LAS VEGAS — For at least one credit union, expansion remains the strategy.
Teresa Freeborn, president and CEO, Xceed Financial FCU, El Segundo, Calif., is in a completely different mindset than her two Nevada counterparts.
"We are not in a retrenchment strategy but an expansion strategy," she declared. "We have built and opened four new branches in the last 18 months."
Xceed's strategy is to serve 200-plus SEGs in five states, rather than attempt to go after an entire community, Freeborn explained. She said the CU's expansion has been aided by being "ruthlessly efficient" in going through the entire organization looking for places to save money.
According to Freeborn, Xceed has some operating losses due to the expense of opening the new branches, plus the WesCorp write off and its provision for loan losses, but it still has 10.2% capital.
"We've done the heavy lifting, including our name change last year [from Xerox FCU]. There is some pressure because it usually takes three to four years to get a branch breaking even, but out four-year profit goals are on track. New branches play havoc with the capital ratio and add expenses, but we feel as long as our board remains focused and with us, we are thriving."
Xceed has cut its operating expenses in a variety of ways, starting with a review of all vendor relationships, including both new and existing contacts. It has been "quietly rightsizing," Freeborn continued, by making certain every departmental area is as efficient as possible. The CU has avoided mass layoffs, but instead has realized savings through voluntary retirement offers and attrition.
Contrary to the thinking most businesses employ in an economic downturn, Freeborn said Xceed has remained committed to sales, marketing and training. "We brought 10 people to this meeting, including several board members. This is a big commitment to education because the board needs to see what is going on. We are not trying to cut back."
In another move that was atypical of the strategies commonly expressed at the CCUL/NCUL Annual Meeting, Freeborn said Xceed is not shrinking deposits to preserve its capital ratio. She said she does not want to attract "cherry pickers" looking for the best rate, but the CU has "stayed in the game" by offering attractive rates, including its core savings accounts.
"We are trying to get our loan loss reserves up to take care of everything this year, but we feel good about our core business going forward," she said. "We are nervous about unemployment and we don't expect sunny skies, but we are not gloom and doom, either."
115% Loaned Out & Reintroducing Cards
Lending has improved as other banks are pulling back in its markets, she continued. Xceed is 115% loaned out as it experiences "insatiable" loan demand from its members.
"We are running off indirect loans because we were never good at converting those to members," she said. "But we are booking consumer loans and we've reintroduced credit cards after selling off our portfolio seven years ago."
The credit union began offering its members a "personal banker" model this year, no matter the size of a member's account. People can choose to contact their representative by either phone or e-mail in a system Freeborn described as "very high-touch."
"We are all about good, quality growth," she said. "We are not scattered in our approach, we are very focused. We are looking to cater to tech companies across the country. We have identified tech hubs across the country and that is where our branches are."
