RALEIGH, N.C.-Coastal FCU is on both ends of the budget spectrum for its branches as it plans to close down four underperforming branches in Q1 while installing new teller systems in its other branches.
The $2.1-billion institution also plans to open as many as five more branches in the Raleigh, Duram and Chapel Hill Research Triangle area over the next few years.
Coastal's decision to shutter four branches is part of its five-year strategic plan, said chief retail officer Willard Ross, noting the CU opened about 10 new branches in the last several years, but those outside of the Triangle area, Coastal's core market, simply failed to catch on.
"Most of the branches that we did open during that growth phase have performed very well. Five or six of them are our top performing locations," he said. "If this was a great economy I don't think it would be any different. Even when everything was going great, they weren't performing as well as our core markets."
Ross, who has spent the bulk of his 31-year career in retail banking, led an in-house effort to break down every one of Coastal's branches and analyze them based on "accessibility, curb appeal, proximity to employment and growth potential." The team also examined the deposit, loan, membership growth and other performance numbers to determine which branches simply did not fit into the credit union's future growth model.
While the new growth strategy focuses on a narrower geographic area, Ross is confident that Coastal's focus on consumers puts it in a strong position as major banks continue to falter and community banks focus on the commercial side of the business.
"We compete very effectively in the Triangle," the retail chief said. "We are No. 1 by far when compared to all the community banks in the Triangle; no one is close to us in deposit growth. We see much more potential even where there are tough competitors."
Though the 2009 budget depends on reducing headcount and facilities costs, Coastal's numbers underscore the strategic nature of the decision to close the outlier branches. The credit union brought in 18,000 new members in 2008, growing its assets by 14% and reporting a net income of more than $7 million, according to its September report.
Closing those four branches could lead to a few layoffs, though Ross is hopeful that most employees will be able to find new positions at the credit union's headquarters or through attrition at other facilities. Some may be able to find slots manning the new express teller system that has been installed in two branches with plans to expand to as many as eight others by the end of the year. Coastal FCU was already utilizing remote teller technology, "but those systems require the teller to be in the building," noted Joe Mecca, director of community and corporate relations. "With the express teller, the teller can be anywhere."
The new express teller units are only about 10% more expensive than the existing remote teller systems, Mecca pointed out, and Coastal is installing the express tellers with an eye on future savings. The system could cut down on the cost of new branches, Ross pointed out, as the full-service facilities could be as small as 1,000 to 1,200 square feet while being staffed by just two associates. Three tellers using the new system at Coastal's headquarters would handle the typical day-to-day transactions while the associates handled cross-selling and more intricate transactions.
Because of its flexibility, staffers at Coastal's headquarters will be able to conduct teller transactions at any and all branches with the express teller system in place. "We'll be able to bring new branches online without having to add many more personnel," Mecca pointed out. "We're in a really competitive market. We have some of the biggest banks in the country headquartered nearby and some big regional banks. We're trying to stay as competitive as possible; there isn't a whole lot of room for mistakes in this market."
