Las Vegas credit unions tackle challenges of area's rapid growth

LAS VEGAS – As construction crews and real estate agents hustle to keep pace with this area’s rapid growth, credit unions are also implementing strategies to take advantage of the large influx of potential new members. Ask how they’re approaching the challenges and opportunities, and you’ll hear a different twist from each one. First, a quick outline of the population increase here. In 1990, Clark County’s population was 741,459. By the 2000 census that had jumped 85% to 1,375,765. The median household income in Southern Nevada was $44,600 compared with $41,994 nationally, making these newcomers attractive to all kinds of businesses. The median home price in Clark County is now $139,500, compared to $119,600 nationally. But a third of the newcomers are from California, where housing costs make Las Vegas prices seem like bargains. That’s good news for mortgage lenders. “We’ve all seeing growth,” Dan Paulson, President/CEO of WestStar Federal Credit Union, notes. Who are these people moving into Las Vegas? Paulson says they often arrive alone seeking jobs in the gaming or construction industry. Their wife or husband and children follow. Retirees are lured by the weather and low taxes. “Most of them will shift over to a financial institution here because they like a local presence where they can visit their money. I don’t think the Internet is as good as being able to see somebody in person,” Paulson says. However, “We have limited our branch growth just from the expense standpoint. We’re looking at the potential of shared branching. At least three credit unions are looking into that. As far as our own facilities, we’re looking at a balance between what we provide electronically and branches.” Clark County Credit Union is also facing the challenge many credit unions would like to accept – limiting growth. “We don’t want to grow more than 15% a year,” President/CEO Wayne Tew explains. “We do that rather well. We’ve exceeded that a little bit a couple years, but we do try to keep it under 15%.” “There’s a lot of building going on, there are a lot of businesses moving here, there are a lot of jobs available. Certainly we had a downturn after September 11 because tourism slowed down dramatically. But that didn’t last too long. Even with that downturn, home sales continued at a rapid pace and we had a great real estate year last year.” CCCU is still SEG-based, although there are a couple credit unions in town who have acquired community charters. “I wish them luck both with who they will get in the door as well as the growth that will come to them if they do it right,” Tew says. ” We don’t want to be community-based in that way. We have great SEGs and great relationships with all of them. We think we do it better than most credit unions in town, so we’re not worried about the competition that may come from them.” CCCU is emphasizing technology, including a phone center and home banking, rather than bricks and mortar. All new accounts and loans are opened by telephone. The five branches handle only retail teller service transactions. “ We don’t open a new branch until we have an average of at least 6,000 to 7,000 members per branch, so we control branches by member growth not asset growth,” Tew says. One credit union that has pursued the community charter approach is Community One Federal Credit Union. “The growth of the city has given us particularly tremendous opportunities,” President/CEO J. Alan Pughes says. COFCU was originally Network Federal Credit Union. Formed to serve Nevada Test Site employees, the credit union added some 200 SEGs. Then, three years ago, it switched to a community charter covering much of Southern Nevada. Pughes came to the credit union shortly after that charter was granted. At that point the credit union had about $90 million in assets. Today the credit union boasts $145 million. Last year the credit union actually braked progress a little in order to built the infrastructure. Over the past three years that has included expanding from three to five offices, remodeling and relocating two offices, adding more ATMs, increasing Internet access and joining a shared branch network. “There are a lot of people who belong to credit unions in other parts of the country, so they continue to keep accounts at those credit unions. They’re also eligible to join us, and many have. They deposit some pretty significant dollars. It’s also helped our Members Financial Services investment program.” COFCU is straddling what Pughes sees as a transition between traditional branches and electronic access. “Twenty years ago everyone did their business through a physical location. Twenty years from now people may not even use a branch. We’re in that interim period where we really need both. Right now branches serve as a billboard and attract people, especially in new neighborhoods,” Pughes says. “Most of the credit unions here have different strategies. But I think they’ve been pretty successful for the most part in keeping up with the growth. There’s plenty of opportunity for all the credit unions here.” Cumorah Credit Union has pursued what could be considered a twist on the in-store branch or SEG approaches. CCU primarily serves members of the Church of Jesus Christ of Latter-day Saints. In fact, the LDS church founded Las Vegas as a way station for people moving from Utah to California in the 1860s. Many members were descendants of those original founders. They prospered and didn’t need many loans. So CCU received permission from the state of Nevada to let employees of members join. If you’re an accountant, a doctor or dentist, for example, your staff can join. That has enabled the credit union to write many more consumer loans than it would have without those mini-SEGs. CEO/President Anthony Mook says the challenge has been remaining profitable enough to keep capital ratios in good shape, and keeping up with the opportunities for growth posed by 6,000 adults moving into the area each month. “How do you, as a credit union, market to those people?,” Mook asks. “How do you let new people in the area know you even exist? How do you brand yourself effectively? “For us, it’s a matter of finding the appropriate publications, radio stations and television stations, or sponsoring community events where we can our presence felt. Actually, the best way for us to attract business is still by word of mouth.” In addition to the mini-SEGs, CCU has also pursued what Mook describes as co-branding with business partners. Those partners are LDS members who, for example, operate stores that sell LDS books and other religious materials or specialty breads. It borrows from the in-store branch concept. “What we do essentially is co-locate,” Mook explains. “We build a branch, make sure we have additional space, and they move in next door or we share a foyer. When members of the church come into the credit union or the bookstore they can visit the other business. It’s really increased our penetration into the marketplace.” CCU has posted an average yearly asset growth of 10.2 percent for the past 10 years. Yes, it’s a competitive market and credit unions vie with each other as well as banks. “Fortunately, as CEOs we’ve tried to maintain a close working relationship,” Mook says. “We communicate pretty much on a monthly basis – perhaps at lunch or a CUES or chapter dinner. We have a comfortable although competitive relationship. I think it’s good for the member to have choices.” -