Local Credit Union Responds to Accusations of ‘Outlandish’ Fees
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In response to this letter to the editor complaining of rising fees at their institution, Shon Welborn of the Community Credit Union of Southern Humboldt wrote the following response:
I came to CCUSH almost 17 years ago. My mission was to put this Financial Institution back together following some very challenging times, to manage and lead it into the future, insuring sustainability. Our membership believed in this organization and actively helped to accomplish that mission….and then some. Why, then, are we receiving feedback that indicates that now we look like a large commercial bank and no longer a local credit union.
We don’t get any more local than Garberville. We are a single branch, headquartered right here in Southern Humboldt with all the beauty, diversity and challenges that come with choosing to live remotely. Everything is more expensive here, groceries, gasoline, statements and especially cash handling.
Recently we have listened to you share your feelings regarding the new fees, specifically the statement and cash handling fees. We want you to know that we hear you. Your board of directors, supervisory committee and staff have been grappling with the rising costs of managing Community Credit Union. When a bank abandons a community with very little notice the resulting rush to move accounts to the north of town or to the south puts a strain on everything and everyone effected by that desertion.
To the non-banker it can feel like a rip-off. After all, how much can a statement actually cost? Plenty!
The actual expenses associated with statements are rising and will continue to do so into the future as most of the country moves toward paperless. The number of companies who print statements are shrinking and the price for this service continues to increase. Our actual expense in 2015 was: $35,410.03 to print, stuff and mail statements. At mid year we had 5,500 members (with a very few already taking electronic statements). That equates to $6.44 per statement. Many credit unions and banks charge for statements to help offset the growing expenses. We have striven to provide as many access points to your account information as possible: speak with a teller, call into the call center, call the automated teller (toll free), view your account online through homebanking, and to receive your periodic statement either by paper or electronically. Each one of these access points represent our response to your request for choices. Each of them comes at a cost to us.
Many have indicated that they do not have a computer and do not want to learn how should they have an access point. After all, there should be an advantage (and waiver) when you reach your golden years. We’ve heard you and agree; management will take a recommendation to the next board meeting requesting a waiver of the printed statement fee when a member reaches age 62. However, if you are interested in learning more about how to sign up for an electronic statement, training classes are being scheduled at the Healy Senior Center. We hope to have training sessions set up at the Senior Housing Community Room (arrangements pending), there are computers at the local library (training if needed is available from many staff members here at the credit union) and we have arranged for discounted minutes at Emerald Technology. Every time you chose to take an active participating role in your credit union, we all win.
The actual expenses to handle currency have skyrocketed, especially for an organization of our size. Most credit unions at our asset size have one employee for every 400 members. We must have one for every 200 members and we are still understaffed. We must have specialized equipment to handle the sheer number of bills that flow in and out (over the counter). That equipment is very expensive to purchase and to maintain – the counter/detectors must be cleaned daily as the currency is filled with residue and gums up the works. Currency is filthy, the lines are long, members want to know what is taking so long, staff endures constant complaining with a smile (most of the time), and we want them to do more.
Add to this, we have regulators, auditors, and examiners who insist that we comply with onerous regulations that have been put in place by well-meaning politicians and governing organizations. For a credit union our size we have 1.5 certified compliance experts (those ongoing certification trainings are far away and expensive). Similar sized credit unions employ 0.5 experts. We currently employ 9.5 tellers (including the two New Accounts staff). Credit unions of similar size typically employ three – and they all have additional duties, ours assist our members all day, every day.
Our fees are not many times the actual cost of the service, in fact they are less than the actual cost to us. We continue to absorb as much of the fees as possible. For this credit union (or any business) to sustain itself, it must understand the nature of the business, where the hidden costs lie and determine how to cover these expenses.
I have read much of late about why we must charge to take your money because we just make money with it. Nothing is ever as simple as it seems that it should be. To repeat: our costs to take your money have skyrocketed.
Let’s explore the process: You deposit $100, five twenty dollar bills. You hand over your cash to a teller (with a completed deposit slip and we thank you for that, you have just given us something to balance to, eliminating a step that we used to have to take and shortening both your time at the window and the wait in line – everyone wins). The teller runs those bills through the counter/detector to verify we have five of them and that they are not counterfeit, the bills go into the drawer, and you receive a receipt, exchange a few pleasant words and go about your day. But not for us, that $100 doesn’t stop there.
At the end of the day we count it again to balance a drawer; at some point, it leaves the teller’s drawer and is transferred to the vault where it is counted (and verified that it is not counterfeit) again (the second time it is handled). At some point it is bundled into a bag to be shipped (the third time it is touched). At some point an armored service comes in to pick up the shipment. We should be done with that $100 by now, right? No, now we have expenses for the armored service. That cash is destined for our Corporate Credit Union (for deposit into our account where it earns a pitiful amount). That $100 (now in your account as that deposit) is insured for you by a government entity which is an expense to us. That $100 as currency is insured by us while it is inside our drawers and vault, another expense. Then we must pay for “over the asphalt” insurance while it is in the hands of the armored service, another expense. On top of that insurance we pay for the armored service (with a gasoline surcharge added in). It takes two days for that deposit to hit our account – two days of lost interest (like you, we need every dime).
When you hand a check for deposit over the counter it is processed that day, an electronic file is created and sent before we go home. It is in our account that evening. When you create an electronic deposit (payroll, social security, recurring retirement direct deposit), it hits both your account and ours at the same time, a back office transaction. Very efficient. Very affordable.
I have asked Kym Kemp if we can begin a series of educational pieces for Letter to the Editor to explain how your credit union works, where are our expenses that are not obvious, why are we required to manage to ratios (and not just a P&L like most local businesses) and what are those ratios, why are they important to all of us and equally meaningful: what happens to a community when it is abandoned by a financial institution. These are just a small portion of the issues, challenges, opportunities and threats faced by your local credit union. We do not enjoy efficiencies of scale like large commercial banks or large credit unions with many branches. We cannot share the expenses associated with specialized expertise – we must hire, pay, train, and retain these certified professionals. Shon Wellborn