Evergreen Energy

A Washington state credit union turns its diminutive size into a demonstrable advantage.


A small credit union can be just as resilient and dynamic as a large one.

Calcoe Federal Credit Union ($17.8M, Yakima, WA) began as a credit union for a local plywood and sawmill. In 2004, the credit union opened its membership to the larger community and has since steadily grown its membership. It now fosters a loyal member base keen on Calcoe’s personalized service.

Despite the widespread hardships caused by the recession, the Yakima region forged through relatively unscathed. Because of the area's deep agricultural roots, people and businesses are accustomed to a 7-8% off-season unemployment rate, says Calcoe CEO Leslie Johnson. During the recession, unemployment hovered between 9-11%. Although the situation was less than ideal, Yakima did better than some of the region’s bigger cities. To the benefit of the community and Calcoe, area home prices remained relatively flat, with 3% variation on the average home in the area, Johnson says.

12-Month Member Growth

Click on graph to view larger size. | Source: Callahan & Associates' Peer-to-Peer

As the recession's grip loosens, Calcoe’s loan volume is turning the corner, and the credit union just posted its first positive loan growth in more than a year.

“Any growth we have seen has been due to my loan officers working to get loans from other institutions,” Johnson says.  The credit union doesn't use flashy gimmicks to entice members. Rather, it keeps interest rates stable and capitalizes on members’ desire to save money. “There is no magic to our loan growth," Johnson says. "We just try to make it [the credit union] more personable and a great place to do business.”

To reduce risk, Calcoe maintains conservative lending practices, which have helped it keep year-over-year delinquency unchanged at 0.93%.

Fostering stability is one half of the equation; generating income is another. For the past eight years, fee income has been one way to generate dollars. Over the years, the credit union has added to its fee schedule while still trying to keep fees lower than competitors, Johnson says. The strategy is working: Year-over-year ROA growth of 73 basis points (0.15% to 0.88%) indicates as much.

Annualized Total Income

Click on graph to view larger size. |  Source: Callahan & Associates' Peer-to-Peer

And of course, Calcoe remains vigilant about expenses.

“Efficiency is everything,” Johnson says. “We are expected to run like a billion dollar credit union with just seven people.”

Efficiency Ratio

Click on graph to view larger size. | Source: Callahan & Associates' Peer-to-Peer

To counterbalance demand, staff members at Calcoe rarely perform a single function. For example, loan officers and collections agents are one in the same at Calcoe. “They are all trained to multi-task,” Johnson says. “All of us wear many hats.”

Calcoe might be small, but its work illustrates not only the challenges a small credit union faces but also how to navigate the minefield of a difficult economy and come out whole on the other side.