SAN ANTONIO — When the going gets tough, the truly tough get growing.
That's the way three credit unions across the country are responding to the economic crisis, as they continue to open new branches-even one in a "sand state," no less-as others putting branching on hold or even closing down existing branches.
Credit Union Journal talked with these three credit unions to learn why they are committed to growing their branch network at a time when most are hunkering down and waiting for the economy to improve before embarking on any facilities projects.
CU: Generations Community FCU, San Antonio
Assets: $383 million
Members: 51,567
SAN ANTONIO — Generations Community FCU is moving full speed ahead with plans to expand its main office, which is both a retail branch and an administrative support facility, according to Tim Haegelin, CEO.
The $383-million credit union has outgrown the structure, which is a modified rail station originally built in 1907, and Haegelin sees the chance to reach out to potential members in the community by moving ahead with the project now while competitors hesitate.
"What happens in these economically challenging times they also contract from the market, they move into a survival mode-protecting assets, reducing debt and we can help them do that. To take the risk during this time really gives them the potential of attracting members that are most apt to pledge their loyalty for what you extended them," he said. "Out of adversity there are usually advantages to be had because somebody contracts from the marketplace and if we have competition that is retracting then that gives us a definite advantage."
When making that tough decision to continue as planned, accelerate or hold back capital projects, it helps to have an 11% capital ratio, Haegelin conceded. Haegelin said CUs should not change their decisioning matrix in rough economic times but simply weigh the situation as they normally would without letting fear rule the process.
"Historically whenever you have a contraction in the economy it usually lasts a year and a half or two years, and it takes that long to build a branch," he pointed out. "You're out of the economic crunch by the time you have the branch but it gives you a leg up if everybody else is not thinking about it."
CU: FirstLight FCU, El Paso, Texas
Assets: $602 million
Members: 99,403
EL PASO, Texas — CEO Karl Murphy said FirstLight needs to move ahead with its expansion plans at a growing military installation because more than 20,000 soldiers will be moving there in the coming years and the credit union cannot afford to think short-term. Credit union execs "need to keep a long term focus," he explained. "And if they can financially support the continued construction, specifically if there is a need like in our case, it's important to have that facility. If it's not there, then [potential members] will go somewhere else. Short-term decisions can impact long term strategy and it doesn't need to be that way."
FirstLight Credit Union is also moving ahead with its expansion plans with just an 8.5% buffer, before the NCUSIF assessments, and is doing so in the face of a rising unemployment rate that is already above the national average. The $602-million institution has aggressively expanded its footprint over the last decade, going from three branches in 1998 to eight today with a ninth nearing its groundbreaking.
CU: Grow Financial, Tampa, Fla.
Assets: $1.67-billion
Members: 186,348
TAMPA, Fla. — Even in Florida, one of the epicenters of the mortgage crisis, one major credit union is stepping up its aggressiveness in the marketplace. Grow Financial FCU recently completed a new state-of-the-art branch facility complete with free WiFi in its lobby. CEO Bob Fisher said the $1.67-billion credit union is even looking to purchase existing financial facilities that have been abandoned by the big banks.
"We looked at 2009 as one of opportunity because we knew that when everybody gets in these kinds of situations they start sticking their heads in the sand and start retracting," he added."It's a good time to be aggressive and move forward."
Fisher pointed to big drops in building and property costs in the marketplace as an incentive to make big moves while the competition stands still. Though the credit union posted a $2.79-million loss in Q4, and booked its assessment losses in March thereby exacerbating the red numbers, its 10% capital cushion allowed it to absorb the losses and press forward with expansion plans. Fisher explained that there is still activity in the market and it is up to CU leaders to go out and get it just as they would in any other economy.
"That hasn't changed throughout all of this. You still have to figure out how to beat the competition regardless of what is happening in the economy. You have to do it intelligently, but the great companies do continue to move forward because they have the vision," he continued. "You've got to have faith in your operations, what you're doing, where you are going and you have to understand your numbers. If you don't understand that you're not going to be able to do anything."
