SANTA ROSA, Calif.-In a time most financial institutions are hesitant to open so much as one new branch, $130-million Community First Credit Union has found success opening three "smart offices" in the heart of California's wine country.
David Williams, corporate communications for Community First, told Credit Union Journal the new facilities-which opened in Sebastopol, Guerneville and Healdsburg-are 1,000 square feet or less, or about one-quarter the size of the Community First's full-service branches. He said the new branches have brought in numerous new members and checking accounts.
"We had perfect timing with the 'Occupy' movement and Bank Transfer Day, which of course were unbeknownst to us when we started opening branches," Williams said. "We had hoped half of new members that joined due to Bank Transfer Day would have checking accounts, but it turned out 88% opened checking accounts."
Prior to opening the new branches, Community First asked focus groups how they used their financial institutions, what they liked, what they did not like and what they would change if they were CEO for the day. The most common answer was: "I don't go into a branch very often, but when I do I want competent people there to show me how to do something."
"We realized we could do what needed to be done in 1,000 square feet or less, rather than the traditional 4,000-square-foot branch," Williams recalled. "We make sure there is a local loan officer who knows the area, and a concierge that helps people open accounts or teach them how to use online banking on a tablet."
'Very Progressive Politics'
Community First launched the smart offices concept in Sebastopol in November 2010, becoming the first credit union in the city that is in the middle of an agrarian area of wineries and fruit farms. Williams noted Sebastopol is "very progressive in its politics," meaning the concept of a CU appealed to people who did not like banks. Some elements of the Sebastopol smart office were "non-bank-like," such as a lounge for people to sit and use Wi-Fi. Works produced by local artists were displayed on the walls.
Next was Guerneville in April 2011, in a building that formerly housed a video store.
"Again, we brought in local elements, including local art and locally made furniture," said Williams. "It is very different from our other branches and offices, but it is akin to Guerneville's Main Street."
The Healdsburg branch opened Sept. 6, 2011, and represented Community First's initial move into the north part of Sonoma County-other than a loan officer who had rented a suite outside a Coldwell Banker office for about a year. CFCU found space a block north of the Healdsburg town square, known locally as "the plaza." It hired a local consultant to make the office as inviting as possible.
"We wanted a local resident to walk in the door and instantly feel at home," Williams said. "We even took pebbles out of the Russian River for the table tops. We have a flat screen TV built into timber on the wall, and it displays images of Healdsburg on a loop. All of this cements the feeling that we are a local financial institution-and that is our brand. We use local vendors for furniture and office supplies, and we tell people it matters where they park their money. The Healdsburg office is the best representation of that."
Sustained Growth
In all three cities Community First had a loan operation established for at least a year, so there was "some familiarity already," Williams noted. He said although the Healdsburg office is the CU's smallest shop and most recent to open, it is showing signs of "incremental and sustained growth."
"In Sebastopol, the people were really pining for a credit union option and that office has surpassed our expectations," he said. "It is already our No. 2 office behind our flagship branch in Santa Rosa in terms of new members and checking accounts."
Through Jan. 31, Sebastopol had 32 net new members in 2012 and Guerneville was at 29, compared to 61 in Santa Rosa, which has one-third of the population of the county.
Community First is forced to "keep the lid" on advertising because it does not have much money budgeted for it, Williams said, adding it advertises in the local newspapers, and sometimes in the countywide paper.
"What we do is build around our loan officers and our financial concierges," he said. "They volunteer for causes and Chamber of Commerce task forces. We get out people out there in the community, supported by our local ads. The local papers are weeklies and we advertise every week. We wear the local brand on our sleeves."
Community First is looking at the growth generated by the new branches and Bank Transfer Day as a "positive," Williams declared. He said if a financial institution just acquired a checking account to get a dormant checking account, that doesn't do much good.
Moving Relationships
"We are getting new members who sign up for checking accounts that are active accounts," he said. "We were not adversely affected by people who just wanted to make a political statement by opening a small account at a credit union. They shifted their entire business to us, including bill pay, online use, e-statements and debit card usage. Our debit card usage went up 20% last year, and fee income went up 33.4%."
In its December 2011 Call Report, Community First posted $762,130 in net income prior to assessments. It paid $269,502 to the Corporate Stabilization Fund, leaving it with $492,628 in net income.
Community First's lending units were the same in 2011 as in 2010, but loan dollar volume declined, thanks largely to home prices being down, Williams reported. However, he added, the fourth quarter was "good" in terms of dollar volume, including a "full pipeline" of real estate loans. The CU set a quarterly record in Q4 2010 and matched that in Q4 2011.
"We expect the just-completed January to be good, also, and way up from January 2011," he said. "Like everybody else, we are hoping real estate continues to stabilize and confidence in buyers continues to build. We are cautiously optimistic 2012 will be much better from a lending standpoint than 2011. We don't expect to replicate the member and checking account growth we saw in 2011-if we get half of that, we will be happy."
