Stephanie Schwenn Sebring

She Turned the Ship

CUES CU Management Magazine | October 2015 – Vol: 38 No. 10
by Stephanie Schwenn Sebring
In just under a decade, CUES member Nancy Rappaport, CCE, has made sweeping changes in nearly every area of her CU. The best practices she put in place have resulted in a strong sales culture, empowered staff, reduced turnover, and improved financial standing. They also have positioned the CU for future growth.

At the helm of PriorityONE CU of Florida, Nancy Rappaport, CCE, built an effective turnaround and growth-going-forward culture. Here’s how.

 helm of a boat

Rappaport, president/CEO of $82 million/10,250-member PriorityONE Credit Union of Florida, Sunrise, wasn’t sure what to expect her first day of work nine years ago. She didn’t expect, for example, to try to help a member find an ATM in the CU’s parking lot, only to find said ATM across the street, at the bank. Having held previous leadership roles, including four years as VP/marketing and nine years as senior vice president in charge of the CUSO for $577 million Tropical Financial Credit Union, Miramar, Fla., Rappaport did know much bigger challenges lay ahead.

With $82 million in assets, three branches and 50 FTEs when Rappaport started in 2006, PriorityONE CU had been experiencing moderate growth and earnings. It offered a modest range of services, including savings, checking, and loans. It had also recently introduced online banking. The CU’s capital position was strong at 13 percent, but the CU lacked a culture of trust, and its loan portfolio relied heavily on indirect auto loans. Rappaport took one thing and one day at a time. “The first real step was to build trust with our team, and it was perhaps one of the most challenging,” says Rappaport.

Building a New Culture

During Rappaport’s tenure, empowerment of staff has been central to success. “Only when we established trust could we build on strategies and processes, goal setting, and better efficiencies,” explains Rappaport.

Executive Vice President Deana Hennessey says that CEO support trickles down to all staff, with transparency and open communication. “All of us at PriorityONE embrace this,” says the CUES member. “Communication comes naturally from the top.” The CU shares information through team meetings, one-on-one coaching sessions, and from Rappaport herself.

A hallmark of success in building trust is welcoming staff feedback. “Employee opinions count,” says Human Resources and Compliance Officer Kamir Soto. “We’ve worked hard to have open, direct and honest communication in our culture.

“There is both frequency and a depth of communication,” adds Soto, a CUES member. “The executive team stays in close touch and meets monthly, but we all have weekly one-on-one meetings with our direct reports.”

Rappaport also led building a solid working relationship with regulators. “We’ve worked on developing a mutual understanding of how to implement changes that are best for the membership while also meeting, or in many cases, exceeding regulatory expectations. We are proud of our accomplishments and believe that during any exam, we can showcase to the regulators all the great things we have been accomplishing.”

She reiterates that sound business practices should filter first between an informed executive team and the board, to middle management, staff and, finally, the members. “It begins with an open, working relationship with regulators and sound financial practices.”

Reviewing Process Efficiency

During Rappaport’s early years, she and her team dissected nearly every product and process; she met with direct reports weekly, going over concerns and brainstorming ways to institute best practices.

“I also moved people around quite a bit early on,” reflects Rappaport. “This enabled me to evaluate strengths and weaknesses while they developed experience. Previously, there wasn’t a lot of opportunity for internal advancement or even cross-training and sales. But like most credit unions, we accomplished a lot with minimal resources.”

The CU also had no context for efficiencies, making goal attainment difficult. “In the beginning, there was some reluctance by staff to change and provide transparency on processes,” continues Rappaport. “And many archaic management practices, such as doing payroll on an outdated system, had to be eliminated. Luckily, I had the full support of my board. By listening respectfully and showing I cared, we were able to get everyone on board with the vision.”

Affordable, Desirable Products

Rappaport and her team also tackled a revamp of the CU’s product line. With Rappaport’s years in marketing and running a CUSO, she knew meeting member needs was paramount to success.

“My goal was to offer affordable products members wanted,” she says. “We had to be realistic about what members were looking for, what the competition offered, but also what our budget would allow.”

Hennessey adds that each manager put every product into a spreadsheet. “Meeting weekly, whether it was high level or low level, everything was examined and improved.” The team compared every product offering to the market to gain a perspective of what needed to change.

“During this phase, we also relied on our business partners and fellow credit unions,” explains Rappaport. “Many provided sample procedures to give us assistance. As an example, we instituted a new product, i-Net Checking, which is a free, Internet-based account that earns high dividends.”

Tracking member satisfaction was also critical. “When I came, there was no member tracking, sales or service goals in place,” Rappaport says. “This was hugely important to establish and as quickly as possible.”

VP/Operations Emma Borrego-Rodriguez reiterates that the CU, today, is proactive in tracking metrics and committed to finding new and better ways to serve members. Products/services (used) per member are tracked monthly and tied to employee sales goals and the strategic plan. “We continually review all of our processes and analyze member data with input from staff,” says Borrego-Rodriguez, a CUES member. “We also examine monthly sales and risk reports so we can find ways to improve member service. Tracking is a priority.”

Balancing Loan Portfolio 

In 2006, the CU’s loan-to-deposit ratio was almost 100 percent (it was 53 percent as of July) and its loan portfolio included about $26 million in indirect loans, a great source of income at the time. However, the CU began to see a steady increase in delinquencies and charge-offs. The CU’s propensity for risk declined, and it made a conscious decision to exit the indirect lending market in 2009.

“We knew our loan balances would decline (see chart below); however, we believed it was the right thing for us. It would protect our members’ assets and eliminate a group of non-performing loans representative of an ailing financial market in Southern Florida,” says Rappaport. “As of today, we have less than $1 million in indirect loans. And in the past year, solid growth has occurred in all direct loan segments.”


