Olan Jones: Born, Educated and Locally Grounded

Each year end brings the retirement of credit union leaders who have served a generation or more expanding the cooperative legacy. One such exit at Eastman Credit Union in Kingsport, TN is especially noteworthy.

Olan Jones is leaving an institution he guided for over 20 years. Today it is $5 billion in assets versus $600 million when he arrived. Its 820 employees serve 230,000 members at 30 employer and branch locations throughout the country.

 A Person of Purpose

The first two decades of Olan’s professional career were with Eastman Kodak and Eastman Chemical in corporate finance and human relations. Then came the switch to cooperatives.

While it would be important to single out the over 20 years of Eastman Credit Union’s sustained financial performance as CEO, what makes Olan’s contribution so special is his leadership qualities.

Even with 20 years in the corporate for-profit world, Olan believed in the unique contribution of the cooperative model. In our conversations he was curious about all things credit union. His final question in a call to me would be, who else might he ask about a topic such as “Are any credit unions actually utilizing big data analytics to improve their core understanding of their firm and make better decisions”?

“To Thine Own Self Be True”

In all my interactions, Olan’s “southern gentleman’s” personality was prominent. He was always courteous, calm and thoughtful. He welcomed all comers and made people feel at ease. No air of authority, but rather someone you want to have lunch with.

Olan calls it a “Southern Appalachian” manner. Born in Kingsport, TN, he is a life-long, all-in participant in numerous community educational institutions, economic development efforts, theatrical groups, and church and professional organizations in the east Tennessee and southwest Virginia regions of his FOM.

He always saw his responsibilities as much more encompassing than leading the credit union. One initiative he undertook was to deploy a community WiFi network in downtown Kingsport in the early era of the Internet revolution. Ultimately this community effort was ended when WiFi became ubiquitous.

He was active in many Tri-Cities community leadership roles and in financing public development projects. In the credit unions system, he served in volunteer roles with Filene, CUNA, NASCUS and the Tennessee League, to name a few. He also served on the Thrift Institution Advisory Council of the Federal Reserve Board.

A Manager’s Manager: A Service Culture

His combination of human resource and financial background propelled a multifaceted approach to organizational change that resulted in an 800% asset growth during his two-decade tenure.

He was an advocate for quality improvement processes (Deming) and project management. He sought 5-10% annual growth in the field of membership (FOM) as the area’s population was declining at 0.5% per year and the economy growing at only 1%. The company sponsor since 1936, was downsizing employment. By adding groups and counties to its field and becoming a one-stop shop, the credit union enjoyed strong annual earnings with double digit balance sheet growth during his stewardship.

He believed that empathy was key to effective customer service, not just great products. Creating a service culture, he realized, takes time and continual measurement. Once implemented, the credit union has achieved a net promoter score of 81-87% for over ten years. Better service creates better financial results was his operating logic.

He believed so strongly that lending was the critical credit union role that he once appeared at a staff meeting in a “Hair on Fire” wig to stress this urgency. Since the 1990s, the credit union was a pioneer in a non-government guaranteed, private student loans. He refocused lending on middle-class blue-collar members, not just higher paid senior executives. He introduced business lending and financing municipal development projects resulting in a $350 million portfolio.

The credit union shared its success with its member-borrowers by paying out $130M rebates over a 20-year period. Some business clients were so surprised with annual interest checks in the tens of thousands of dollars that they sent them back thinking there had been an error.

His Credit Union Spirit

Having lived in the corporate world of quarterly earnings-per-share expectations, Olan believes that serving members, not maximizing profits, is what undergirds credit union success. ECU found that the higher the annual member service rating, the stronger the financial performance. To everyone’s surprise, almost everything else that matters to financial performance got better as well.

He preached that ECU’s strategy of “maximizing service to members” both differentiates and gives the credit union a huge competitive advantage.

The smartest investment he made was in the credit union’s hiring and training program to maximize this service quality focus. He wanted to keep goals clear, simple and understandable. An employee bonus program of up to 20% of salary, is based 50% on loan performance and 50% annual member satisfaction rating.

Service quality excellence was recognized in the staff bonus combined to create the organization’s decades-long superior outcomes.

The yearly bonus dividend paid out more to members than the credit union would have paid should it have been subject to federal and state taxes. Instead these funds were reinvested immediately to enhance member’s lives and their communities.

Not Changing of the Guard, but Drawing from a Pipeline

Credit unions are unique in their ability to capitalize on local relationships. Olan’s leadership accomplishments stem from his deep, caring loyalty for his people, his community and his region.

His successor, Kelly Price, is from the credit union’s executive ranks. Just as Olan himself sprang from the local environment.

On October 14, 2019, Olan’s singular contributions to east Tennessee were recognized by the Speaker of the Tennessee House of Representatives in a formal proclamation reciting his lifetime of service to his home region.

