affected members. But if the last few years have shown Nick and I anything, it’s that, mergers aside, collaboration and partnerships provide durable resources and strategies in an environment of ongoing change.
The regulatory burden of multiple agencies and changing regulation will remain with us for years to come. The question is not, “How are we going to deal with it?” The question is, “How will we leverage this as an opportunity and competitive advantage to benefit the member?”
Hodson and Nelson: The change-management mechanism and partnerships that Point West built during Net Worth Restoration will help us agilely and creatively respond to future challenges. We’ve been shown amazing support, for which we’d like to say, “Thank you.” We intend to pay it forward.
Up Next: Look for the next “CEO Perspective”, featuring Peninsula Credit Union President and CEO Jim Morrell, in the March 25 edition of Anthem.
Questions? Contact Gary M. Stein: 503.350.2216, firstname.lastname@example.org.
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