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SAN JUAN, Puerto Rico – It’s not just big credit unions that need to manage their growth. Well-run community development credit unions need to balance their growth pressures as well, according to two CEOs of rapidly growing CDCUs who addressed a breakout session of the National Federation of Community Development Credit Unions 30th annual meeting. Helen Godfrey, CEO of the $60 million Shreveport Federal Credit Union, headquartered in Shreveport, Louisiana, advised the breakout attendees to pro-actively plan for growth and not to focus too closely on the day-to-day business of managing the credit union. “Leadership and management are not the same things,” she told the attendees, noting that in some ways management, which tends to be concerned with keeping the status quo, can be opposed to leadership which is concerned with the vision of where the credit union is headed. Shreveport’s performance gives Godfrey a substantial platform from which to speak. With an ROA of 1.94 as of December 2003, Shreveport was 56th in the country when it came to ROA among credit unions over $50 million. And although the ROA fell to 1.89 in the first quarter of 2004, it still outstripped the peer average of .70 by 1.19. Other numbers also look good. The ratio of total loans to total shares, at 89.54, also outstripped the peer average of 65.05, as does the ratio of total loans to total assets at 73.07 compared to 57.17 for the peers. Godfrey stressed the development of member service as a key to increased profitability, including events that don’t cost much to do but which members appreciate. For example, when she returned to the credit union after the conference, Godfrey was scheduled to take the credit union’s teen-aged members on a field trip to the Federal Reserve Bank in Dallas, Texas, about three hours away. “Now we don’t charge them anything for the trip and we really look at it as a chance for them to get to know the CEO of the credit union and to interact with credit union staff and get some of their questions answered,” Godfrey said, adding that she did the same thing with all of the different cohorts of age groups that the credit union had. “It’s a small price to pay if it results in the relationships that generate the use of loans and other products,” she added. Ginger McNally, CEO of the $59 million Santa Cruz Community Credit Union, headquartered in Santa Cruz, California, told the meeting that her credit union had a slightly different problem. While Shreveport had success keeping its shares and loans balanced, Santa Cruz had found itself with deposits rapidly outgrowing other aspects of its business. “Our examiner has even joked with us that everybody loves us,” McNally said, laughing a little ruefully. “You could cut your interest on deposits to nothing and people would still deposit their money with you.” Since March of 2003, according to NCUA data, total shares and deposits at the credit union have climbed from just over $49 million to $54.5 million, an increase of over 11%. In fact, the credit union has adopted similar strategies such as cutting the interest rates on share deposits to 25 basis points and returning some large non-member, institutional, deposits in order to slow share growth and allow loan growth to catch up. “We were scheduled to return the Foundation deposit already,” McNally said, “but the Foundation had already let us know that we could have extended it if we wanted and it was just a little awkward to go to them and say, `you know, four years ago we really did need this money, but now we don’t.’ ” The grant maker was very sophisticated, McNally reported, and understood the credit union’s dilemma. McNally reported that Santa Cruz believed that its share growth had come as part of the flight to safety which had taken hold among investors as the nearby Silicon Valley went though economic hard times. But even though the economics had improved, McNally said the money was still coming and that the credit union had begun to question its understanding of the phenomenon behind the deposit surge. One possibility is that the credit union’s new headquarters, which had won awards for its environmental design, might have helped hike the credit union’s profile and helped draw the money. “ There is something about having the new building which signaled to people that you are really solid and stable and a good place to put their money, “McNally added. McNally added that the credit union’s loan growth had been slowed as it focused on working to serve the members through its new Watsonville branch. The Watsonville branch serves a predominantly lower income and Hispanic membership in the southern portion of Santa Cruz county and McNally reported that building the bridges into the community that would allow the credit union to make more loans had been slow to develop. “That branch had been a goal for so long,” McNally said, “and something that we worked toward that no one really considered how significantly it might impact our operations.” -

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