For those who have not had the experience of meeting Olan, this video for his work with Junior Achievement will give you a first-hand picture of his personality.

https://www.youtube.com/watch?v=dZS8kCnarBE

From the Field: A Sentiment Binding Cooperatives

Email from a member: “Thank you so much for the Patronage Dividend Bonus. We appreciate all the hard work from you and your team. Have a great holiday season.

CEO reply: Thanks for the message. It takes the mutual appreciation of the players involved in a cooperative to generate dividends. And I am proud to work in a cooperative that highlights the sense of appreciation as one of its main drivers for success. Enjoy the holidays.

The Bard on This Time of Year

These lines from Hamlet, Act I scene I, upon seeing the ghost,  are like a favorite ornament at this time of year;

Marcellus: Some say that ever ‘gainst that season comes
Wherein our Saviour’s birth is celebrated,
This bird of dawning singeth all night long;
And then, they say, no spirit dare stir abroad,
The nights are wholesome, then no planets strike,
No fairy takes, nor witch hath power to charm,
So hallow’d and so gracious is the time.

Horatio: So have I heard and do in part believe it.

The Artist Banksy on Social Purpose at Christmas

Any fan of modern art should have no problem recognizing the name Banksy. He is one of the most renowned street artists of this generation. His pieces push the boundaries of political and social activism. Every new street scene draws crowds making his art a public spectacle whenever they appear. His work is usually a “call-out” of current society or a send up of a political taboo. He is a revolutionary with a spray can.

Every Christmas season he issues a new holiday street card. They evoke familiar images and invariably provoke response. His many seasonal efforts can be found on Google.

His December 2019 work “God Bless Birmingham” can be viewed here: https://www.bbc.com/news/uk-england-birmingham-50715803

I enjoy his painting commentaries as they communicate so readily with viewers. Those who visit his pop up sites, feel he is on their side. Whatever the topic, a painter for the people.

A Poem for Cooperative Designers

I was sitting through a somewhat disjointed lecture. Jeffrey Race was describing his latest book in which he discusses the topic of public policy disasters such as the 2008/2009 financial crisis. That reference got my attention. He stated the issue in his slide as follows:

“The decisions leading to these [public policy] disasters were made by very intelligent people with degrees from top universities, with great staffs and almost limitless information. And they were amply warned. The scientific question is why does this pathological behavior exist and what can we — must we — do about it?”

His answer was not simple. He described filters, rules and feedback loops. But the most interesting reference was his asking the attendees who had read Rudyard Kipling’s poem, The Gods of the Copybook Headings? What was the relevance to his core topic?

This artistic query prompted me to look up the poem. The voice in the poem portrays the fads and fallacies that appear in the “Market Place” and the political arena. These motivations end in inevitable disaster, again and again in human history. Whereas the wise sayings that appear in the children’s copybooks remain viable throughout time.

Selected stanzas that directly cite the insatiable allure of the market include:

As I pass through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all. . .

With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things. . .

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

The Cooperative Question

Are your credit union’s efforts driven by the Gods of the Market Place, or the verities of a children’s copybook?

P.s. His analytical approach to the 2008/2009 financial crisis will be the subject of another blog.

The State of Your State

Each quarter, the FDIC issues a single page, three part economic and banking profile for every state. You can look up any state from their website.

What You Can Learn

The data is usually timely, released about two months after each quarter’s end. It is a good macro snapshot of key economic and financial institution trends.

It provides three current data sets:

  1. Macro economic indicators including the % changes in employment growth , housing permits issued, home price index and rate of bankruptcy filings.
  2. Banking trends showing number of institutions, total assets, asset quality, capital/earnings, liquidity and loan concentration trends for five quarter ends.
  3. Banking profile including the # of banks in the five largest deposit markets and the distribution by asset size within the state. Note the September report uses the latest 2019 bank deposit report.

Adding Credit Unions to the Totals

Using external databases from Callahans and NCUA, an analyst can easily add credit union numbers to the banking profile to see total market size and individual firm share.

In many states there is a marked difference in the balance sheet composition for banks and credit unions. However, growth and financial ratios can be compared for relative performance trends.

The one caution is that the institutional performance ratios from the FDIC data are based on the median( the number half way in the set), whereas most credit union data is a weighted average which is a better indicator of a system’s overall standing.

Are Credit Unions Missing Out on the Next Generation of Entrepreneurs?

At colleges and universities throughout the country, entrepreneurship is being encouraged by administrators and embraced by students and professors.

There are new, for credit, academic programs in innovation and new business ventures. Universities routinely offer prizes for the best ideas. Competition among startup ideas are held within and among campuses throughout the year.

What is TigerLaunch?