When PriorityONE CU began to experience charge-offs and negative earnings from the recession, it developed a capital preservation plan. PriorityONE CU reduced assets, including phasing out its indirect lending portfolio, which was important but not something Rappaport enjoyed.

“No one wants to run off business,” she says. “Nonetheless, there are times you need to make tough decisions in the short run to position yourselves for the long run.”

Borrego-Rodriguez elaborates: Starting in 2009, “we dramatically altered our approach to lending. First, by rebuilding and balancing our portfolio from an over-balance of indirect loans—which at its height comprised about 32 percent of our portfolio—to a portfolio comprised mostly of direct consumer loans.”

Additionally, all member service staff were cross-trained to approve and close loans for improved member service, while managers received weekly updates on lending goals to stimulate productivity.

While the intentional decline in indirect loans led to a corresponding decline in the CU’s loan-to-deposit ratio, it was the impetus for an effective new investment strategy. “With the intentional runoff of indirect loans, we knew we would accumulate cash and need a sound investment strategy—a strategy that would maximize earnings potential and prepare for long-term growth,” emphasizes Rappaport.

“Unfortunately, our investing strategies began when rates were on the decline. However, it needed to be done. At one point, loans and assets were equal, making it even more challenging. And with a loan-to-deposit ratio of 100 percent, it was more difficult to fund or prepare for healthy loan growth.” The key was having it be a strategic, unselfish move for a stronger future.

“While not an easy process,” she adds, “we have built a well-planned investment ladder that has us positioned for a rising rate environment. Investments that are maturing monthly will allow us to fund easily pent-up loan demand over the next few years.”

The CU’s healthy growth factors now include a checking program that reduces interest rate risk and produces strong fee income; a sound investment strategy with a manageable level of interest rate risk; and forward-thinking leaders who work together through both good and tough times.

Creating a Finance Committee

Rappaport wanted to be transparent with staff about the challenges the CU was experiencing from the Great Recession and the restructuring of its loan portfolio. In 2009, the CU’s finance committee was created to fill this need. All managers participate in the quarterly committee meetings and an annual strategic planning meeting. Managers also conduct a strengths, weaknesses, opportunities, and threats assessment with their teams, so staff can take part in the strategic planning process.

“The committee also provided a positive way to share with staff the negative trends occurring and, unfortunately, so soon after my arrival,” says Rappaport. “An educated staff who can articulate what is happening financially encourages everyone to become strategically aligned. The committee continues to be an excellent stepping stone for goal setting today, and a way for employees to realize everything impacts the bottom line.”

Rappaport believes each employee must understand the CU’s strategic goals and realize how his or her role impacts goal attainment. Flowing from goals outlined in the CU’s strategic plan, each employee works closely with his or her manager to establish growth goals, and selects three or four online training courses to complete.

Similar to member tracking, the CU also needed a quantifiable way to track employee satisfaction so improvements could begin. The CU instituted an annual employee opinion survey to learn about their needs and desires; senior management reviews the recommendations collected from staff.

Rappaport knew tracking was necessary to get results. “If you’re not able to measure goal attainment or success, you cannot manage it,” she says. “At PriorityONE, we call it our ‘monthly matrix’ or ‘dashboard.’ It tracks every area; managers know their goals and can compare goals to actual results. Those numbers feed into the budget and long-term strategic plan.” Managers discuss the matrix monthly with staff.

Rappaport reflects that it took years to build the team she has today, centering on respect, and a strategic planning process built on cooperation and solidarity.

Together, her team develops strategic goals and every department forms a cohesive plan. “With training, empowerment and thoughtful communications, everyone can grasp and manage the metrics. It also leads to an organization of strategic thinkers. Members benefit as we stay the course based on mutual understanding and trust.”

PriorityONE CU continues to build on its best practices, and Rappaport offers this final bit of advice: “Don’t give up. And never short-change long-term objectives for a more favorable outlook in the short term.”

Supporting the Turnaround

Some key vendors provided helpful expertise in support of the big, positive changes at PriorityONE Credit Union of Florida.

For example, Allied Solutions, Carmel, Ind., provides assistance with sales culture development, and such products as mechanical breakdown protection, guaranteed asset protection coverage, and credit life and disability insurance. Mark Rodriguez, regional vice president, says PriorityONE CU’s consultative sales approach includes an emphasis on four characteristics: education; tracking; recognition; and management commitment.

“Everyone understands the financial needs of the credit union’s members,” he says. “The CU continually explores new products and services to meet those needs and supports staff incentives based on sales performance.”

Brick and Associates, E. Lansing, Mich. works with the CU on asset/liability management, and Brick Capital Management, Inc. provides its investment advisory program.

“Nancy and her team adapted the credit union to a rapidly changing economic environment,” explains Bridget Balesky, a vice president at Brick. “As was the case for many credit unions located in the sand states, PriorityONE CU faced a difficult environment in 2007, as CU members began to suffer from the financial crisis. Nancy and her team dealt with the loan loss problems head on, strategically reduced concentration risk, and implemented a concentration risk policy to enhance the CU’s safety and soundness.”

And Singer Marketing Group, Coral Springs, Fla., provides marketing services.
“Marketing is now strategic and campaign-oriented, focusing on brand, not just transactional pieces,” says Helen Singer, president. “Employees have embraced Nancy’s engaging, tactical style, and now have the sales tools to use and meaningful campaigns to get behind.”

With 25 years of marketing and communications experience, Stephanie Schwenn Sebring established and managed the marketing departments for three credit unions. As owner of Fab Prose & Professional Writing, her focus is assisting credit unions and industry suppliers with their communications needs.

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