In June 2010, TexasOne Community Credit Union was forced by regulators to merge with PrimeWay Federal Credit Union. The two Houston based credit unions each had their own problems, not the least of which was TexasOne's abysmal financial situation.
Over the next five years, Annette Zimmerman, CEO of the new, combined PrimeWay Federal Credit Union, would right the financial ship, create a one-of-a-kind company culture, and turn PrimeWay into a leader in the Houston market and an example for financial institutions across the country.
To serve its members, a credit union must be financially sound
The merger between the two credit unions was brought about by what was essentially a financial emergency at TexasOne. At the time, TexasOne brought just $2.43 million in total capital to the merger, a terrifyingly low number to support its $125 million in assets. The credit union was also bleeding money, losing $665,000 for the quarter ended in March 2010, its final as an independent entity.
Fortunately, PrimeWay was well capitalized and had the financial strength to power through the merger. In a recent interview, Zimmerman was quick to point out that at the time PrimeWay had its own problems, even if they were not yet as severe as those at TexasOne. She said,
When I arrived in 2010, I had to cope with the damaged culture of two struggling credit unions ... There was the culture of PrimeWay, which already had very high employee turnover, low loan origination and rising delinquency, and TexasOne's culture after the merger.
As the dust from the merger settled, the new PrimeWay Federal got to work rebuilding the company into the high performer it is today. The key to the success was two-fold -- focusing on the members and on the credit union's own culture.
Using culture to heal PrimeWay's heart and brain
Zimmerman found that many of PrimeWay's employees had fallen behind on job training and were being forced to used outdated technology to do their day-to-day jobs.
She began investing in new technology, improving processes, and she rolled out new employee training opportunities throughout the various departments of the credit union.
PrimeWay Federal upgraded it's core system in 2012 -- the credit union's core system is the massive and complex central database software that drives the entire institution from loans to deposits and everything in between. In a way, the core acts like the central nervous system of the credit union, and this upgrade gave the entire system a much needed reboot.
At the same time, Zimmerman was working on an even greater challenge: changing the heart and soul of the credit union. To do this she rolled out a new management strategy she coined as "CARING" for compassion, accountability, real value, integrity, new ideas, and guidance.
The underlying objective of the CARING approach was to put the credit union's members first and foremost in everything each employee did. Zimmerman explained that "earnings are a lagging indicator of what you are doing correctly or incorrectly. If you put quality service first, better earnings will follow."
Credit unions are member owned, and in this case, the members hit the jackpot
Unlike banks, credit unions are not accountable to shareholders or Wall Street. They answer to their very customers, called members.
As PrimeWay Federal Credit Union began to slowly turn itself around in the following years, it was those members who benefited the most.
The new investments in technology brought highly desired products into the credit union's offerings like online and mobile banking. The credit union was able to cut its delinquent loan ratio from 3.81% in 2010 to just 0.59% as of year end 2014. That means fewer members are in danger of losing their homes to foreclosure.
The credit union is today comfortably profitable and growing, meaning it can continue offering highly competitive interest rates on loans and providing even higher yields on deposits. It can confidently expand the services it offers even further and grow its membership to positively impact the financial lives of even more Houston residents.
In 2010 it was unclear if PrimeWay Federal Credit Union would ever become a leading financial services provider. Credit unions, banks, and other financial services companies across the nation should take note of exactly how this credit union got it done.
They focused on better serving their members, and they focused on a "CARING" company culture.