Rather Than Go Community, LAFCU Grows By Refocusing On Its Core FOM

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PASADENA, Calif. - Rather than seek a community charter that would take it out of a niche it has served so well, Los Angeles Firemen's CU found a way to expand the niche and dig deeper into it.

LAFCU CEO Mike Mastro said that several years ago CU staff examined the idea of changing charters. After a great deal of "soul searching," LAFCU decided to stick with its single segment of firefighters and their families, but to widen the net they applied for a TIP charter allowing the credit union to reach out to all fire professionals throughout the state of California.

"It's a good niche. It's a very good field of membership. We know that field very well," Mastro said. "They get to know each other as family members. It's a very noble field of membership."

While LAFCU staff realized the present credit union model for doing business is changing nearly every day, Mastro said changing to a community charter would have taken the CU away from its main mission of serving firefighters.

"Members look to us for trust and integrity," Mastro said. "I think we would have lost a great deal of that trust and relationship. We know firefighters and respect them."

That focus on firefighters worked during the third quarter of 2006 as LAFCU finished first Callahan & Associates Return of the Member rankings for the $250-million to $1-billion asset category. LAFCU also finished in the top ten in the subcategories called Return to Borrowers, Return to Savers and Member Service Usage.

The Return of the Member rankings were designed to measure how credit unions "give back" to their members.

Mastro said the $750-million LAFCU has spent the last five years on a drive to offer the best products and services to its firefighting FOM, an effort that has resulted is a large loan portfolio of $600-million at a credit union of only 24,000 members. Like many credit unions profiled for the Credit Union Journal's new Leaderboard series, LAFCU staff mention long-time CU values as the main reason for their success. Mastro said one way LAFCU stays loyal to its FOM is by returning a refund of interest on all loan products from the previous year.

LAFCU refunds members 4% of interest paid on loans. For example, Mastro said a $20,000 loan would result in an $800 payment to the member. Mastro said the interest refunds reflect LAFCU's working philosophy of recognizing members as the true owners of the credit union.

"That amount of money we will give you back at the end of the year," he said, "it's truly part of our internal working philosophy, really about paying attention to what we're about. Our members have come to expect it."

Another unique program at LAFCU is the member business division called Firehouse Business Services launched last August. Mastro explained that as firefighters work 24-hour shifts, they usually have the next two days off. Firefighters with a strong business interest, spouses who run small businesses or those wanting to turn a hobby into something profitable can take advantage of the two-day breaks.

"They can work other jobs or set up businesses," he said. "It's still new but it's going well and we're adding business accounts every week."

Mastro said the CU, which is privately insured by American Share Insurance, Dublin, Ohio, recognized the opportunity after it learned of the "wide variety" of businesses off-duty firefighters were establishing. Firehouse Business Services offers the usual array of business savings and checking accounts, plus vehicle loans and lines of credit, but also financial planning, commercial property financing and realty services and even financial software.

Mastro said he adds 100 to 150 members each month to drive his growth but also expects the Firehouse Business Services unit to bring a significant amount of accounts in 2007. As usual, Mastro said LAFCU's main effort will be on the California family of firefighters, and their own families, to stay high in the rankings this fiscal year.

"They're a great group of people. If you give them great service, they pass it on to their fellow firefighters. If they don't get great service, they pass that on too," he laughed.

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