How one credit union is proving that making tough changes can fuel positive growth.

Changing the culture of an established business can be a risky endeavor. But when Thomas Beck took the helm as president and CEO of Montgomery County Teachers Federal Credit Union, nothing was off the table.

Thomas Beck, President and CEO

Fine tuning
Begun in the 1950s in Montgomery County, Md., MCT Federal Credit Union has grown from a small entity serving only members of the county school system to a well-established financial institution with 60,000 members and $445 million in assets. Beck has been with MCT since June of 2006, and since that time has presided over a growth period that last year saw a total asset growth of 12%. According to Beck, that growth has accelerated in 2007 and is due, at least in part, to some operational changes his leadership team implemented.

“We looked at all of our processes, how and why we were doing things,” said Beck. “We tore apart every business process this institution had, rebuilt them, and put them back together.”

As it has grown, the credit union realized it needed to move beyond its initial existence and expand its membership outside of the school system. MCT now has more than 100 local businesses in its field of membership, which it calls SEGs (select employment groups), as a critical component of MCT’s future.

“We created a business development department, and its job is to sell the credit union to other companies,” said Beck. “It’s definitely part of our growth strategy because the school system is only so big.”

The company has also placed an emphasis on using technological advancements that are available to it. It invested in the IT infrastructure over the last year, an effort designed to make the staff more efficient and quicken the point of delivery.

“We had technology but it was just there—we weren’t using it effectively,” Beck said. “We shifted our focus away from trying to outdo Bank of America and shifted it to our employees.”

Knowledge is power
MCT has also placed an emphasis on education, both for its employees and its members. Since Beck’s arrival, the company moved away from a traditional HR department and created a department called Organizational Development. As an extension of that initiative, it brought in a manager of talent acquisition and a manager for cultural development. The company also partnered with the University of Maryland’s Center for Creative Leadership to bring continuing education to its management team. According to Beck, these moves have allowed the credit union to increase productivity by making sure that its people are in the right places.

“We were able to define the basic core competencies for each job, and make sure that once people have been here for a while, they’re successful and can continue to drive the organization,” Beck said.
As for its members, Beck said that the company needed to do a better job of establishing its brand identity. Although the company had built a solid reputation in the market, not all of the branches had a uniform look. In response, MCT developed a common brand, expanded promotional efforts, and renovated its branches.

The credit union also has an ambitious In-School Branch Program. Students run these branches with help from teacher liaisons. At the end of 2006, it added two more to bring the current total to nine. With its roots in education, the many positives of this program for MCT Federal Credit Union are evident.

“It is one way of educating the kids, by bringing some financial literacy to the schools,” said Beck. “Not to mention that a lot of these kids and teachers are members of ours, so we’re actually taking branches right to them.”

Local ties
MCT has taken care to limit the company’s growth and investments to the area it has always called home. It does not invest outside of Montgomery County, and the union prides itself on knowing who its members are and what they expect out of the services MCT provides.

“We can tailor our programs to the companies we work with because we have a narrow focus,” said Beck. “We’re also in a better position to understand what our members want and react to them, because we’re not trying to appeal to the masses.”

Also, Beck said some of his company’s products are on a par with those offered by for-profit banks, like savings accounts. But when it comes to small personal loans, MCT is in position to do things many traditional banks are unable to do. For many banks, processing those types of loans is too expensive. Not so for MCT, said Beck, as his credit union has seen its loan numbers go up in a market where loans are flat across the board.

“We can put out smaller personal signature loans at a reasonable cost because our cost structure is so different. We’ve found our niche in the market,” Beck said.

A shared vision
Despite so many changes in operations and company growth in such a short period, Beck said he and MCT’s board of directors have been able to stay aligned on a path for the future. This is due to an open line of communication between the president and the board, as well as common goals.

“Because the communication has been so good, the board members know what our direction is going to be and what the challenges are going to be,” said Beck. “Our board is without a doubt the most in-tune board I’ve ever worked with.”

A clear strategic vision and a cohesive relationship between the board and management allowed changes to MCT’s business practices to succeed. The company has gauged its success by measuring the money coming into its savings and checking accounts, as well as its thriving loan business. As long as Beck can keep his team unified, there is no reason to believe MCT’s growth will slow anytime soon.