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credit unions transformation

The ACULA Has Transformed Over The Decades

In the 75 years since the formation of the Arizona Credit Union League & Affiliates, the organization’s role has changed markedly as its membership soared. Actually, the first credit union law in Arizona was introduced, passed by the Legislature and signed by the governor in 1929. Thus, Arizona became the 29th state to enact a credit union bill.

Even before credit unions were officially recognized and regulated by the state, a mutual investment group known as Pyramid was launched in Tucson in 1925. Once the Arizona law was passed in 1929, Pyramid Credit Union received one of the first — some say the first — charter to formally operate as a credit union.

Five years later in November 1934, the Arizona Credit Union League, as it was then called, was formed. By 1948, there were 25 credit unions in the state with 3,000 members and almost half a million dollars in assets. Today, 56 Arizona credit unions represent about 1.6 million members, with assets in excess of $11 billion.

Initially, the league focused on organizing new credit unions throughout the state. In the early years, there were just a few state-chartered credit unions. Scott Earl, president and CEO of the Arizona Credit Union League & Affiliates, tells how the league’s efforts fostered growth.

“Field reps would arrange meetings with employer groups,” Earl says. “They’d be driving down the road looking for parking lots outside of businesses. If a lot of cars were parked there, they’d put credit union charter applications on the hoods of the cars. I don’t know how many organizations were created as a result during those years, but I’m sure many were.”

Gary Plank, who retired as president and CEO of the league in 2007, recalls being an organizer when he entered the credit union profession in Iowa in 1966.

“We felt the best way was to talk to the management of the company to see if we could generate interest in a credit union for the good of their employees,” Plank says.

The largest Iowa credit union back then had assets of about $7 million. Today, the assets of that same credit union exceed $1 billion, Plank says.

Plank says two factors triggered the phenomenal growth of credit unions: the addition of share-draft checking so direct deposits, including Social Security benefits, could be accepted; and a decision by the federal government to insure savings accounts.

Indeed, as credit unions grew, officials saw the need to offer more products and services, such as debit and credit cards, individual retirement accounts and first and second mortgages.

“The league was the incubator for a lot of these products and services, helping individual credit unions along the way,” Earl says. “An outgrowth of that cooperation is shared branching.”

Under shared branching, credit unions join networks that enable their members to transact business from virtually anywhere in the country where a joint operating logo is displayed.

“Shared branching addresses one of the competitive disadvantages credit unions had, which was a lack of convenient locations,” Earl says.

In the 1990s, the league’s role shifted dramatically, becoming more of an advocate for credit union legislation at the state and federal levels. In other words — lobbying.

“We put a great deal of resources into that today,” Earl says.

Services the league provides include consulting, governmental affairs activities, regulatory compliance, legal, human resources, education, communications, publications and public relations. The league works in cooperation with Credit Union National Association (CUNA), U.S. Central Credit Union, the World Council of Credit Unions and the CUNA Mutual Group.

Having the support of the league and national and international credit union organizations is helping Arizona credit unions cope with the current recession. Though a few mergers have taken place, Earl says they are not the result of the economic downturn.

“Almost always when a merger occurs it’s to provide better service to the members,” he says.

Yet, the economy is having an impact on credit unions. Many of its members — average Arizonans — have defaulted on loans or gone into bankruptcy. The good news, Earl says, is that credit unions have been reworking those loans to help their members get through difficult times.

“The challenge for the league,” says Earl, “is to find new efficiencies for credit unions to collaborate so they can provide better products and services to their members. We have to keep looking for ways for credit unions to work together.”

Credit unions, which are not-for-profit operations, have good capital and strong reserves, Earl says.

“We built those reserves for a rainy day,” he adds. “And for a lot of consumers, it’s pouring rain. But we will be around. We’ll be just fine and will continue to be of greater service to citizens.”

angel statue

New Angel Investment Group Targets Women Entrepreneurs

A new angel investment group called the Catalyst Committee is gearing up to invest in local startup companies that focus on consumer goods such as apparel, high-end furniture and cosmetics. Heading up the new committee is Dee Riddell Harris, president of the Arizona Angels, a group of private investors that has been funding startup, technology-based companies in Arizona for nearly a decade.

“The Arizona Angels have rejected a number of applications from women entrepreneurs over the years because their ideas weren’t technology based or have a patent behind them,” Harris says. “So the point of the Catalyst Committee is to be supportive of entrepreneurs, particularly women, who have good ideas, as well as businesses that are not tech-based.”

Harris started building the framework for the Catalyst Committee about nine months ago. The group met for the first time in November 2008 and now has 35 potential women investors from around the state. During the kickoff meeting, the founders of three local startups talked to the group to provide an idea of the type of companies that could eventually apply for funding. High-end fashion designer Debra Davenport talked about the fashion industry in Phoenix, her couture collection, which she launched in November 2007 during Phoenix Fashion Week, and her hopes of one day raising $1.7 million that would allow her to participate in fashion shows around the world. She also showed a number of garments from her couture collection.

“Being able to participate in key fashion shows in Los Angeles, Miami, New York, Paris, Milan and London is a fashion designer’s primary marketing tool,” Davenport says. “But it’s not cheap. It can run anywhere from $30,000 to $100,000 per show when you figure in pattern making, fabrication, manufacturing and all the specialized notions, materials and threads that have to be brought in from places like Paris and Italy.”

Last year, Davenport was able to show her luxury collection during the Mercedes-Benz Fashion Week in Los Angeles. It’s the second largest and most prestigious fashion week in the United States next to New York Fashion Week. Davenport was also the first and only designer to show from Arizona, according to IMG, the production company that puts on the show. Now, Davenport was invited to show her fall collection during the most recent New York Fashion Week.

“I’m hoping that with the significant achievements we’ve been able to accomplish over the last 15 months, we will catch the eye of some savvy investment people who think this is a winning proposition,” Davenport says.

She is planning to launch her first signature fragrance later this year or in early 2010. She also plans to expand her design offerings to shoes, handbags and china patterns. The 50-year-old fashion designer has already completed designs for china patterns, shoes and luxury handbags that will be manufactured in Italy.

Kathie Zeider, senior vice president of Legacy Bank and a member of the Catalyst Committee, says there are many worthwhile businesses in Arizona like Davenport’s that serve women, or are women owned, and poised for high growth of $5 million to $50 million.

“We’re in a service and tech economy, so for Arizona to grow and prosper we need to nurture both sides of the economy,” Zeider says. “Kudos to Dee Harris for seeing this gap in the Arizona marketplace and developing an initiative to fill this need.”

Committee member Connie Jungbluth also believes early-stage investors are critical to the state’s economic vitality. “It’s important to infuse capital into early-stage companies in our community, especially in this economy,” she says. “Women are also big consumers, so overlooking businesses that serve them is not a good idea.”

The Catalyst Committee is still in search of investors to join the group. Its goal is to have 100 investors and to help one local startup company a month. Investors must meet state and federal accreditation standards. Individual investors need an annual income of $200,000 for the current year and the past two years. Couples require an annual income of $300,000 for the current year and last two years. A net worth of $1 million is also acceptable in lieu of the income standard.

Entrepreneurs can submit their applications and business plans to the Catalyst Committee via the Arizona Angels Web site. Harris says entrepreneurs seeking angel investment need to be well prepared when applying for funding; they need a strong business plan with important information aimed at investors.

“Angels are extremely interested in the management team that gives credibility to the firm, so oftentimes they read the first paragraph of a business plan, then skip straight to the management team because it’s so important,” he says. “They also want to know about the company’s marketing and sales strategy and whether the company has some type of competitive advantage.”

www.arizona-angels.org