MASSENA, N.Y.-Scott Wilson knows that without expanding the credit union's charter many years ago, today SeaComm FCU would be closing its doors along with the GM plant in this town.
The automotive plant is going away soon, but the $419-million SeaComm is staying. "More than 30 years ago that GM plant was our primary business," said the CEO. "The plant closing will have a $60-million payroll impact on this area. But SeaComm continues to do extremely well, because we have diversified our field of membership."
In 1986 the local GM plant went through a resizing and was on the verge of closing, said Wilson, who has been CEO for four years. "At that time the credit union recognized we needed to be more than we were."
As a result, prior to 1990, SeaComm, originally known as Seaway, moved to a community charter serving St. Lawrence County and part of northern Franklin County and has done well. Wilson said the credit union has had steady 4% annual asset growth since the switch. Membership growth has averaged 15% over the past five years. ROA last year was 1.18% after stabilization and special assessments, operating expense ratio was 1.91%, and capital was above 9% without realized gains.
But the challenges to growth don't magically go away once the credit union pens a wide charter, noted Wilson-especially today. "With margins being squeezed and extra costs like NCUA assessments, you have to grow your business to meet those obligations."
Saturation & Mergers
Despite expanding charters, some credit unions have reached market saturation, said Wilson, who reminded that NCUA has not been readily approving charter expansions these days. "So you see a lot of mergers to get credit unions into new markets."
Yet growth creates distance between the credit union and its members, which Wilson does not like. "We have today over 38,000 members. Although we would like to say we know all by name, that's impossible. We try to make our members feel important, and part of that is knowing them personally, but we don't. Not all of them."
Wilson said one advantage SeaComm would have if it had remained with GM is that loans would almost be guaranteed to be repaid. "You would see people at the workplace and see them at the branches. Now your members are not people you know intimately, so you go to risk-based lending."
When a credit union considers expanding its charter it needs to ask one question, stated Wilson. "How does this impact the members? It always goes back to what is best for your current membership. You always have to ask, 'What advantages will moving into new markets bring for my members?' "