One of the recently promoted competition open to all students is TigerLaunch.

Here is the description from the website: “Sponsored by the Princeton Entrepreneurship Club, TigerLaunch is the nation’s largest student-run entrepreneurship competition dedicated to building a network of student founders at the university, regional and national levels. TigerLaunch combines networking, mentorship and funding opportunities to craft a distinct experience.”

The site lists the most recent winners and discusses financial and mentoring support available to attendees.

Where Are Credit Unions?

Three years ago, several enthusiastic freshmen entered George Washington University’s new venture competition with the idea of starting a credit union. Their mission statement: “to strengthen the GW community by helpings students and alumni bank cheaply, build credit, better manage their finances and develop valuable skill sets that they can bring to their careers.”

Their concept placed them in the top ten finalists (from several hundred submissions) gaining them a small cash prize and free office space. The university issued a letter of support

So where is this initiative today? This all-volunteer effort with undergraduates and advisors donating their time, ideas and energy?

The quick answer: it is in NCUA’s bureaucratic bog for new charters. The organizers recently shared the documentation with me for counsel. The first draft of their operating policies runs over 70 pages and includes bank secrecy, foreign assets control, disaster recovery, vendor management and additional statements more relevant to their immediate operations such as a loans and collection policy.

A second document is for asset/liability and liquidity management. It runs 10 pages.

The credit union has also developed five years of financial projections. In the initial years the balance sheet will be less than $500,000 total assets. Their products will be simple, and all transactions will be virtual. They have identified and selected their principal vendor relationships and even signed an agreement with a core provider.

They have $10K in the bank and want to raise a total $40K in initial capital. The goal is to operate at breakeven, relying entirely on student volunteers.

They have not been able to meet in person with NCUA. Their goal at this time is to be operational by next May to work through startup issues before classes resume in the fall.

The Agency has slowed the process to a crawl with paperwork requirements, so much that the original entrepreneurs are now seeking successors for this effort when they graduate.

The Dearth of New Charters

Few would question the need for credit union services in communities across America. But the passion and vision needed are drained of life by NCUA’s bureaucratic process that results in few if any new charters each year. Meanwhile 250 or more charters are closed via mergers or dissolution because of morale and/or leadership failings.

Without new generations of leaders inspired by the passion to serve and make a difference and using the latest technology, the credit union option will become a “mature” industry in slow decline. It will end up cannibalizing itself through self-interested mergers, and seek growth via bank and other acquisitions, not by deepening relationships and value for members and communities.

Which start up effort would you back? The students participating in their university’s innovation fairs, or those trying to bring cooperative financial services to the campus?

The answer could be a harbinger about the relevance of credit unions for today’s newest generation of financial customers. Chances are they won’t be called members, except by American Express.

Bob Minor: Mentor, Counselor, Volunteer and Friend for Over a Quarter of a Century

This week ends the tenure of Callahan’s longest serving board member, Bob Minor. He has been part of multiple organizational transitions including three changes of CEO leadership since being asked to serve, as a personal favor to me in the early 1990’s. This was a time when Callahan & Associates transitioned to become a leader in credit union analysis, strategy and collaborative initiatives.

Bob is a long-term Washington hand, having attended almost every Presidential inauguration starting with FDR’s second in 1936, a practice that ended with the current White House occupant.

He graduated with BA and MA degrees from George Washington University followed by career stops with quintessential Washington organizations: the CIA, Clark Construction Company, the National Education Association and the State Department. What tied all of these positions together was his lifelong interest in helping people make good decisions about their employment/career ambitions. These were often at critical transition points in the life of the organization or of the employee.

An Organized Committee Member

I first saw Bob’s skills as a member of the Columbarium Committee of the Chevy Chase Presbyterian Church in Northwest DC. We were tasked with evaluating whether a columbarium addition on the church grounds made sense, and if so, to carry out the proposal.

No member of the five-person group had first-hand knowledge for this project. But as we visited other church’s examples, talked with contractors and evaluated different options, everyone learned together. Bob’s vital contribution was that he kept meticulous records and understood how to succeed in the internal decision making within the church. He then played essential roles in the fundraising, construction and dedication, a time span of almost two years.

Seeing firsthand his ability to work within a committee as part of a larger organization, I asked Bob if he would volunteer on a new Callahan “Advisory” Board of Directors. Advisory, because at the time Callahans was a sole proprietorship, and all decision making and authority was mine.

I believed that if Callahans were to grow beyond the vision of a single person or team, we needed a governance/advisory process that would fill the director’s role required by most organizations.

The Rest is History

Bob and fellow board members, Randy Karnes, Rosemary Hardiman and Mark Elliott guided the company through the inevitable transitions any successful organization must navigate.

