CUES member Randy Smith, CPA, CCD, jokes that friends and colleagues tell him he’s living on Fantasy Island. To those who have witnessed the unrelenting growth of $4 billion Randolph-Brooks Federal Credit Union in Universal City, Texas, of which Smith is CEO/president, the metaphor is not a reach.
Smith’s business acumen, commitment to his credit union and dedication to his community are just some of the reasons his credit union enjoys continual success during these challenging times. These are also some of the reasons he was named the 2010 CUES Outstanding Executive.
“Being named the CUES Outstanding Executive was a total surprise,” Smith says. “I had no idea I was even being considered. It was very pleasing to get that telephone call.”
What is not a surprise to this “Mr. Roarke of the Credit Union Movement” is the Fantasy Island comparison.
“Fortunately, we are having the best year we have ever had,” Smith says. “And we had the best year we’d ever had last year. It is as though we are on an island. One of my friends said, ‘No, you’re on Fantasy Island!’ We’ve just not been hit by all this (the economy).”
Smith has earned the respect and praise of his board for the outstanding accomplishment of not only weathering the storm of the past couple years, but thriving in spite of it.
“All performance indicators available to our board show that our credit union will experience another banner year even though our national economy has been in a deep recession for an extended period of time,” says Randolph-Brooks FCU Chairman Col. (Ret.) Harry M. Edwards, Ph.D., a CUES Director member. “We attribute our success in large part to the vision and leadership of our CEO/president, Randy Smith. Our board has always been acutely aware of the important role that Randy plays in the overall success of our credit union, but in the volatile economic environment that our country is experiencing, his impact has been manifestly greater.”
Edwards continues, “In spite of these troubling times, our financial condition has not only remained strong, but has measurably improved. Randy and the highly professional executive team he has assembled have an enviable track record and are regarded as among the best of the best in our industry. He is the consummate leader and has earned the high respect of the entire Randolph-Brooks team, other leaders within our industry, and those in the communities which we serve. I cannot think of anyone more deserving of the recognition which CUES has bestowed upon him.”
|“I cannot think of anyone more deserving of the recognition which CUES has bestowed upon him.”
Harry M. Edwards, Ph.D.
Chairman Emeritus Fred Walters echoes these sentiments: “They just don’t come any better,” says the CUES Director member. “His management and leadership skills are just outstanding. I came on the board at the same time he became CEO, which was 23 years ago, and the progress of the credit union has been phenomenal since he’s been running it.”
Smith began his career in the financial industry in 1971 as an accounting and finance officer for the U.S. Air Force. In that capacity, he dealt with vendors, made sure military employees were taken care of and designed accounting systems.
Eventually, he left the military and began working for a public accounting firm.
“It just so happened that Randolph-Brooks decided at the time to change auditing firms and I got a call from one of the members of the supervisory committee asking if our firm might be interested in bidding on the job. We did and ended up getting the job.”
Smith was auditor for approximately three years before receiving a call in 1982 from the board president asking if he’d be interested in leaving public accounting to work full time for the credit union.
“Like a lot of Americans, I did not fully appreciate the amount of good work that credit unions do in the United States and throughout the world,” Smith says. “My first contact with a credit union was when I was about 18. I thought, OK, it’s a place to save money; but I didn’t know at that early age that they made loans as well. I’m just really impressed with the amount of services that credit unions all around the world—and especially in our country—offer. We really are in this business to help people and that is very, very different from the banking industry.”
An Island is Formed
Since Smith became CEO/president in 1987, Randolph-Brooks FCU has grown from being just a military-based credit union with four locations—two primary and two satellite—to one that serves more than 336,000 members in south central Texas.
“We’re in 14 or 15 cities and if the military decides to close one of our bases, the credit union will still do very well,” Smith says. “In the old days, we had all our eggs in the military basket. Over the last two to three decades, we’ve diversified significantly.”
This diversification has also created many opportunities for Randolph-Brooks FCU’s employees. The CU has employees who began working as tellers right out of high school. Many of these tellers have risen through the ranks to senior teller, member service representative, head teller, assistant branch manager, branch manager/assistant vice president, and some even to regional manager/vice president. In addition, some of the CU’s other vice presidents have come up through the ranks in other parts of the organization.
Although employees may appreciate the opportunities inside the credit union, Smith also stresses to them the importance of visibility outside the credit union.
