With Plate Full, One Small CU Makes More Plans

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Liz Schilling speed walks, hikes and climbs mountains. She's even sailed across the Atlantic Ocean. And, oh yeah, and she's head of a small credit union.

It's no wonder that, like the self-described achiever herself, the credit union she oversees is in tip-top shape. For the last three years, the $22- million Cutting Edge FCU has been so successful it's given members more than $209,000 in bonus dividends.

The full-service, multi-branch credit union also has an in-house VISA card, ATM/debit cards, two proprietary ATMs, home equity loans, a mortgage broker, online banking that includes loan applications and online investing. And it's only going to get better, she said.

"We're in the process of making our most dramatic move," she said. "We're changing our name, moving off site from our sponsor company and offering our credit union to other businesses in the area."

Formerly Blount FCU, the financial institution that has served Oregon Cutting Systems since 1953 (it started as Chipper Chain), is now Cutting Edge FCU.

"We've taken that connection with our sponsor's name, but are also making a statement about our future to be more technologically oriented," she explained.

While the move to a new location is literally only 50 feet away, Schilling said it would open the door to more people because it's no longer behind the sponsor's locked fence.

The downside, she said, is that the credit union will now be responsible for building expenses, whereas before it's only obligation was to pay property taxes.

Planning For A CUSO

"We may have to look at putting in a CUSO," she said. On the plus side, Schilling said she thinks the new off-site location will stop some of the unprofitable foot traffic from members "who come in three times a day to get five bucks because they have nothing better to do during their breaks and lunch."

To further reward the more profitable members-the credit union has identified 11% of its membership as highly profitable, 20% as moderately profitable-the CU recently added risked-based pricing.

"We felt we were losing our good members because we were pricing at B credit and giving the D people one heck of a deal," Schilling said, adding that she was inspired to try risk-based pricing after participating in one of consultant Rex Johnson's programs.

She said there has been a noticeable change in both loans and income as a result. In addition, delinquencies have stayed below 1%. The success of this program contributed to the 23% growth over the last three years (the CU is 14% capitalized), she said, thus the 4% rebate on share and loan interest paid to members via bonus dividends.

"We've actually said this is the best marketing dollar we can spend," Schilling said. "We want our members to know we share the good years with them. When (a bank) makes too much money, you won't find them giving it back."

Schilling started in the credit union community in 1979 as a manager of another small credit union. The problem then, she said, was "I didn't know the difference between a debit and a credit card."

Determination led her to attend credit union management courses at the local community college and eventually to CUNA Management School. She said she gained a lot of hands-on experience in leadership skills and public speaking as a member of the Credit Union Women's Association. As part of her work with the latter, Schilling said, she helped create a brochure to educate political leaders on credit unions.

Sense Of Accomplishment

"I love what I do," she said. "I like to have a sense of accomplishment." The challenge as a CEO, however, is "Once you accomplish one thing, you have 10 more things to do."

Among the things Schilling has achieved at Cutting Edge-with the help of a very smart board, she added-are the in-house credit card program, online banking and online bill pay.

In the last three months, by the way, online banking usage has surpassed the CU's audio-response system. Schilling attributes it to a new service provided by WesCorp FCU in San Dimas, Calif. that allows members to view their checks online. Schilling added that the new branch will include a teaching kiosk and ATM in the lobby to help increase usage of the available technology even more.

"With our in-house VISA, we saved about one-third of the cost," she said, explaining that it cost more than $25,000 a year for an outside vendor, the old CUNA Service Group, to run the program. Now, with staff processing, folding and inserting statements, yearly cost is down to about $15,000. Schilling said the possibility to take on VISAs came in 1996 when the CU changed its data processing system. In the deal with Symitar Systems, CECU also got the credit card program and an audio-response unit. Schilling said she is not afraid to ask a lot of questions and is always looking for a bargain. "I protect the credit union's bottom line like it's my own checking account," she said.

Surprisingly, Schilling said, the credit card program is turning a profit of about 8% so far this year. Schilling said the credit union also uses Symitar for its online banking program, but has its own in-house employee who handles all the technology matters.

"We found somebody who was young and wanted to get into this field," she said. "He didn't have any background so we sent him to Symitar for training" in San Diego.

Technology On A Budget

Thanks to long extension cords connecting its ATMs at both sites to its data processing system, the CU hasn't had to pay a network fee for its ATMs. Even with the move of the Milwaukie branch, Schilling said, the machine will continue to be proprietary with the help of a special cable line "that'll cost us 25 bucks."

"I'm always asking, 'How can we offer technology at the least cost possible and still have good communication?'" she told The Credit Union Journal. Schilling noted there are areas in which the credit union doesn't cut costs. For example, she said, she has hired professionals, such as strategic planner Jim Aho in 1996 to help the CU with its long term planning.

"He helped us set a goal of where we would be in five years," she said. "We reached that goal in three and a half years and brought him back a year ago to start with our next five-year goals." She said the money has been well spent as it has "prompted the board to be more outside the box."

With a link to the United States Postal Service, or www.usps.com, from its own website, the CU offers members online bill paying services at $6.95 a month for 20 bills and 40 cents a bill after that.


If investing is what members' want, they can click on the link to CUNA Mutual's Members Financial Network, she said. "Just because we're a smaller credit union doesn't mean our members shouldn't have all of the services available."

With 4,550 members and plans to grow-"Another half-million-dollar credit union is in the process of voting to merge with us"-she said it'll be like walking a tight rope to maintain that member service and provide all the technological advances at the same time.

"Even though members want that technology, they want the branch, too." As proven with its decision to keep the Blount name at the Lewiston, Idaho branch- at the urging of members-it's obvious members come first.

"The branch in Idaho didn't think its members would relate well to Cutting Edge," she said, adding that with the permission of the NCUA, the old name will remain with the tag line, "An affiliate of Cutting Edge FCU."

She expects the Blount name to eventually be phased out, but wants to be respectful of the members.

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