SAN JOSE, Calif. - When Silicon Valley Credit Union merged withMeriwest Credit Union late last year, it seemed like a perfect fit.It was the largest of the three mergers Meriwest has completed inthe past 10 years. SVCU, with 5,000 members and $80 million inassets, was right in the middle of Meriwest's geographic area.Membership demographics of the two credit unions were very similar.Managements of the two credit unions shared similar approaches."Operationally, the merger went very, very well," Chris Owen,Meriwest president/CEO says. "It was a win, win for both." Oh, yes.The merger pushed Meriwest into the Billionaire's Club. Are localbanks sitting up and taking notice? "Not yet," Owen says. "I'm notsaying it's not coming. I think the train is going to pull into thestation at some point. Any organization needs to grow and anyorganization needs a market in which to grow. "We've been growingat seven to nine percent a year. In the credit union market, andprobably as well with banks, it's been pretty severe the pastcouple years in terms of both growth of membership and growth ofassets. "The merger last year let us grow at actually an abnormalrate of about 11 to 12%. But we had been growing before that. Wecontinue to do well. The outside forces are the outside forces.We're focused on our business. We've got to make sure we maintain ahealthy profile and keep delivering credit union products andservices to people that want them." Owen has been Meriwest CEOsince 1995. After graduating from Franklin Pierce College inRindge, N.H., with a BA in finance, Owen joined JPMorgan and workedin both New York and San Francisco, primarily in internationalbanking. After 13 years he left JPMorgan for a job with Westpac,Australia's largest bank. Westpac was moving into the U.S. withoperations on the West Coast, and hired Owen as essentially theirCFO to get things underway. He was there eight years. Then Westpacrethought its approach and shrank its U.S. presence. Owen startedlooking around and happened to see a newspaper ad for the CFOposition at what was then Pacific IBM Federal Credit Union. Hejoined the credit union in 1991 and became CEO in 1995. "What I didon day one was split the credit union into two major pieces," herecalls. "Product and service delivery is under the chief operatingofficer and essentially has four departments. Product and servicesupport, which is another four departments, is headed by our CFO."Also reporting directly to Owen are the president of MeriwestMortgage and the human resources head for the entire organization.As far as Owen is concerned, moving into the Billionaire's Clubranks has been a matter of simply doing the right thing. WhenMeriwest was Pacific IBM, it perhaps took certain things forgranted, such as a common employment or occupational bond amongmembers. When it switched to a community charter, it not only hadto change its name, it had to focus on core competencies andprepare to compete with Wells Fargo and other financial giants.Simply by the fact that it was a credit union, Meriwest wasmember-centric. It wanted to hold onto that bond. Managementfigured if they could retain that intimacy, members and prospectivemembers would join and stay. That doesn't mean change isn't afactor. "It changes every day. Every day someone is coming up witha new thing. We really have to work hard to make sure theexperience of dealing with Meriwest is the best we can make it,"Owen says. Success has also meant dealing with changes in the localeconomy. "We have a little bit larger area, but Silicon Valleyspecifically had unprecedented growth in the late `90s," Owennotes. "Then the bubble burst and there were a lot of vacantbuildings that were never filled. That certainly has come backagain." In 2002, 90% of IBM's operations in the area were sold toHitachi. If Meriwest hadn't already moved to a community charter,the sale would have posed a big problem. Meriwest hasn't beenalone. Owen estimates more than 50% of local credit unions,particularly the larger ones, have adopted community charters. Evenwith about half of Meriwest's membership still having IBM ties,Owen sees changes in the membership. Those changes, he explains,primarily reflect changing lifestyles. As a result, "For the pasteight years we've been building branches very differently. WellsFargo had people in taking photos before we figured out who theywere and chased them out. Our new branches don't have teller lines.The member service representatives are more out on the floor. We docash checks and make loans, but the branches are learningexperience places with Internet cafs where you can learn how to doonline banking," he explains. But with so many IBM people and otherSilicon Valley groups in the field of membership, aren't membersmore tech-savvy than average? Five years ago, Owen answers, theadoption rate of new financial services approaches by Meriwestmembers might indeed have been above average. Today the rest of thenation is catching up. It's less of a standout factor. Dealing withMarket Pressures For credit unions in general, he continues,membership and asset growth have slowed dramatically. At the sametime, in order to maintain economies of scale, Meriwest wants toreduce-or at least increase at a slower pace-operating expenses.It's hard to compete, Owen stresses. Technology is expensive.Community charters are hard to administer. The yield curve is flat.Margins are narrow. "We're probably watching every penny much moreso than we have in the past 10 years," he states. Off the job, Owenplays a little golf, but his real passion is sailing. He has a34-foot Catalina, which he races in one-design competition on SanFrancisco Bay. "It's always a thrill," he declares. On the job, heenjoys seeing members acquire new cars and homes and send theirchildren to college thanks to financial services from Meriwest. Healso likes watching managers grow professionally, and takes pridein the credit union's community involvement. Specific projectsinclude fixing up the homes of autistic children and working withthird grade students to improve their reading skills. "At myadvanced age of being in my late 50s," he quips, "that's bringingme more and more satisfaction." [email protected]