Polish, Renovate, or Build Anew?

Community-chartered CUs know it takes more than simply hanging out a sign to attract new members.

THE "T&C" IN T&C Federal Credit Union stands for "town and community," but it once stood for "truck and coach." That change is symbolic for this credit union and many others that have sought community charters.

T&C Federal, Pontiac, Mich., was chartered in 1936 as General Motors Truck Corp. Employees Federal Credit Union. In the 1980s, T&C Federal served 300 select employee groups (SEGs).

But in February 2002, still needing a broader base, T&C Federal received a community charter to serve all people living and/or working in Oakland County, Mich. With $515 million in assets and 61,000 members, T&C Federal is among Michigan's largest and strongest credit unions.

"The challenge was that our SEGs were small and mostly auto industry-based," reports Dianne Addington, T&C Federal's president/CEO. "It became expensive to serve multiple SEGs through in-service visits. And as GM consolidated and moved jobs out of town, we knew our best opportunity for growth would come from our community."

Fortunately, says Addington, the credit union was well known in Oakland County. By the time it received its community charter, T&C Federal employees long had been active in the community and simply expanded that public involvement.

Each employee receives eight hours of paid time off annually for volunteer work. Eighty percent of staff volunteer for community events each year.

There was a pent-up demand for its services when the credit union announced its new charter at the Pontiac Silverdome during the 2002 Walk for Warmth, which helps disadvantaged people pay heating bills. Membership grew quickly, but T&C Federal's new status was no panacea.

"Credit unions that go to a community charter have to understand they can bring in more people at the start," says Addington. "But it's every bit as difficult to get new members in the long run as it is when you serve SEGs."

T&C Federal is expanding by using its proven community involvement model. Several months before opening a new branch office, the credit union will join the target area's chamber of commerce, making itself known by sponsoring and participating in community events.

Addington advises credit unions seeking a community charter to talk to people from several communitychartered credit unions.

"Do your homework," she suggests. "Make sure your credit union can support a community charter."

Build on your identity

FAA Credit Union, OkIahoma City, was in a situation similar to that of T&C Federal. FAA, however, wasn't as well integrated into the larger community when it received a community charter in November 2001. It served employees of a Federal Aviation Administration training center, and its growth potential was limited.

Gaining the community member base put the credit union in a position to grow for several decades, says Steve Rasmussen, president/CEO of FAA, with assets of $261 million and 35,000 members.

FAA had to build a stronger presence in Oklahoma City. Starting with its two locations, FAA increased its advertising budget. Personalities from two popular radio stations hosted "member roundups" in May 2003 and in 2004. Everyone within a five-mile radius of the credit union was invited to these minicarnivals, featuring prizes for new members and the members who recruited them.

To maintain the momentum, FAA remains active in area chambers of commerce. FAA business development officers attend community events and conduct financial education seminars. And the aeronautical center, its first branch, still is thriving with 2,500 members, says Rasmussen.

You can become part of the larger community, but what about making the community part of your credit union's culture? Rasmussen encourages employees to join in business development. After training, they earn incentives by teaming up and calling on businesses targeted by business development officers.

But advertising and spreading the word aren't enough to ensure success for a newly chartered community credit union, says Rasmussen. You also literally must branch out, he says. FAA has launched a 10-year building plan that could result in its opening a new branch annually. Two new branches will open before the end of 2005.

"It's still all about location," he says. "You can have state-of-the-art electronic technology, but if you're not in the right locations, you can't serve the community."

Create a new identity

Becoming integrated into the larger community was even trickier for Unitus Community Credit Union, Portland, Ore., with $635 million in assets and 50,000 members. Once called Oregon Telco Credit Union, it served the telephone company, a large employer.

But that industry changed, jobs moved out of state, and the member base shrunk. To ensure its vitality, Oregon Telco sought a new charter and became the first community credit union in Oregon.

The credit union's community involvement, however, was limited because it had been so closely aligned with its sponsor, says Unitus Community President/CEO Patricia Smith. "We found you can't just hang out a new sign," she says.

The credit union increased its advertising budget, but the results were disappointing. Then focus groups told the credit union it had no brand presence in the community. Some people thought Oregon Telco was a phone company or still a phone company credit union, Smith explains. So, six months ago, it became Unitus Community Credit Union.

The credit union joined chambers of commerce, partnered with other organizations, held charily fund drives, and volunteered at events such as Portland's Cinco de Mayo celebration. But perhaps the most challenging part of the transition was changing the credit union's culture, Smith says.

"When you've had a strong organizational brand for so many years, you can drop to the bottom of the learning curve by becoming community chartered," she explains. "You're operating under a new business model."

Unitus Community managers learned from focus groups that no one at the credit union was asking members for their business. In their years working with a sponsor, Unitus Community employees never had to do this. Now they had to learn how to ask for business rather than be order takers, Smith explains.

Those changes took time, Smith says, which also was difficult. The credit union was used to communicating quickly and efficiently with members through its sponsor. Unitus Community committed to a larger marketing budget and began spreading the word to a bigger, more diverse membership. What it received for its investment, Smith adds, was a brand that belonged to them, not to a sponsor.

"If your sponsor has problems, you have less control over your future," she says. "But when you build a brand, you own it."

Copyright Credit Union National Association, Inc. Jul 2005
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