“A lot of our credit union success has to do with management decisions, loan rates, mortgage rates and that sort of thing, but the biggest thing is the culture that people care about our members,” Walters says. “He (Smith) really pushes that. He personally meets with all new employees for a full day, explaining what he expects from them, our relationship with our members, ethics and that sort of thing—and it really pays off.”
“As a movement, there’s always more we can be doing, but I’ve seen a lot of positive signs,” Smith says. “I’ve seen and heard credit unions being advertised on national television and radio programs. Very seldom in the past have I seen that. Locally, we’re advertising on television, billboards, we’re using social media. We are reaching out to our communities.”
Smith says Randolph-Brooks FCU reaches out through advisory groups made up of members of all ages in addition to “disciples” that go out in the community.
“We have business development folks that we did not have in the past. Almost all day long, they are on the road visiting schools, hospitals and churches. Wherever people are, they are out there spreading the good news about credit unions. Every time there is a bad news story in the newspaper about the for-profit world or losses on Wall Street, we benefit from that.”
Apparently, Randolph-Brooks FCU’s community outreach is working. The CU is opening 4,000-5,000 new accounts monthly. Smith says it’s not unusual for potential members to come in to the credit union, ask if they accepted TARP money and, upon hearing the response of “no,” promptly move their money from their bank to the credit union.
“This just goes on and on and on every month, which is amazing for us,” Smith says. “That’s why people say we’re on Fantasy Island. I think we are. One of the big box banks down the street is advertising to cash checks for three dollars. Well, we’ve cashed checks for free since we were founded. We provide free services to members millions of times per year. Why would you go anywhere else to cash a check or IRS refund? Some of the stores are charging up to $50 to cash a tax refund check. This is absolutely ridiculous.”
Smith admits, though, that there’s a fine line between making money and serving members, and the credit union is always conscious of making too much money. The perfect solution was to give more money back to its members. In the last few years, Randolph-Brooks FCU has had a program in place that gives members 10 cents every time they use their debit card.
“This has become a kind of contest now among a lot of folks,” Smith says. “They go to lunches or parties and ask each other, ‘How much was your rebate?’ I have folks getting $50, $60, $80 or $200 in rebates using those debit cards, which helps us build the business. I think last year on that debit rebate, we gave out $4 million dollars. To my knowledge, nobody else in this business is doing anything like this. In fact, we tell our members that ATMs are for their grandparents. They no longer need to use ATMs because they can use that debit card at practically any point of sale in the United States and get cash back when they’re checking out. And we pay them a dime to do that, so we actually pay them to take money out of their account by using somebody else’s cash register.”
Smith says the program has become so popular that he often sees customers in stores pulling out their Randolph-Brooks FCU debit cards.
“It’s fun when you go to some of the big box stores around here and there are several people in line who pull out those cards they got from us. Even if you go to Starbucks in the morning, it’s 10 cents less than it would usually be (for a cup of coffee).”
Smith says members can go to the credit union’s Web site (www.rbfcu.org) to see a tally that shows how much the CU owes them. Earnings accumulate throughout the year, and the CU cuts the member a check at the end of the year.
Although Randolph-Brooks FCU has experienced great success with this program, Smith worries a significant reduction in interchange rates (resulting from the Durbin amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act, allowing the Federal Reserve to set interchange rates) could kill the program.
This program is but one example of how Smith has increased membership. He also credits community outreach efforts he’s spearheaded at the credit union.
“We have folks who volunteer in a wide variety of events,” he says. “We just had an event where our folks got out and worked with the United Way and, of course, we have several major fund-raising events. We encourage employees to join social clubs and go to county fairs and ball games and really be a part of the community. Many of them get a kick out of doing that. We also have operated several school branches; and a number of staff have volunteered to help run those school branches.”
Smith says staff members work with the teachers and principals to encourage thrift and teach students how credit unions operate. Additionally, the students also get actual work experience. They become part-time employees working in the school branch.
“We actually pay them,” Smith says. “When they’re not in school, sometimes they come into a regular branch and work. So they get work-study experience, plus they get to save some money for college.”
Smith says they got the idea from a grade school principal who was frustrated by watching students consistently put money into soda and candy machines. Fortunately for Randolph-Brooks FCU, the principal’s bank saw no ROI in educating students on financial literacy, so Smith’s credit union was only too happy to step up.
