"Due to the basic products and services offered, the pre-chartering costs will include
basic items needed to establish the credit union’s operations. The pre-chartering
costs could involve consultant (or application organizer) fees, office rental space, a
basic computer (record keeping) system, basic furniture & equipment, and an initial
market analysis and survey of potential members. These items are estimated to
cost $49,905, as indicated under Scenario A on the Estimated Pre-Chartering Costs
spreadsheet.
Meanwhile, the annual expense of operating a basic service credit union is
estimated at $76,781, as illustrated under Scenario A on the Estimated Post
Chartering Annual Costs spreadsheet. Detailed information relating to these
expenses is discussed later on in this whitepaper under the section entitled,
Explanation of Estimated Post Charting Costs (or Annual Operating Expenses)." -- taken from http://mycreditunion.gov/pdf/estimatedstart-up.pdf
However, basic services seem to be premised on a geographic coverage, without ATM, ACH or direct deposit, which would all be required for a useful Credit Union. To go full service, we would have to have more like $80,000 and be able to cover $350,000 in annual expenses, which includes the cost of experienced management. The numbers they provide are of 2008 and are of a generic, idealized CU and our costs will probably differ, being more tech-dependent and perhaps without actual tellers in the beginning. I strongly urge people to read that document, however, to set expectations for the future. 76.252.43.70 02:08, May 25, 2011 (UTC)
D'oh![]
Sorry, the quote etc was from me, I forgot to log in Almethod 02:13, May 25, 2011 (UTC)
Another thing to consider is that this is as a federally chartered credit union in the United States, I don't know if we need do seek state chartering in every state we want to do business in, nor do I know if credit unions are permitted to operate internationally by other countries. If the former is yes then we will have additional hurdles, and probably a business plan drawn up to suit just the National Credit Union Administration will need tweaking to accomodate that. If the latter is no, then this will hamstring efforts to produce a homegrown, unifying banking system for all LUF members. Feedback from those in the banking industry would be vital. Otherwise, it is just a matter of driving membership mass to support such expenses in a credit union. At that point, first year LUF membership dues could probably be used as initial deposits in the proposed CU. Core members would be heavily encouraged to use these accounts, but that would only make sense if we could provide services that would match those of locally available institutions. I'll probably add more thoughts on this in a bit. Almethod 02:32, May 25, 2011 (UTC)
I did some playing around with numbers. If we have 1500 dues paying members in LUF willing to back this, we could probably pull it off if we directed dues to the creation of the CU. 1500 x $50 = $75,000. They then create accounts. At 1500 members of the CU, we would have to average about $350 of revenue from each member to cover costs. This means loans and other financial services. For example, I currently do not have a securities license (I hold a health and fixed life insurance license in several states) and I have not been contemplating obtaining one because I have no interest in offering variable products. However, financial services can be pretty lucrative and if done in house could be used to cover some of this revenue. Financial planners earn one half of one percent of money under management every year. Insurance agents earn commissions, and often residuals (though fewer than in the past, depending on licensing). If the CU employs the financial planner, a health and life agent, a property and casualty agent as part of its suite of services and provides benefits, covers professional expenses and so on, the CU could capture 50% or more of that compensation for support. I know that when I provide a lead to a subagent, the subagent has already agreed to give my agency 50% of commissions from that lead. The same principle applies here. Dividends on CU profit naturally are returned to members of the CU, which would be members of LUF.
If we work toward having members use LUF services whenever possible and we maintain active membership growth, those professionals would not have to spend their time prospecting. If I, as an independent life and health insurance agent, were given unique access to 1500 households with no real competition, I probably would not have to go outside of the organization to support myself. I'm not saying that I would be the best fit for such a job, but I am offering you the perspective of someone who is in the industry: the CU goes full service, and I mean full service, and we build the expectation of utilization of LUF resources, establishing and maintaining a CU is not far off at all, and we can attract professionals who would be qualified to attract others for the GreenStar Securities investment side. So from the CU would come a membership goal of over 1500, which would give us a very strong base going forward and build momentum to attract others who can provide more services which will attract others. I'll talk elsewhere about how to build and maintain a strong grassroots membership base from scratch, but believe me when I say that starting a CU is not necessarily the huge task portrayed by the end of the main article. When there's only a dozen people involved, yeah it looks challenging. But it is a pretty straightforward process it looks like and the numbers are far better than I thought when I first suggested this goal. Just my thoughts, obviously I like this idea. I like it a lot more than I did when I first posted it to start conversation. Almethod 04:48, May 25, 2011 (UTC)