From: Maurice Smith
Sent: Thursday, May 12, 2022 7:07 AM
To: HAYES, JIM
Subject: Shared Branch Model
Attachments: Shared Branch Model
Good Morning Jim,
I hope you are well and enjoying these fine Carolina Spring days.
I
have been giving additional thoughts to our conversation about the
potential combination of SECU and LGFCU. We have had exhaustive dialog
with and among our Board about the prospects. The lens through with
which we have weighed this discussion continues to be what’s in the best
interest of North Carolina local governments and our members.
To be frank, there is hesitation among our Board about a merger. The Board does not readily imagine local government can be better served by anyone other than a credit union 100% focused on municipal and county government. Management has been tasked with thinking imaginatively about options. Our directors do not prefer to make decisions based on binary choices. They count on our Staff to think outside the box when it comes to strategy. So, it is with this question.
I’ve heard you imply that LGFCU is a bigger weight to SECU than you would have expected. This is the first time I’ve heard this from SECU management. Nevertheless, we recognize SECU has a new strategy horizon for itself. We prefer to work collaboratively with you to achieve both our goals. With that in mind, we have ideas on an alternative future.
Attached is a Shared Branch Model illustration that potentially gives both our credit unions what we want. In a nutshell, LGFCU will purchase a separate core, extracts its member data from SECU and build its own back‐office operations. LGFCU and SECU would enter a new arrangement for shared branch services only. The shared branch approach would operate much the same as it has for other credit unions. LGFCU will pay a transaction fee for actual work done for LGFCU members.
To be sure there are lots of details to work out here, not the least of which is the software to manage a private shared branch system. I think we can ease this lift by getting assistance from others who have done this. We both have friends in this space.
Just in case you are scratching your head and wondering what’s in this for SECU, here’s how we see it.
1. In this arrangement, SECU gains immediate access to CIVIC’s commercial services platform. Collaboration goes both ways. You’ve mentioned the preparation needed to up-fit SECU for business services. Civic can get you there overnight. SECU begins to build a working book of business at the outset.
2. You stated that SECU staff spend 15% of their time on LGFCU members and operations. With this model, this opportunity cost can be remedied right away. This is a net gain to SECU by allowing you to propel your strategy at a more efficient pace.
3. This is a model that works for SECU and its neighbors…. namely LGFCU. Our near four‐decade history of collaboration is no accident. Our credit unions forged a relationship built on mutual trust and partnership. I see no reason this can’t continue in a newly re-imagined future. This approach cements our credit unions’ reputations as the innovative leaders we are.
Lots to chew on here. How about giving this proposal some thought and let’s continue the conversation.
Best regards, Maurice
From: Maurice Smith
Maurice R Smith | CEO
Local Government Federal Credit Union
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