Going From DEFENSE To Going On The OFFENSE

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Commonwealth One Federal Credit Union didn't know it was entering the underserved market when it took on an educationally-based select employee group two hours south of its metropolitan Washington D.C. headquarters.

But the unexpected opportunity has set in motion a series of events that have resulted in significant potential growth for the $222-million institution.

Formerly a credit union serving the U.S. Department of Defense, Commonwealth was a single-sponsor institution until the late 1980s. That's when the Alexandria, Va.-based credit union began serving different SEG groups in an attempt to grow its membership while its primary sponsor was downsizing, explained Charlotte Cash, Commonwealth One's vice president of retail sales and marketing.

"The DOD's cutbacks put pressure on our sponsor group, so we began to branch out," said Cash.

Part of that branching included picking up James Madison University in Harrisonburg, Va., 130 miles to the south. The college, which Commonwealth One added in 1992, had 40,000 students, staff and faculty who needed credit union services. Commonwealth One was able to meet those service needs with an on-campus branch

The university proved to be a nice fit and, despite the distance from Alexandria, credit union service in Harrisonburg began to grow. Commonwealth One started adding SEG groups around the community and, in 2000, the institution added an off-campus branch in Harrisonburg.

About that time, the National Credit Union Administration began issuing guidelines for what constituted underserved areas and Commonwealth One found out that the entire community of Harrisonburg qualified, said Cash.

"There weren't a lot of NCUA procedures for serving the underserved at the time," said Cash. "I think we must have been one of the first."

Commonwealth One applied for and received permission to serve the entire city of Harrisonburg in December 1999, effectively making them the equivalent of a community credit union, said Cash.

"Now we could serve the entire city, anyone who lived, worked or worshipped in Harrisonburg," said Cash. "We suddenly realized that our brand new 1,800-square-foot branch might not be large enough."

Harrisonburg qualified as an underserved area because 22% of population lived below the federal poverty level according to the 1999 census, 2% more than 20% required to qualify. Commonwealth One was already established and simply expanded its marketing to include radio and newspaper ads to help build its new field of membership, said Cash.

"It was a great opportunity for us to expand," she said. Local advertising also provided a significant springboard as the credit union continued to seek out new sponsor groups.

Harrisonburg has been a big success for Commonwealth, which now counts roughly half of its 38,000 members as either Harrisonburg residents or James Madison University students, said Cash. The city is responsible for $50 million of the credit union's $150 million in loans, and Commonwealth One has even begun indirect lending through local car deals, something it wouldn't have attempted in Alexandria, she said.

'Good Kind of Different'

Commonwealth One also ougrew its Harrisonburg branch in three years, rather than the expected seven years. The credit union built a new 6,8000-square-foot satellite office, opened this spring, that housed the new branch, as well as about 3,400 square feet of back-office operations functions to support its downstate operation.

"Harrisonburg is very different than our other market, from employees to members," said Cash. "But it's a good kind of different."

Commonwealth One will get quite a bit more of that difference with the addition two more counties that have qualified as underserved areas.

The credit union also was given permission to serve Warren and Clarke counties, located between Alexandria and Harrisonburg, which adds an additional 40,000 potential members. Toss in the 23,000 potential members in the underserved area immediately surrounding Commonwealth One's Alexandria headquarters-another new area of service- and its clear that credit union will the have NCUA-designated underserved areas to thanks for future growth.

"We've got our hands pretty full right now so I can't imagine what might be next," said Cash.

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