The Golden 1 is not the competition

I enjoyed reading the Letters to the Editor ("Better for whom?", "Enough is enough") in the May 3 edition of Credit Union Times. I know Stuart Perlitsh and George Davis to be thoughtful CEOs; therefore, I was a bit surprised that they had joined the chorus of Cassandras who fear credit union competition. The issue of credit union competition is wildly exaggerated. I do not know whether Mr. Perlitsh and Mr. Davis know the competitive effect of The Golden 1 on their credit unions. I recently performed a study of SAFE Credit Union's competition, however, and would like to share that information with them. SAFE Credit Union is in The Golden 1's primary market area. SAFE and The Golden 1 compete for both the SEG market and the community credit union market. I think the following information dispels the myth that credit unions are major competitors for other credit unions. The Raddon Financial Group surveyed SAFE members in the Spring of both 1999 and 1998, and asked them to name their primary financial institution. SAFE was listed as primary financial institution by 49% of our members in 1999, versus only 44% in 1998, while 21% of SAFE members listed Bank of America and Wells Fargo Bank in 1999 versus 24% in 1998. The credit union most often listed by our members, The Golden 1, was selected by only 2.5% of members in both 1998 and 1999. I believe the member survey results support the conclusion that even in a market served by very competitive credit unions, there is plenty of opportunity for growth from banks that have alienated the consumer. The Golden 1 has 23 branches in SAFE's market area; SAFE has 10 branches. The Golden 1 advertises heavily in the local media. The Golden 1 has the largest local employers in its field of membership. It has a community charter for all of the local counties, with a potential local membership of two million members. It prices its shares and loans very competitively. Despite all of those advantages, The Golden 1 holds a relatively small primary share among SAFE's members. I encourage Mr. Perlitsh and Mr. Davis to stop worrying about The Golden 1. The large banks still have the bulk of the market share. Why? SAFE's member survey clearly points to branch convenience as the one factor most likely to determine market share. Our member survey indicates that our members want convenient locations. The three most frequently cited reasons members keep their deposit balances elsewhere are based on branch convenience. Branch convenience is also important for loans (members cite inconvenient branch locations as the number one reason they do not borrow from SAFE.) The key for credit unions is to out-local the big guys and out-big the local guys. If location is as important as our research indicates, local credit unions should be able to have better locations than those of an out-of-town credit union. Competition from other credit unions is much more desirable than bank competition-at least the members are benefiting and the money stays within the credit union movement. A credit union that fears competition from other credit unions is probably already losing market share to other financial service providers. Competition does not preclude cooperation. We cooperate on many different projects with The Golden 1. The Golden 1 has done much to make the credit union system better. One last thought for Mr. Perlitsh and Mr. Davis: Be thankful that The Golden 1 has chosen to do business in 21 counties. Most of the credit unions it will overlap in membership will be 21 times more focused. I like those odds! Henry W. Wirz President SAFE CU