“We have a fund of approximately $8 million dollars. We use the earnings from that fund to run this program,” Smith says. “We have four full-time people who do nothing but provide financial training classes throughout our community. They go to the schools, shelters for battered women, detention centers, senior citizens homes—wherever there’s a need.”
Throughout his nearly 30 years in the movement, Smith has contributed much, collecting many memories and lessons along the way.
Smith cites joining the fight for HR 1151 (the Credit Union Members Access Act) as one of his most memorable times.
“This was a time when the banking [industry] went after the Credit Union Movement and pretty much wanted to put us out of business,” Smith says. “This ended up in a Supreme Court hearing. We lost 5-4, but I was fortunate enough to be selected to work on an oversight task force.”
Smith was instrumental in this grassroots effort that he recalls as having the participation of millions around the country.
“We were in a situation where we were not allowed to let folks join the credit union,” he says. “The bankers were basically saying, ‘we want you to serve only those people you served 30 years ago.’ If you worked for the government, for example, you could join a credit union, but if you worked for the pizza parlor across the street or a shoe repair shop, you were shut out. You could not join a credit union. This was really an issue of basic fairness for all credit unions. It was truly a big deal to get this law passed.”
Smith acknowledges that many misconceptions about credit unions and questions about membership eligibility still exist, partly due to the word “union,” and it’s a continual battle credit unions face.
“Our forefathers called us credit unions, so that in itself has caused some confusion,” he says.
So how would he advise the up-and-coming crop of credit union leaders to push the movement forward?
“We’ve had success here, particularly, working with new employees,” he says. “After they’ve gone through their basic training here, and they’ve been in the field about six months, I spend a day with them. We have breakfast and lunch together and we talk about the history, religion and philosophy of credit unions. We discuss why we’re in business, what we’re about, what we’re planning to do.”
Smith is a strong proponent of teaching new employees the history of the last 100 years of the movement and sees it as a critical knowledge base for moving forward.
“We’re always getting attacked from people who want us to go out of business and you have to fight to keep this alive,” he says. “They (new credit union employees) really need to know the difference between a credit union and a for-profit, commercial bank. Many, many folks do not really understand that.”
Smith says there is also a lack of education about the role the board plays in credit unions and the differences between state and federally chartered credit unions. He says it’s also vital that those new to the movement understand the relationship between credit unions and the government.
“The people in Washington, D.C., who created credit unions created them with the stroke of a pen and they can also put us out of business with the stroke of a pen,” Smith says. “We have to remain vigilant and politically active. We can wake up one morning and Congress says, ‘we don’t think credit unions should be allowed to do car loans any more’ and, next thing you know, that’s passed at midnight and we’re out of the car lending business.”
Smith and his employees “walk the talk” when it comes to being active in the community so, naturally, he strongly advises future leaders to do the same.
“You cannot grow a strong credit union by sitting behind your desk and just working on cutting expenses,” Smith says.
He recommends credit union leaders “get out there in the world” and make contacts by attending chamber meetings and county fairs or by joining volunteer service organizations such as the Lions Club and Rotary.
“People still don’t know what credit unions are and you can make a difference by getting out there,” he says. “A lot of credit union folks, particularly at small credit unions, worry so much about the expenses of the credit union that they will not even go to important meetings because they want to save money. In many, many cases, that is not the way to do it. They ought to be working on building the revenue side instead of worrying about how much they’re spending on travel or at the Xerox machine.”
Among the valuable life lessons he has learned and believes in sharing is one he learned from his parents.
“Treat people with respect and treat them the way you would like to be treated,” he says. “It’s a good lesson for life; and that’s the way we try to operate this credit union.”
Smith says the success of his credit union lies partly with operating it from the viewpoint that the people the CU does business with are family members and friends.
“We sit around and try to think of ways to reduce prices and remove red tape, whereas in the for-profit world, people sit around a table and try to think of ways to raise prices to the highest possible level to maximize their income,” he says. Sometimes, when we talk about raising fees, for example, or raising loan rates, the question that I ask is, ‘Well, would you want to charge your mother?’” he says. “If you take that approach, you’ll easily come out with the right answer.”
Felicia Hudson, a former CUES marketing specialist, is now a free-lance writer based in the Chicago area.