Services Center Federal Credit Union Overlooks Size, Uses Collaborations, Online Access to Go to Next Level

WASHINGTON – Last year’s success for Services Center Federal Credit Union is as simple as one plus one “equals something greater than two.” Dave Wright, CEO of the $23 million credit union based, explained his formula to attendees during Callahan & Associates, Inc.’s Third Quarter Trendwatch Webinar on Jan. 6. Wright said the Yankton, S.D.-based credit union had a phenomenal 2005 especially in the area of loan growth and signing members on to online banking and e-statements. An alliance with Grand Rapids, Mich.-based CU*Answers, a multi-service provider, has also helped SCCU bring broader services and products to its nearly 6,000 members. “Future success is not just to survive but to thrive,” Wright said. “One way we do it is one plus one equals something greater than two. Our credit union may be a fly speck on the wall but (we decide how we can) collaborate with credit unions and other entities across the United States.” While SCCU’s field of membership covers four counties, its two branch offices are in very small towns with populations of 850 and 1,300 respectively. One county has an average of one person per square mile. Another way the credit union has thrived is involving and giving incentives to staff, Wright said. SCCU is offering them $1 every time they sign a member up for online banking and $2 for every new e-statement signee. More than 20% of its members have signed on to the latter. E-statements are especially popular with the “snowbirds” because they don’t have to deal with forwarding their mail while SCCU doesn’t have to spend a lot of money on postage, Wright said. This year looks promising too, Wright predicted, because he continues “to see the value” and that SCCU is providing a service that members want. “Our plan is to take action, not just muddle through,” Wright said. “We just don’t get up in the morning, open the door and wait for service to come.” The economic forecast for 2006 also looks more promising for the credit union industry and the rest of the country given the most recent payroll and wage numbers but there are “some cracks in the foundation” to watch for, said Dwight Johnston, vice president, economic and market research at WesCorp during the Webinar, which was co-sponsored by Open Solutions, Inc. The biggest issues for 2006 will be housing, the inflation outlook and the yield curve, Johnston said. “I am a firm believer that the inverted yield curve is a true predictor of the economy and a recession. It happened in 2000,” Johnston said. New homes unsold reached a five-year high last year while unsold existing homes topped out at a 22-year high. Inflation will send “mixed signals.” The overall results could be a loss of 800,000 jobs in a “flat market”, 1% to 2% of the Gross Domestic Product tied back to housing activity and worsening debt problems. The theme for credit unions in the third quarter of 2005 can best be described as “rational exuberance,” said Melanie El-Sabaawi, executive vice president, Trust for Credit Unions, a Callahan mutual fund subsidiary. “Some are saying the industry has matured without any potential for more growth,” El-Sabaawi said. “Credit unions are having some difficulty growing the next generation of members but others are dealing with it on a case-by-case basis.” Some of the maturity symptoms include membership growth near a 10-year low at 1.5%, share growth at the same low at 4.5%, net interest margin of 3.27% being one basis point above an all-time low and return on assets below 1% for seven consecutive quarters, according to Callahan. “Still credit unions are realizing that the power of the system is what they can grow,” said Chip Filson, president of Callahan. “There is the capability to serve members through shared networks. One example of this came out of the Katrina disaster.” The good news is credit unions are experiencing the strongest loan growth since 2000 with auto lending at an all-time high and double digit top line revenue growth. The industry is also doing more to get the word out on what it has to offer – marketing is the fastest growing expense category, Callahan reported. -