SPOKANE, Wash.–New membership at Spokane Teachers CU (STCU) is up by 50% since September, and a long-term branding campaign translated into membership growth of around 8% last year, pushing the credit union above the 100,000-member mark.
That strong performance was just one reason STCU was chosen as a recipient of a Crystal Performance Award from Raddon Financial Group for the category of CUs with assets of more than $500 million. Crystal Awards are measured on a scorecard of growth, income, efficiency and margin management.
STCU CEO Tom Johnson noted that the long-term branding campaign paid off when Bank Transfer Day rolled around. "This is where the brand becomes important, because when people finally were motivated to make a change, our brand and our name were top of mind," said Johnson.
STCU currently serves about 100,000 members with $1.59 billion in assets.
Johnson stressed the difference between a brand-awareness campaign–which may have a six-month timeline–and building a brand, which can take as long as a decade.
"All kinds of things that are visual markers for your brand have to be consistent," explained Johnson. "On the front end you spend two to three years doing that work, but over time what you're really doing is communicating the essence of your core values and developing a trust with your marketplace that you are in fact a trustworthy … financial partner for people. You do that through ad messages, the way you participate in the community, through investments you make in the community, employment policies and how you show respect to employees, the community and your members."
A Look At The Portfolio
STCU's December 2011 Call Report shows 64,106 loans and leases on its books, totaling $1.26 billion–an increase over its December 2010 numbers of 58,926 ($1.23 billion). The credit union currently has more than 12,000 real estate loans on its books totaling more than $868 million. Johnson called its large real estate portfolio unique, but also noted that even as the CU has begun selling some of its portfolio to avoid excessive concentration in that asset class, it continues to service every mortgage it originates.
Johnson said that refinances have been running "at a healthy clip," in part because of historically low rates, but also because the economy in Spokane has stayed somewhat stable over the last decade, with home prices rising at a more reasonable pace than in other markets.
Additionally, a few years ago the CU rolled out a 20-year amortizing mortgage with a 10-year balloon. That was enticing to a lot of members with mature loans who wanted a lower rate but didn't want the fees or commitment of completely refinancing.
At press time, STCU's rate on a 15-year fixed-rate mortgage started at 3.25%. The credit union makes an effort to be competitive on rates for both deposits and loans–within the top three or five slots in the market, said Johnson–but does not necessarily seek to lead the market.
Focus On Revenue Streams
Johnson noted that interchange income continues to decline, but rather than working to boost non-interest income streams, STCU is focused on maintaining its current revenue streams. Johnson added that more regs are set to kick in this spring that will continue to affect that income, and the CU has built allowances into its budget to account for that.
STCU continues to promote debit card usage, and offers an occasional promotion paying $25 to members who do not actively use their debit card if they use it three times within a 30-day period.
"What we find is that once people do start using a debit card it will overcome the hurdle of ‘I don't know how to use this,'" said Johnson. "We have found that it pays for itself; it probably takes a year to recover the $25, but if you can help them make that change in behavior, it's something they'll do from that point forward."
While Crystal Awards recognize efficiency, Johnson believes STCU still has a ways to go to improve. In April 2011 the credit union went through a core system conversion, followed by conversions of its credit card portfolio and its online banking platform.
"All of that has caused quite a bit of change, so it's been a difficult time to look at reducing staffing, because we're trying to absorb and fine-tune all of these new systems to the way we want them to be for our members," he said. "We're not the most efficient operation of the 7,000 credit unions out there, but we are always working on efficiency." Johnson added that improved efficiency is a "major strategic initiative" for the CU right now, and that efficiencies are improving each quarter.
Johnson noted that he keeps a heart-shaped paperweight on his desk and that many STCU employees have their own such trinkets. "It reminds that the reason we're here is because of the heart of the member, and if we keep the heart of our member at our desk and in our thought process at every decision we make, we're going to be doing the right thing."
