Railroad Ties Run Deep

Numerica, a railroad credit union, has turned into an economic engine for Spokane and its surrounding communities.


Regardless of name, membership, or charter changes, one thing has remained constant at Numerica Credit Union: Its commitment to its members and community. That commitment is especially evident in its activities during the past few years.

Numerica Credit Union ($1.2B, Spokane, WA) was founded during the Great Depression as Spokane Railway Credit Union. In order to remain a vital resource for its surrounding communities, the credit union expanded its field of membership to include companies that shipped or received goods by rail or truck. In the early 1990s, the credit union converted to a community charter for the state of Washington as well as the five northernmost counties in Idaho. In 2000, the credit union undertook a major rebranding campaign that included a name change. Numerica Credit Union was born.


“We were fortunate to go into the tough economic times with great capital and great earnings,” says Numerica Credit Union COO Jennifer Lehn. “That gave us some room to do things other institutions, particularly the local banks, could not.”

The area lagged behind the national downturn by a year to 18 months. When the area started struggling with layoffs and job searches, more Numerica members started launching their own small business to solve their employment woes.

“We became very active in small business lending,” Lehn says. “And when I say ‘small business loans,’ I mean loans that are at a level most banks are not interested in.”

Numerica makes small business loans that can range from $5,000 to $50,000, just enough to provide relief to purchase equipment and cover payroll or inventory for many businesses.

“Being in the small business market, which is not served by the banks, is a great way to stimulate economic growth in Spokane,” Lehn says. “Our losses have been manageable because we lend only in our area and we lend to people we know.”

The credit union has approximately $150 million in business loans. Some of those come with a government guarantee, some do not. Many — because of size, circumstance, or collateral — would have proven difficult to secure financing at an institution with more mainstream parameters.

Providing loans, or granting access to credit, is an essential role of credit unions, and it is one Numerica takes seriously.

“We’re a great lending organization,” Lehn says. “We’ve historically led with a loan. Our strength has been in collateralized loans. We’ve had to get good at doing loans for things like boats, RVs, ATVs, and all those things people need to enjoy the beautiful outdoors in Spokane.”

Four Pillars Of Lending

When it comes to granting credit, Numerica focuses on its four pillars of lending: retail lending, the dealer center, mortgage lending, and business lending. The credit union considers each segment of its lending portfolio independently of the others.

“We focus on having all four of those lending arms working to the best of our ability,” says CFO Cindy Leaver. “By looking at them individually, we can determine if we are where we want to be or do we need to do better. This year, we’re on target to make more than 9% loan growth.”



The credit union considers itself a leader in auto lending, according to Jane Ronnfeldt, vice president of marketing. On April 17, great rates and great prices came together to help the credit union book 64 loans totaling $1.6 million through its dealer center, the largest single day since the credit union launched the center in the first quarter of 1993.

The dealer center is Numerica’s indirect lending channel and through it the credit union works with more than 100 dealers. Unfortunately, the success of the dealer center means Numerica must contend with its fair share of single-service household relationships.

“Our core products per household are not as high as we would like,” Ronnfeldt says. “When you’re running as many auto loans as we do annually, all those people come in as single-service households. We’re trying to find ways to build those relationships.”

Last fall, with the addition of new CEO Carla Altepeter, Numerica redoubled its focus on converting those households. It currently converts about 27% of its single-service households, but according to Ronnfeldt, its goal is to hit closer to 35%.

“The problem there is we’re feeding the beast,” Ronnfeldt says. “Every time you move one household, you’ve added another.”

Nickles, Dimes, And Thousands Of Dollars

Numerica is always on the lookout for places it can tighten its budget.

Its efficiency ratio of 65.53% was better than its asset-sized ($1B+) peer group’s 72.23% for first quarter 2012. For the first three months of the year, it dedicated 4.62% of its total income to office operations compared to its peer group’s 9.7%. For salary and benefits, Numerica dedicated 32.25% compared to its peer group’s 26.51%. And overall, at 2.93%, its operating expense ratio is five basis points higher that its peer group’s 2.88%.

“We pay attention to where we spend our money and make sure we’re getting the most out of it,” Leaver says.

When the credit union started seeing the effects of the economic downturn, from corporate write-offs to NCUA assessments – it created a staff group called We All Can Make A Difference (WACMAD) that gathers employee suggestions for how the credit union can operate more cost efficiently. Ideas have ranged from using outdated marketing material for scratch paper to larger changes that offer significant savings.

“Even though we ran pretty lean, when we started looking under rocks and couch cushions, we found things that weren’t as efficient as they could have been,” Leaver says.

Programs like WACMAD allow Numerica to evaluate where it spends money and identify areas it wants to invest more in, such as marketing, staff, or IT.

“We can decide things like, if we’re going to invest some money in our membership, what is the best way to do that,” Leaver says.

Using that strategy, Numerica is implementing a few changes in 2012. It is positioning itself to better serve members now and in the future through investments in ATMs with image capture capabilities and mobile technology.

“We recognize the younger demographic is interested in those types of things and we want to continue to be there for our members,” Leaver says.

What Members Want

In 2007 Numerica kicked off its “What Do I Want” campaign that positioned the credit union as a provider of solutions, not products. For example, in one ad a member — who was a real member — wanted safe transportation, another wanted a nice place to cook. The end result was a new car and a remodeled kitchen, but the means to get there was a car loan and a home equity loan. The campaign featured five women and one man, which represented the credit union’s demographic at the time and reinforced its strategy to reach out to women.

“That campaign set us on a course to focus on women,” Ronnfeldt says. “We’re seeing more heads of households come in.”

The campaign helped the credit union build its reputation as a financial institution that was welcoming to women. The credit union conducted its due diligence in regard to research before it launched the campaign, relying on focus groups, paper surveys, and phone surveys to determine its brand in the market.

The credit union interviewed members — including a businesswoman, a stay-at-home mom, an older couple, and a Gonzaga University student — and pulled snippets for the campaign.

“It made us friendlier, a little more approachable,” says Ronnfeldt. “Up until that time we were seen as a railroad credit union.”

In the past five years, the credit union has added more than $400 million to its assests and increased its net worth by 62%. In that time frame its total capital has nearly doubled.

“Numerica is about providing more than service,” says Anthony Tschache, a market research analyst at Numerica. “The community sees us and gets behind a lot of our goals and aspirations.”

Market Competition

The credit union considers a number of factors in its strategic decision making, including what is going to differentiate Numerica for its members as well as what its competitors are doing.

“Credit unions are our main competitors in terms of members,” Leave says. “Two of the largest in Spokane are both community-based, so there’s a lot of overlap.”

Numerica keeps its finger on the pulse of the industry as well as its local market. Because Spokane is a different kind of market, one in which credit unions consistently turn out strong performances, understanding how its competitors are faring helps Numerica identify its own areas of focus.

“We look at the competitors that are right here in Spokane because we know they’re playing in the same market,” Leaver says. “We look at institutions that have strong financials, consistently strong growth in members, shares, loans, consistently strong ROA, those types of things. It holds us to a higher standard if we compare ourselves to strong, best-in-class credit unions.”

Its local competitors inspire Numerica to constantly improve and strive to serve its members better. To do that, the credit union considers variables that provide a deeper analysis than absolute numbers. For example, it looks at trends to evaluate how it has performed over a given time period.

“You can tell a lot from the slope of a line,” Leaver says. “Whether we’re falling behind or catching up. Sometimes, just a point in time can’t provide that.”