CHARLESTON, S.C. -- After 30 years in the banking business, Richard L. Dargan crossed enemy lines to mna credit union that was about to suffer the loss of its main sponsor.

Today, the president of South Carolina Federal Credit Union is not only a survivor but a convert.

OK, he still has trouble remembering to call his customers members. But listen to Mr. Dargan describe the difference between banks and credit unions: "The customer, I mean the member, is part of the family."

He says that with a straight face and a deep Southern drawl.

In an interview, Mr. Dargan, 54, said he had no trouble adjusting from the ways of South Carolina National Bank, where he worked until taking the $380 million-asset credit union's helm in early 1993.

"It was almost like I went back in time," he said of his move from banking to credit unions, "from the standpoint of trying honestly to take care of the customer, in our case, the member.

"Once this is put in American Banker, the bankers are going to go crazy," he added. "But my perception is, at least as far as the larger banks, that they are so bottom-lined driven that, although they give lip service to serving their customer, they really don't do a very good job of it."

South Carolina Federal was created in 1938 as the Charleston Naval Shipyard Federal Credit Union. The name was changed last month to distance the institution from the shipyard, which is scheduled to be shut down by April 1995.

The cutbacks have cost the area's economy about 7,500jobs, but that's not the institution's only problem.

South Carolina Federal lost millions on commercial real estate loans, which peaked in late 1992 at $77 million. Regulatory pressure led the credit union's board to oust its management and. hire Mr. Dargan, who has whittle the portfolio to $28 million.

This double whammy produced losses of $2.6 million in 1992. But earnings rebounded in 1993 to $4.8 million. Profits through August are $2.2 million.

Preparations for the downsizing have been in the works for years. Today, just 20% of South Carolna Federal's 120,000 members depend on Uncle Sam for a paycheck.

"Due to the downsizing...we feel it is very important that we not only look to diversify geographically, but we need to continue to diversify the membership base," Mr. Dragan explained.

To broaden the base, South Carolina Federal is looking for new members. The credit union employs four peole who hunt for suitable select-employee groups.

The credit union already has 550 groups i its field of membership, which is concentrated in three counties around Charleston but reaches 60 miles north to Georgetown, S.C., and 100 miles inland tot he state's capitol of Columbia.

But only 15% of South Carolina Federal's members use the credit union for the bulk of their transactions; 18% have their checkign accounts with the credit union.

"I do not think you can be the principal financial institution without handling a members' checking account," he said. "They've got it somewhere and that's where their paycheck is going."

Though one of the first credit unions in the country to offer share drafts, South Carolina Federal let the accounts languish. So, its one-size-fits-all checking is being revamped and customized to fit the needs of different members, according to Mr. Dragan.

On the loan side, penetration is much better. About half of South Carolina Federal's members are in debt to the credit union. But Mr. Dargan wants to push that figure higher, too.

"If you're not growing, you're going backward," he said.

The average monthly total of consumer loans has risen to $5.2 million so far this year from $4.4 million last year and $3.8 million in 1992.

The credit union also is eying a number of new products, such as auto leasing, mutual funds, and financial planning.

"To be the principal financial institution for your member... you need to be in a position to offer thses things," he said. "If you don't somebody else will."

Also interested in upgrading the credit union's technology, Mr. Dargan is keen on debit cards and home banking.

"I am convinced that debit cards and electronic delivery of services is the key to the financial marketplace of the future," he said. "We've got to play in that game. That's what people are going to demand.

The credit union has stepped up marketing as well, targeting members who use some services and might buy others.

That budget, which also covers product promotions and image advertising, totals $450,000 a year.

"We think that's the best money we spend," Mr. Dargan said. "You've got to tell your story."

Mr. Dargan, who's nothing if not optimistic, is upbeat about South Carolina Federal's future.

Although Charleston is expected to lose another 12,500 jobs, Mr. Dargan is predicting an economic boon when the 2,200-acre shipyard is redeveloped by the private sector.

"We anticipate there will be a tremendous economic upturn once we get through this whole episode," Mr Dargan said. "Long-term, Charleston will be better off."

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