EUREKA, Calif.-Coast Central CU has parlayed strengths in operational efficiency, cross-selling and the depth of member relationships it has with its members to a spot on the Credit Union Journal Leaderboard.
Coast Central was recognized as one of the top-performing CUs in the country by Lombard, Ill.-based Raddon Financial Group in the greater than $500 million in assets category.
Bill Handel, VP of research and development for RFG, said $860-million Coast Central's operational efficiency ratio was below 60%, which Handel termed "extraordinary." "In the credit union industry we try to encourage credit unions to get under 70%. The average is typically between 75% and 80%," he explained.
Coast Central also achieved stellar marks in Cross-Sale Index, specializing in "quality" cross-sales, not just quantity, Handel said. "The credit union does not do as many cross-sales as others in its peer group, but it generates really strong relationships with the households that it does cross-sell."
Dennis Hunter, Coast Central's VP of marketing, noted that a Eureka, Calif.-based newspaper's poll of its readers rated Coast Central as the best credit union or bank for the ninth year in a row.
Raddon's Handel said Coast Central has achieved impressively deep relationships with its members, as evidenced by numbers in a pair of related categories: Average Deposit Balance per Household (84th percentile) and Loan Balance per Household (75th percentile).
"Coast Central does not have a demographic advantage because its membership has moderate incomes, but it generates strong balances per household."
According to Handel, Coast Central has 2.31 deposit and loan services per household, compared to the industry average of 2.12. He said the CU's key strengths are operational efficiency, cross-selling and depth of relationship, plus Non-Interest Income per Household (64th percentile).
Strong non-interest income, Handel said, allows it to maintain efficiency as an organization and help support high profitability-92% of CCCU's staff expense is covered by non-interest income.
As for the strong numbers in Household Profitability and Return on Assets, "Both are due to having great efficiency, strong relationships and non-interest income. Household profitability was $102 per household, which is a really good number. The credit union has to serve a broadly defined field of membership, but because it does a lot of things well, the overall performance index really stands out."
James Sessa, Coast Central's CFO and SVP of administration, said operational efficiency stems from a member-centric focus and a longstanding commitment to doing things the right way. "Most credit unions were fat and happy and for years didn't care about operating expenses, but we run ours like a real business," Sessa declared. "We watch our expenses and only buy what we have to buy. Our service is ranked highly by our members."
Credit unions, Sessa stressed, are in the retail business and the product is cash. "We don't chase high-technological innovations if they don't solve a need for our members. We do most things in-house, which gives us control and keeps costs down. We have been trying to control expenses from day one. There is no secret formula for controlling operating expenses, and it can't be done overnight. For credit unions today that are trying to reduce expenses because they are in trouble probably are impacting their member service levels. If they are applying a broad stroke, they might eliminate something they regret later on, such as key personnel or a branch location."
Both Sessa and Hunter pointed to Coast Central's checking account strategy as an example of how to please members without giving away the store. Unlike many FIs, the credit union does not offer "free" checking-it comes with a service charge. However, 97% of members do not pay the fee because they have other relationships with the CU.
Said Sessa: "We really take care of members who have deep relationships with us; credit cards, real estate loans and more. If you can increase the share of wallet, it keeps overall operating expenses down. It takes a lot less to serve members the way we do."
Added Hunter: "Our objective is taking care of our members, and that is reflected in the fact we don't have a lot of dead weight in people taking advantage of one product."
