EL PASO, Texas -
"Opportunities can be a matter of being in the right place at the right time," said Cabajal, who serves as CEO of the $74.6 million credit union. "But when it wasn't the right place or time we did things anyhow, because there was a need."
The needs were always plentiful for the CDFI-designated, low-income credit union's largely Hispanic members. Serving those members, who now number more than 22,000, enabled the credit union to pioneer a remarkable number of sophisticated of services for an institution its size. Impressive growth in assets, loans and net income reflects the success of the credit union's needs-based growth strategy, Cabajal said.
"It's been very profitable, but it's very labor intensive," he added.
Cabajal may have a better perspective than most, having spent 30 years with the credit union, formerly known Tri State Wholesale Associated Grocers Federal Credit Union, or TSWAG FCU. The original institution, part of a wholesale grocers' cooperative, served the distribution company's employees and families. Cabajal was working in the wholesale warehouse in 1975 when he was tapped for credit union service.
"They wanted to put me in the credit union a year or year and a half and I've been here ever since," Cabajal said.
With member needs increasing, TSWAG FCU knew it had to grow. In 1998, Cabajal petitioned NCUA for permission to pursue more SEGs. At the time, however, TSWAG was one of several credit unions named in the American Bankers Association lawsuit against NCUA, so the regulator was unwilling to put the then $17-million institution at greater risk. Instead, regulators offered TSWAG the opportunity to merge $3 million West Texas Federal Credit Union, which served El Paso-based State of Texas employees, into its membership. The credit unions merged, assuming the West Texas name and, as part of the package, receiving a "territory charter" from NCUA, allowing West Texas to serve anyone living within 15 miles of any of its branches.
The merger strategy gave the institution a much-needed boost, setting the stage for merging other small credit union in the El Paso metropolitan area.
"Back in 1983, there were 45 credit unions in El Paso, and now there are nine," Cabajal said. "The little ones couldn't compete, so five or six of them merged with us. Under the territorial charter, we can now serve just about everyone in El Paso County."
Community and membership overlaps fostered growth, helping West Texas expand its member services to including share drafts, credit cards and even business loans, which the credit union began offering in 1979. West Texas became a designated SBA lender the year the Federal agency approved credit unions for their program. Currently, it's one of two El Paso credit unions offering SBA loans and by far the smallest. JSC Federal Credit Union, the other area SBA lender, has more than $1 billion in assets.
"Based on our size under NCUA's guidelines we can offer up to $9 million in business loans, with a maximum loan size of $600,000," Cabajal said. "For larger business loans, we can participate with other credit unions."
Lessons Learned
In recent years, West Texas has moved into sub-prime lending on automobiles as well as real estate, again at its members' request. Some lessons were learned the hard way and the executive admits the credit union lost money for the first time in 2001 due to sub-prime lending.
"If you don't manage [sub-prime lending], it can do you in," Cabajal said. "We discovered we couldn't do some of the things we were doing, but we knew that if we dotted all the i's and crossed our t's we could turn this program around."
The numbers show that West Texas FCU has learned how to manage it sub-prime program, adding it to the growing roster of services required by 80-employee credit union's neediest members. If that were testimony enough, in 2003 Cabajal himself won a Herb Wegner Memorial Award from the National Credit Union Foundation for outstanding service.
"Examiners still say that risk-based lending was invented at TSWAG FCU," said Cabajal. "We've been doing it since year one and we maintain a good delinquency and charge-off rates. You simply have to know what you're doing."
