Members May be Taking it the Safe Way at Safeway FCU

When asked what accounted for having 28.14% of total shares in IRAs, Dave Holmes, president of Safeway LA said it was dumb luck, explaining that 13 years ago, our sponsor group sold the division we represented to another grocery company and there were a lot of payoffs that rolled over to the credit union. The rate the CU offered then was higher than 10%, he added.

 
 

Safeway Los Angeles Federal Credit Union was recognized as one of the leading credit unions in IRA Accounts, ranking fifth on the list of Top 50 IRA Balances as a Percent of Total Shares (as of September 30, 2001) in the December, 2001 Callahan Report.

When asked what accounted for having 28.14% of total shares in IRAs, Dave Holmes, president of Safeway LA said "it was dumb luck," explaining that 13 years ago, "our sponsor group sold the division we represented to another grocery company and there were a lot of payoffs that rolled over to the credit union." The rate the CU offered then was higher than 10%, he added.

"We pay at market or better for IRA accounts," said Holmes. The CU is now offering 3.5% for a one-year IRA. "That's better than most S&Ls and sure better than Enron stock," Holmes added. As of January, the IRA share was 24%, at $20,071,000 which represents a drop from a high in 1995, when it was just over 28%, said Holmes. (Safeway LA has assets of $84 million.) Membership has risen due to SEG expansion to nearly 20,000 members from 7,000.in 1989. The vast majority of IRAs are from those Safeway employees, while loans are mainly coming from the SEG side, said Holmes.

Safeway's assets had been decreasing since the sale of the division, when the trend reversed itself in 2001 and the CU gained $2.5 million ($77,000 of it in IRAs) and has picked up another $1.2 million in IRAs so far in 2002.

"People are disheartened with events in the stock market," Holmes said; and he is well aware of the increased individual limit, which kicked in last month. "To $3,500, yeah, I know. We'll take the money," he laughed. Holmes recognizes the opportunity for credit unions in IRA accounts. "Members need a place to park their money that's safe." But Safeway LA doesn't do any direct mail marketing to attract IRAs.

Concerns over capital will kick in, he said, if the CU attracts more than $10 million in IRA money. "Our capital is now 12.93%, and if it goes below 10% we'll take action."

What is your credit union doing to tap into the IRA potential? Send your comments and especially your current & planned IRA strategies to callahan@creditunions.com. In addition we are also providing interested credit unions with a free custom IRA portfolio peer group analysis. Just fill out the form below and we will send it out to you.

 

 

 

Feb. 18, 2002


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