The single proprietorship became a 25% ESOP in 2003, followed by a management led purchase in 2014, and a 100% ESOP conversion in 2018. All these changes were new for us and required careful consideration. Bob was vital counsel in ongoing personnel successions including three CEO transitions. While internally focused these transformations took place at a time of unceasing change in the credit union system, Callahans reported on with its data, market share analysis, and editorial commentary.

Essence of a Volunteer: The Elder’s Role

Bob’s volunteer role was always positive. He provided continuity with firsthand knowledge of the company’s history and previous decisions. Staff members sought his counsel about their careers within Callahans or beyond. He was trusted by all to be impartial. His patience for circumstance reflected his deep respect for individual choice. His counsel was based on his wide-ranging experiences of public, government and non-profit employment.

As a member of Northwest FCU since his time as a CIA employee, he understood the potential for credit unions’ contributions and Callahan’s important role in the industry.

Unique, But Not Original

Bob’s service to Callahans is just one aspect of his life. He served as an elder, deacon, choir member and on multiple committees in his over 50 years membership at Chevy Chase Presbyterian Church. Through his decade long association with the career management consulting firm, Drake, Beam, Morin Inc., he advised and coached literally hundreds of persons in their career decisions.

Bob’s vital role at Callahans is that he understands, values and enhances relationships. After the striving and recognition that is so strong a motivation for many, Bob practiced the value that matters most in the end: how we treat our fellow human beings. And that is the reality that ultimately makes all organizations a success—or not.

In credit union land, Bob’s role was not original. The fiduciary and volunteer role of credit union directors can be a critical factor in their success and sustainability. Bob’s spirit can be amplified by thousands of examples in credit unions throughout the country. His departure is a reminder of how cooperatives depend on this dedicated stewardship and oversight. So, don’t wait to recognize this dedication at a retirement event; instead reach out and give your board a hug today!

Thanksgiving for Life’s OMG Moments

I did not understand the OMG reactions in text messages when I first saw them. Did not know what it meant. And when I learned, thought it a cliché.

I have come to recognize that these three letters are the sender’s stamp for a special experience. A kind of shorthand for a secular prayer of joy, insight or even sorrow.

Some Personal OMG Moments

An Unexpected Win

This summer I was watching an iPhone video of the SRAA National Championships rowing finals in Dillon Lake, Ohio. The boys 8-person varsity entry from Wilson High School in the District was not supposed to be there. My sophomore grandson was in the two-seat. They had not made the finals in their qualifying regatta. But the coach petitioned and received an exception entry. They were seeded at the bottom of the teams.

As the finish of the finals was being recorded live on an iPhone video, the sound of the phone’s owner became louder and louder as they ran along the shore capturing the last two hundred yards. I heard again and again: “Oh my God! Oh my God! They are going to win!” And they did. Becoming national high school champions.

National HS champions

Coming in Second: Twice

As both a freshman and a senior, my granddaughter’s high school volleyball team worked its way to the state championship rounds. As a freshman they lost in the final championship match-second place. As a senior they finished second again in the Northern California playoff. After her final senior match she sent an Instagram post to her followers as a thank you for their support. The words that stuck in my mind: “There is not a single thing about my four years with M-A volleyball I would change.” I thought OMG, gratitude, even when coming up one match short of winning it all, more than once.

Recognizing a Busker

The concert of Richard Einhorn’s Voices of Light, a choral work accompanying Theodor Dreyer’s silent film The Passion of Joan of Arc, had ended. We walked to the parking garage with the crowd of other concert goers to take an elevator to our car. A tenor singer, still in concert dress, said to hold the elevator as everyone crowded in. He walked over to the busker, between 50 and 80 in appearance, who was seated, playing an accordion at the end of the long entry hall. The singer reached into his wallet and dropped a bill into the little box at the musician’s feet. One musician out of a chorus of over 100, completing a performance in a very modern concert hall with full orchestra and silent film, pausing to recognize a person performing for change, not applause, in a parking garage entry. OMG

Life’s OMG Moments

Every day we experience OMG events. Sometimes it is as simple as seeing again the stunning beauty of a tree changing seasons:

Or, it can be as grand as the communal expressions of disbelief and joy as the Washington Nationals won the world series.

Washington National’s logo (curly W) and team colors light up the National Cathedral during the World Series.

Thanksgiving is a moment, a pause, to share OMGs. Whether it is seeing family members who have been absent for a time, sharing food from recipes handed down through generations, or just being together around a traditional table, it is a celebration of gratitude. For life’s special moments and for each other.

But try to avoid the one OMG moment we all fear: OMG, I ate too much!

Wisdom from the Field

“The primary purpose of MANAGING is to keep current systems functioning, while the fundamental purpose of LEADERSHIP is to produce useful change!”

Steve E. Kelly, President, Metrum Community Credit Union