If you're a vendor seeking a contract with FirstFinancial Federal Credit Union of Maryland, be ready to make anattractive–really attractive–offer.

President/CEO Rob Windsor watches expenses carefully, andnegotiates aggressively to keep an operating expense ratio of 1.4%,about half of what many peer credit unions have achieved.

“We're very good at that,” Windsor declared. “We look at everycontract we sign and we negotiate everything. We try to keep a lotof things in-house to keep expenses down. One thing that causes usto have very effective use of our employees is what we call ourcashless system.”

“We do not issue cash over the counter. If a member brings in acheck, they deposit the check, then based on our experience andrelationship with them they go to the ATM that's right there andwithdraw up to $100 of the check amount. Why would we want someoneto stand in line behind five or ten people just to get cash? Whywould we force our members to come here just to get cash?”

“Tellers can take time to solve whatever issues the member has.We do surveys on a regular basis and have a secret shopper program,and we are always in the top 3% of rankings.”

As for hurdles, he joins the chorus of credit union CEOsconcerned about regulations and the cost of compliance. Oh, yes,and competition is tougher than ever, spreads are tightening andinterest rates have been low for some time.

Windsor has worked in credit unions for more than 30 years, andhas seen people dig themselves into financial holes. So from theday he arrived at First Financial, he has supported programs suchas student branches to help young people before they could developbad financial habits.

A high school debit card program has been excellent, Windsorsaid. The card can be used by students, faculty and staff atseveral local high schools to make purchases at the dining hall andother on-campus locations.

At the same time, as a school credit unionFirst Financial's members have tended to be “a little frugal,”Windsor said.

“That's good for them, but not real good for our loans. Like alot of credit unions, we have to struggle to get loans out. Theeconomy has made people nervous about creating more debt.”

Reflecting time and budget pressures in schools, “We were goingto put in another student branch. We needed a supervisor for thatbranch. I will not put a student branch in a school without aschool employee who would do that for maybe an hour a day. Part ofa template we have that has worked well for us is that we havefaculty support.”

But nobody stepped forward, so the branch didn't open. Asimilarly guarded approach has prompted the credit union to movecarefully about pursuing business members.

“We looked at it some years ago,” Windsor explained. “I talkedwith a couple credit unions that had big-time programs. I realizedthat in order to do that I'd have to bring in a former bankemployee earning six figures.”

“I decided that's not our main function here. It's not apriority. We have a great situation here with our seniormanagement. We're all a team. Just for business lending, I did notwant to upset the apple cart by bringing in someone from theoutside who is used to a different philosophy and individualbonuses. I don't want to put people against each other.”

First Financial does participate in some business loans, butWindsor describes them as the lemonade stand variety, all securedwith real property.

Top management establishes priorities and asks supervisors toidentify goals that support those priorities. An incentive programis structured to pay frontline people with the highest percent ofsalary. At one time the rank and file did not even know there was astrategic plan. They do now and are told why those priorities wereset.

At the same time, the credit union has aggressively pursuedgreater share of wallet from members by rewarding those who makeFirst Financial their primary financial institution.

A Five Star membership program is available to members who signup for at least five services–checking, an active Visa credit cardaccount and on-line home banking and two other products or servicessuch as direct deposit, e-statements, an auto loan, a fixed-ratehome equity loan or a share balance over $20,000.

Five Star members receive an additional quarter percentage pointchecking account dividend, a 0.5% rebate on signature-based debitcard transactions, and a 50 basis point discount on certainloans.

Who is a typical First Financial member? Because of the link tothe school system, many members are well-educated but Windsor notedteachers don't get rich although they are middle-class. At the sametime, 47% of new members come from the families of existingmembers. First Financial doesn't actively recruit new SEGs, butwhen a SEG comes to the credit union they are welcomed.

After graduating from University of Baltimore with a degree inaccounting, Windsor worked as a CPA. Twelve years later he foundhimself burned out. He happened to be vice chairman of JohnsHopkins Federal Credit Union at the time the CEO was leaving.

The chairman told Windsor he was retiring and suggested Windsorbecome chairman. But Windsor decided to apply for the CEOs job, washired and it proved a good fit. In January of 1996 he moved on toFirst Financial as CEO.

“I've loved it. I've been able to do my analysis as I used todo, and I can also see the benefit of changes I've made,” hesaid.

Until some recent problems with his back, Windsor has been anavid tennis player and plays on the team of a country club where heis a member. He also golfs, and he and his wife like to travel.

“We've been pretty much around the world,” he noted. “We likecruising on the smaller ships, not necessarily those with 3,000 or4,000 passengers.”