Steady, Measured Improvement Just Fine at Pacific Service Credit Union

WALNUT CREEK, Calif. – Maybe it’s his training as an industrial engineer, but steady, incremental improvement is just fine with Tom Smigielski. Smigielski – president/CEO of Pacific Service Credit Union – never pursued engineering after graduating from Purdue University. But evidently at least a little bit of an engineer’s desire to constantly measure progress has stuck with him. He readily cites data showing how the credit union is performing. Operating expense ratio for the most recent quarter was 1.56% compared to 2.70% for PSCU’s peers. The call center receives more than 10,000 calls a month, and so far this year the staff of 11 has answered 97% of those calls in 30 seconds or less. That more than meets the goal of answering 95% of calls within 30 seconds. The abandoned call rate is less than one-half of one percent. “I like to solve problems, not just put out fires,” Smigielski declares. “It’s a pet peeve of mine when I think a problem has been solved but the same problems pops up again. I am very willing to spend resources to fix the problem, and it irks me when something has regressed. “I really enjoy getting comments back from members. We put out a survey every month that measures member satisfaction, and I read all the responses. If they’re not happy, I have my staff follow up and get back to me. But generally, 80 to 90% of those comments are compliments.” Perhaps another sign of Smigielski’s engineering education is the fact he loves technology. For example, he likes the fact members can apply online for any loan the credit union offers and receive a reply within seconds. Actually, Smigielski says even when attending Purdue he never intended to go into engineering. He immediately went on to earn an MBA at Stanford University. He also completed the requirements and passed the exam for a CPA. His resume shows work as a consultant for Arthur Anderson, service in the U.S. Army, a stint as a financial consultant for Marco Systems in Washington, D.C., senior financial analyst at PG&E, assistant treasurer at U.S. Leasing, owner of his own consultancy business, senior director of finance at Blue Cross, then CFO for Pacific Gas Transmission, a subsidiary of PG&E. He joined the PSCU staff in July, 1990. At that point he was a PG&E employee working on a financial conversion project. The assignment was winding down. The CEO of PSCU had gone on vacation, then on extended leave for health reasons. Smigielski was asked if he would like to go over to the credit union and fill in as CEO to see what the job was like. He stepped in on a temporary basis. The CEO never returned, and in 1991 the board asked Smigielski to take on the job permanently. PSCU was founded in 1936 by employees of Pacific Gas & Electric Company. It was not only a single-sponsor credit union, but if a member left PG&E that meant they were no longer eligible for the credit union. Today it’s a state-chartered community credit union serving not only PG&E employees and their families, but also public and private energy companies in California and Texas as well as anyone who lives, works, worships or attends school in any of 12 California counties. Some 64% of PSCU members are employees, retirees and their families. A healthy 34% come from the 12 counties under the community charter provisions. Smigielski points out those counties cover an area equivalent to the distance from Boston to Virginia Beach, Va., or from Miami to north of Savannah, Ga. “Over the years we’ve been expanding our membership because we thought that (relying on a single sponsor) was a vulnerability,” Smigielski explains. “As it turns out, PG&E has had many waves of layoffs and they just came out of bankruptcy. We knew we needed to diversify, so we started looking for SEGs. We were a federally-chartered credit union and the feds weren’t letting us bring in big groups. So in 1999 we went back to a state charter.” The credit union has weathered the bankruptcy of its key sponsor and the dot.com bust in nearby Silicon Valley. But what worries Smigielski currently is what he sees as irrational pricing – that is rebates and interest deals – offered by the manufacturers which has curbed car loan growth the credit union had anticipated. Two other issues pose challenges. “Our membership, like a lot of credit union memberships, is aging. Eighty percent of our savings actually come from 13 percent of our members. We need to get new members into our credit union and we’ve been working very actively on that during the last few years,” Smigielski says. “The other challenge is we’re in all of these counties, and have such potential in those counties, but how do you get your name out there? How do they know who you are?” When PSCU switched back to a community charter, the board of directors felt community involvement was simply the right thing to do. In 2004 the board approved a budget of $150,000 for organizations such as the Salvation Army, Head Start, Juvenile Diabetes Research Foundation and Children’s Hospitals The efforts are not business-driven, Smigielski emphasizes. However, he agrees the activity, plus offering a community room in each branch free to nonprofit groups, does help build awareness of PSCU. When Smigielski isn’t wrestling with the credit union’s problems, he may be celebrating its accomplishments. When PSCU hit the billion dollar in assets mark in May 2004, the credit union celebrated with a catered breakfast for all employees. Each employee came into Smigielski’s office and received a crisp $100 bill (with taxes paid by the credit union). They also received a commemorative candy jar filled with “billion dollar bars” and a congratulatory “Thanks a Billion” photo. All employees are part of a bonus program that can pay from 8% of salary on up, depending on rank. On a weekend or holiday you might find Smigielski and his wife at their condo on Maui, Hawaii, an island they love. They’ve been married more than 30 years and have a daughter, 26, and a son, 24. Golfing ranks high on Smigielski’s list of interests. He likes jogging and scuba diving, but knee surgery earlier this year has slowed him down a bit. He and wife also enjoy touring the California wine areas of Napa, Sonoma and Alexander Valley only about an hour away. Any regrets? “Only maybe that I didn’t find this job earlier. It’s been 15 years and it doesn’t seem that long,” Smigielski says. -