Credit Unions Cut Costs
to Attract Customers

by Patricia Rathbun

Credit unions in Whatcom County are experiencing member growth and holding up remarkably against competition from banks.

Terri McKee, president and chief executive officer of Industrial Credit Union (ICU), says the credit union is withstanding competition well. ICU saw a significant increase in membership with the recent closing of a bank branch in the east county.

McKee understands the economics of the banking industry and its need to provide profits for the investors. She’s pleased that ICU is there to fill the void and serve the community.

“We’re in the business to help our members achieve their financial goals. Our bottom line is to provide stability for the future, not to provide dividends for investors,” she adds.

Joan Martin, vice president of marketing at Whatcom Educational Credit Union (WECU), explains that credit unions are not-for-profit organizations.

“We have a board of directors that serve as volunteers; they are not compensated. They are elected by members. By being not-for-profit, our rates our lower. We can turn profits back into lower fees and interest for our members,” Martin says.

The credit union’s philosophy centers around a group of people with a common bond who pool their resources to help each other. The first credit unions were founded by farmers who couldn’t get seed loans from banks. They pooled their money and made loans to each other, she explains.

Katie Jordan, CEO at GAPAC Employees Federal Credit Union, sees banks as only one segment of credit unions’ competitors. Credit unions also have competition from e-traders, auto-loan lenders and mortgage companies.

“It’s fiercely competitive,” Jordan says.

McKee says that as a community credit union, ICU has to consider many aspects of the local economy when forecasting loan growth. Currently, ICU’s members are being very cautious, especially in light of the recent energy crisis that has hit several of the large

Whatcom County employers with whom ICU is affiliated. The recent decrease in the federal fund rates may stimulate loan demand, but each member must evaluate his/her future finances before incurring additional debt, she says.

Jordan says GAPAC also has a strong loan program. “We have to go with what economists are saying. We do short-term balloon mortgages and we out-source those. The phone has been ringing off the wall with people calling about refinancing,” she adds.

 

Membership varies

Local credit unions appear to be faring well in the county’s economy.

“WECU did very well in 2000; we grew in assets by 10 percent. Membership increased by 3.5 percent; that’s ahead of the average for credit unions,” Martin says.

“When there’s a bank acquisition in Whatcom County, credit union membership seems to go up; it’s a natural effect. No one wants to pay fees. Banks generate money by fees. There’s a place for banks and a place for credit unions,” she elaborates.

Membership requirements vary with each credit union. ICU has a new community charter that allows it to offer credit-union services to all people who live or work in Whatcom County.

“Our membership has grown significantly over the last year as people come to understand the value of membership. Credit unions are a good choice for the consumer,” McKee adds.

Martin says WECU has not wanted broader membership. It wants members to have a common bond — that of educational or medical ties. Relatives of teachers or alumni of Western Washington Univer-sity can also become members.

“We have 29,000 members. We are staying with our original philosophy of a common bond,” she emphasizes.

At GAPAC, only Georgia-Pacific employees in Bellingham and their relatives are eligible for membership because that institution is covered by federal guidelines.

“We are federally chartered, as opposed to community chartered like other credit unions in town. We have a different set of regulatory guidelines, so our membership has become more narrow,” Jordan explains.

 

Heading online

Online services are an important aspect of many credit unions in Whatcom County and nationally. According to Martin, WECU was the first county credit union to go online about 1 1/2 years ago. In January 2000, 17 percent of its members used its “e-max;” now 25 percent use it.

Neither GAPAC nor ICU has online banking yet, but will in the near future, according to Jordan and McKee. GAPAC will offer it sometime this summer; its members have been requesting the service, says Jordan.

“We believe it is an investment in the future. Online banking enhances ICU’s product and service portfolio by giving our members convenience at their fingertips. That is why our plans are to have online banking tested and available to the membership during the first quarter of 2001. Our members deserve the very best,” McKee says.

She does not, however, expect online banking to “take the place of brick and mortar.” ICU will still maintain convenient branch locations throughout Whatcom County for those who want that face-to-face interaction.

“A computer program cannot take the place of a friendly, caring person,” McKee adds.