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SHAPIRO GROUP SESSION: Turning Surviving Into Thriving
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Attendees at this year’s Shapiro Group session—held from 1 p.m. to 3 p.m. on Wednesday, October 26 in conjunction with the Leagues’ Annual Meeting and Convention—will have the opportunity to learn how three Shapiro credit unions turned difficult economic times into a successful turning point.
At the session, “Turning Surviving into Thriving,” the panelists will share their case studies and discuss practical applications for membership growth, lending, and investing that withstand current economic conditions. The three CEOs involved are Suzanne Leedale, SLO Credit Union; Antonio Pizano, Pacoima Development Federal Credit Union; and Greg Stockdale, 1st Valley Credit Union.
MEMBERSHIP GROWTH
The last time the $32-million-asset-sized SLO Credit Union in San Luis Obispo, CA had experienced positive membership growth was in September 2003. But, even before that the trend was downward. At one point, the credit union lost as much as 10.5 percent in terms of membership. From 2005 on, increasing membership growth in a responsible manner became a board directive.
To that end, the CEO prior to Leedale started adding products such as checking accounts and debit cards. But what was not added was a comprehensive marketing plan.
When Leedale—an Ohio native who started in the credit union industry in 1999 after a stint in the Army—came to interview for the CEO job, she couldn’t find the credit union in downtown San Luis Obispo.
“The credit union had no professionally developed logo, no identity standards, no signage, no cohesiveness in its materials, no taglines, and no mission statement,” she said.
So when Leedale started as CEO in January 2008, she set to work on a comprehensive marketing plan. With the help of a Shapiro Group marketing/public awareness grant, she hired a local agency to develop a marketing plan.
“When you have this huge, monumental task to create an identity, it can’t be done all at once or it becomes overwhelming,” Leedale said. “So we took baby steps.”
A year of planning and securing funding later, the plan was implemented in 2009. In San Luis Obispo, local is important and so are “mom and pop” establishments. So the SLO CU campaign focused on its personal and friendly service, being local, and fun. The results were almost immediate.
“There was a huge increase in membership growth right after the campaign,” Leedale said.
For some time, SLO Credit Union had been well below both the California and national averages for membership growth in its asset category. It has now narrowed the gap—and is above the California average. And the trend continues to move upward, according to Leedale. It now has 2,118 members—even though it only has four full-time employees and one part-time employee.
Leedale would like those who attend the Shapiro Group session at AMC to take away the idea that they should start thinking creatively. She said you cannot get bogged down on thinking that things should be done a certain way because that’s the way they’ve always been done.
“You need to think again,” Leedale said. “In order to attract attention, you need to stand out.”
LENDING
Offering Small Business Administration/member business loans had always been a part of Pacoima Development Federal Credit Union’s business plan. It was one of the reasons why the Valley Economic Development Center (VEDC) had sponsored the chartering of the credit union—in addition to providing the low-income community of Pacoima, CA access to basic financial services.
But, the NCUA did not feel it was appropriate to charter the credit union to do SBA loans, according to Pizano, who has led Pacoima Development since July 2009. So the credit union had to wait two to two-and-a-half years to get started on MBLs. And once it began to offer SBA loans, in early 2008, the NCUA didn’t feel comfortable enough with the program and froze it for nine months.
“Most of our SBA/MBL lending has happened in the last 18 months,” said Pizano, who worked for the VEDC for five years and prior to that worked in the banking industry.
While the credit union has been quite successful with its SBA/MBL program—it has never had any defaults or serious delinquencies, has had four full payoffs in the past 12 to 14 months, and now has slightly less than $900,000 in its portfolio with a few more loans in the pipeline—Pizano would like to see more growth.
“I think we can do more,” he said. “One of the reasons we haven’t been able to do more is we are very conservative in lending.”
There have been other roadblocks. “The NCUA doesn’t seem to have much knowledge in this type of program—it doesn’t understand it,” Pizano said. “It’s been an educational effort and it’s been a bad thing for us because it slows us down.”
Despite that, Pacoima Development forges ahead. This May, it launched a CUSO to help credit unions, particularly those with $150 million or less in assets, either start an SBA program or provide underwriting or servicing assistance to those with existing programs.
“I truly feel that we as credit unions have a window of opportunity, between 18-24 months, to get out there and get a larger piece of the small business lending market. But it is closing,” Pizano said. He would like attendees of the Shapiro Group session to be motivated and better informed about SBA/MBLs after his presentation.
“Now is the time for credit unions to step up to the plate and further contribute to the recovery of our economy … all while still impacting our bottom line. It would be irresponsible of us to turn our backs on the very same ‘entrepreneurial spirit’ our industry was founded on. Let’s ‘turn surviving into thriving,’ for not just our credit unions, but for our small business community as well.”
INVESTING
When Gregg Stockdale came to 1st Valley Credit Union in 1999, he saw the credit union needed a better investment vehicle than it had available from its corporate credit union. “(WesCorp) was not giving me the yield or flexibility I needed in investing,” he said.
So Stockdale—who received an MBA from Central Michigan University in 1974 and has been active in the credit union movement since then—looked for a new way.
“I struck out on my own and learned it by doing it,” Stockdale said. “I asked lots of other credit unions, and no one was of much help. So I turned to the brokers and started with simple investments. Then over time, I learned and expanded what we invested in. I have a minor in economics, so I was not without resources.”
The $35-million-in-assets credit union now uses the services of brokers to purchase its investments.
The credit union with 3,844 members and 12 employees has earned four percent-plus (safely and with the regulator’s blessing) even in this difficult economic climate. Also, Stockdale has achieved a portfolio with a mark-to-market of more than $400,000.
“I shut down 100 percent of the regulators’ financial concerns when I explained what and how we do our investing,” Stockdale said.
He also has 100 percent of the credit union’s investments in “Available for Sale.” The advantage of this, he says, is since you are required to assess each period the market value of your portfolio, this knowledge can be used as ammunition when regulators offer suggestions and recommendations.
“They told us we were ‘thin’ on income and they were concerned,” Stockdale said. “When we explained the potential income we were sitting on (if we needed it), they left us alone. If the investments were in ‘Hold to Maturity,’ the credit union is left blind to the actual value it has.
“Also, if you have all your investments in ‘Hold to Maturity,’ you cannot sell one investment without transferring the entire portfolio into ‘Available for Sale.’ This usually blinds credit unions to take advantage of making a sale. It’s really quite simple. Just this month, I gained $10,000 on a sale (not a call of an investment).”
Stockdale plans to provide participants of the Shapiro Group session with the data and tools to replicate his credit union’s efforts and double their investment income while avoiding regulatory pitfalls.
Don’t miss this year’s Shapiro Group session on October 26 at the Leagues’ Annual Meeting and Convention in San Diego, CA. To register, click on the Register icon above in the top right corner.
