Spokane Media Federal Credit Union was founded during the Great Depression by the employees of the Inland Empire Paper Company, a paper mill that still operates today in the Spokane Valley. The 74-year-old credit union has a closed field of membership that includes select employee groups in newspaper, radio, television, and other media-related industries in Spokane, WA. Debie Keesee is the CEO of Spokane Media. She is also the vice-chair of the Northwest Credit Union Association and sits on the board of directors for CU*NorthWest.
Why do you think Spokane-area credit unions enjoy such success?
DEBIE KEESEE: The State of Washington has one of the best charters in the nation with fairly liberal field of membership laws and rules. Our state trade association worked hard to have a charter that strengthens credit unions and allows credit unions to determine their own destiny. If you are a state-chartered credit union, you can decide what field of membership you’re going to serve. If you want to serve the entire state, you simply have your board of directors say it wishes to serve all the school districts in the state, for example. If the board feels the credit union has the ability to open the field of membership, it has the authority to do that.
And you think that is reflected in what credit unions have been able to do in the market?
DK: I do. When we were able to achieve that type of a charter, I can remember being at a few meetings where the small credit unions were saying, “Oh, that’s it. We’re out of business because we won’t be able to compete with the large credit unions.” And I don’t think that’s been the case at all. It’s made a healthy environment for all of the credit unions within the state. We compete at whatever level we decide to compete. We’ve figured out what works for us, and we play to that niche.
Do you realize you're operating in a market that is really strong for credit unions?
DK: Our whole state is strong. If you look at the numbers from a state perspective, and that is something I do regularly, we always perform better than the nation in almost every category. Some of that has to do with the robust charter that we have that’s made it healthier for credit unions.
It also doesn’t hurt that we cooperate. When I talk to the credit unions from Seattle where, statistically, they have good numbers, there’s less a sense of healthy competition, whereas we look at it as we’re helping one another. We’re competing, but we play nice in the sandbox. The way the region is designed, there are a large number of people in a fairly small geographic area. We feel like a small town, and maybe that helps credit unions. Maybe the perception is different.
If we could put our finger on it, we’d bottle it and sell it to everybody else.
Tell me about some of the challenges you face as a smaller credit union in this market.
DK: We are fairly unique in that we’re in a downtown office building with no parking lot. So we don’t make it easy for our membership to get to the credit union, but people want to come here and do business with us. We participate in shared branching, but people still come in here. I’ll say, “Do you know you could go to the shared branch?” And they say, “We know. We want to come in here. We like doing business with you.”
You have only four employees. How do you divvy up responsibilities?
DK: I am fortunate that I have not hired an employee in six years, so I have long-term staff that is trained well. Everybody has to be able to know how to do almost everything. We have cross-training almost across the board. For example, I have two loan officers. So there are three, including myself, out of the five staff that can approve loans, and the back-office responsibilities are shared by several people.
Tell me about the loan market.
DK: People are more confident about making a purchase and obligating themselves to the debt, but they are still more cautious than they have been in the past. We had some loan growth last year. Then we lost a little of that growth and we are slowly gaining it back.
Our primary focus is on cars, RVs, and that type of thing. We do an excellent job at selling our short-term mortgages, primarily HELOCs. We don’t do a lot of 30-year stuff. We do a fabulous job at selling our Visa card program and balance transfers, as well. [Editor’s note: In first quarter 2012, Spokane Media’s auto loan penetration was 24.54% compared to 13.29% for credit unions with $5-10 million in assets, its credit card penetration was 20.02% compared to 4.0% for its asset-sized peer group, and its first mortgage penetration was 1.53% compared to 0.35% for its asset-sized peer group.]
Do you have balance transfer campaigns?
DK: For the past two years from April to June we did a balance transfer campaign for the life of the loan. Just doing the balance transfer program made people more aware of the credit card and we actually did more new credit cards than we did balance transfers. So it was doubly successful, even though we did not make our goal as far as the transfers.
We underwrote the transfers the same as a new credit card, and we didn’t make the assumption that if someone else had given you a credit card, we’d give you credit card. We don’t have a ton of losses in that particular program. The growth has been pretty rapid, and it makes money.
You have a solid marketing expense ratio. Talk to me about that.
DK: We do not spend a lot of money on marketing. We’re fortunate that our CUSO offers marketing plans that allow us to market very reasonably. We also talk to the members when they’re here and do more face-to-face selling, although we don’t sell to every member that walks in the door because not every member would qualify for a loan. [Editor’s note: In first quarter 2012, Spokane Media reached 25% of its potential members compared to 13.5% for its asset-sized peer group of $5M-$10M, and it had 0.63 loan accounts per member compared to 0.37 for its peer group.]
So you lean on your CUSOs. How else do you maximize what the credit union can do?
DK: We have a group of small credit unions that meets once a month for breakfast. We talk about all kinds of things, so that’s a great resource. We have our CUSO, which brings credit unions together if we want to collaborate to do some different things. All of those things are helpful for us. It’s tough to wear all the hats we wear. There’s no way to do it without help from other people. Here in Spokane, I know if I called any of the large credit unions and said, “I need a policy for interest rate risk. Can you share yours with me so I can adapt it for what I need?” they’d be willing to do that.
How do you adopt other credit union's policies to meet your needs?
DK: There are a number of rules and regulations that can be adapted. For example, financial education for board members. It’s fairly cut and dry, and it’s the same for everybody. How much you do for a $1 billion credit union is going to be different than what I do for a $10 million credit union, but there isn’t any reason why we can’t all have essentially the same policy that adds additional levels of learning or training for larger credit unions. The intent is the same. You have to educate your board members. Why would we have to write 10 policies? That doesn’t make any sense.
Now, there are a number of things that are specific to a credit union. For example, I might be able to share the template for my BSA [Bank Secrecy Act] risk assessment, but what my risk assessment is would be totally different than someone even across the street because my field of membership would be different and the way my members use us would be different. So you would have to adapt and change the policies to meet those guidelines, but again, sharing the template would be okay.
Spokane Media has a higher average member relationship and higher loan balances than other credit unions of your size. How do you encourage strong relationships with your members?
DK: We’ve always been a product-oriented credit union. There is almost nothing you could get out of a billion-dollar credit union that you cannot get at this credit union. But our expense ratios are higher compared to our peer group because of our diverse mix of products and services. It costs money to provide the services we provide. It’s the business choice we have made.
Is there any interest in expanding your field of membership?
DK: I would never want to grow just to grow. We had 17% growth last year. Our capital eroded as a result, but, again, that has always been a business decision. We’re going to provide these products and services, which means our bottom line is going to be impacted by the expense. I am 100% in favor of supplemental capital. We’ve been talking about supplemental capital in this state for probably eight or nine years. Supplemental capital would be fabulous for us if we did something as simple as saying our par value is $50.00. If you want to join, you put the $50.00 in. When you leave, you get the $50.00 back. That would be enough for us to be a little more comfortable.