LAKE JACKSON, Texas-Moving to a community charter means taking on the big boys, and TDECU likes to do that one at a time.
The credit union switched to a community charter in the late 1970s and has prospered, growing from $654 million in 2001 to $1.7 billion today.
One of the reasons the credit union has been successful, according to EVP/COO Stephanie Sherrodd, is taking a local perspective on the competition. "Our motto is that we can never out-market or outspend Wells Fargo, but we can beat the Wells Fargo branch across the street."
When TDECU enters a new market it analyzes the strengths and weaknesses of a bank's branch, then chooses strategies it believes will give TDECU advantages. "Wells Fargo will always have that big brand name," noted Sherrodd. "But we often find we can beat them on service, rate, and getting more involved in the community. We find our niches and leverage them."
Besides needing more of a competitive edge, Sherrodd said other requirements come with a wide charter. "You have to do things like develop new lending risk parameters and broaden the procedure for opening new accounts. That is important when taking on community and national banks."
When it comes to lending, Sherrodd said it is a matter of being aware that the accounts you open are not tied to that one employer group that used to be a credit union's single member base.
"You just want to make sure you have a good tracking mechanism in place and know and understand what are the implications of the loans you are making.
For example, you might be lending in market areas you have never participated in before. So knowing and understanding those markets and appropriate risk parameters is different, and takes more work than when you served a single sponsor."
TDECU used to serve employees of Texas Dow primarily and has kept its original name, only abbreviates it now for broader appeal. The CU now serves 12 Texas counties. Serving a wider membership base also spreads the risk, reminded Sherrodd.
"You may have had a strong sponsor 30 years ago, but as the economy and businesses change, you have to broaden your approach. You can't put all your eggs in one basket."
Overall, community charter expansion has been good for credit unions, said Sherrodd. "It has promoted growth, and growth for our industry is a good thing. Plus it brings in more diverse board members and leadership, which is good."
