SAN LUIS OBISPO, Calif.-One common refrain is credit unions are the best-kept secret in the financial services world, and that's exactly where $32.6-million SLO Credit Union was before Suzanne Leedale took over as CEO in January 2008.
Membership in the SEG-based CU is open to any city, county or state government employee in San Luis Obispo County, but Leedale said the credit union had fallen into a trap of assuming HR managers would continue to send new employees its way.
"People did not know we existed," she recalled. "You can offer the best service in the world, but if people don't know about you, it doesn't matter. We let people know they can join the credit union."
For starters, SLO CU put its name on its building. Then came a targeted advertising campaign designed to reach those who were eligible for membership. The Downtown Business Association was added as a SEG, followed later by the Young Professionals Networking Group of San Luis Obispo.
"We have found our niche," Leedale assessed. "We are the only Shapiro credit union [California CUs with less than $45 million in assets that are assisted by the state's league] that operates in San Luis Obispo County. We don't compete with any of the other financial institutions. It is not that we don't have the competitive spirit-it is that we have been successful in differentiating ourselves."
New Avenues For Marketing
SLO CU now markets itself in a number of ways, including advertising in the newsletters of the Downtown Business Association and the County Employees Union. Plus, it markets internally to its members.
Faced with a membership that does not require many loans (its loan-to-share ratio is just 15%), Leedale said SLO CU derives the majority of its income from investments.
"It is not that we have a really high decline ratio-we may decline one or two loans per month-our members just don't borrow for a variety of reasons," Leedale explained. "We can't force our members to borrow, so anything we can't lend out we put out in investments."
The "good side" of such limited lending opportunities, she pointed out, is SLO CU's delinquencies are less than 1% and it does not have to tangle with collections. Delinquent loans to total loans is just 0.43%, Leedale reported, while return on assets after the NCUSIF premium was 67 basis points; before the premium it was 98. Net operating expense to average assets is 2.05%, which she said is a full point below the credit union's peer average.
"We have a 15.48% capital ratio, which is pretty amazing," Leedale said. "We keep expenses down by having a limited staff and we operate efficiently. We manage vendors and outsource the rest. The larger credit unions in our area are very pro-small credit unions. They are willing to help and are very supportive."
In its June 2011 Call Report, SLO CU reported net income for the first half of $157,753, despite paying $24,723 to the NCUSIF and $24,724 to the corporate stabilization fund. In 2009 it posted $299,046 in net income prior to assessments.
Leedale will be attending the California CU League's Annual Meeting and Convention this week in San Diego, and will be a presenter at the Shapiro Group session, but will not be attending courtesy of a grant from the Shapiro Group.
"The meeting is something we budget for. I would feel really bad getting a grant with a 15.47% capital ratio."
