With all the changes, Visterra has been sought out by credit unions as merger partners. In April, the $35 million Raincross Credit Union, which served 6,300 members, merged with Visterra. Hale said like many, Raincross faced the harsh reality that it did not have the wherewithal to continue on. In a letter, Raincross members were told "we face the same technological, administrative, research, and development expenses as a larger financial institution, but we have a much smaller base over which to spread those costs."

"The management and board saw the handwriting on the wall," Hale said. "They had difficulty offering the bells and whistles to members and they just lacked economy of scale."

That merger, along with two others over the decade, has helped Visterra grow its membership to its current 40,000-plus membership. The credit union recently opened a new branch acquired through the Raincross merger and another center is scheduled to open in Moreno Valley later this year. Visterra rode the indirect lending wave that rushed in a few years ago as did other credit unions, Hale said. Twenty-four percent of members are indirect. Visterra was among the first credit unions to bring CU Direct Corp. (CUDL) to Riverside County and the partnership has paid off, he added. At the end of June, 550 new indirect members joined Visterra.

"It's been a very successful program for us. There have been some learning curves," Hale said. "For the past several years, we've looked at indirect lending as a separate portfolio but lately, we've been having second thoughts."

For one, Hale explained, there are other products that can do a better job of establishing more "endearing relationships." Secondly, if a person closes a deal at a dealership but they don't live anywhere near a credit union branch, it's been very difficult to establish a relationship. So, it resorts to coming up with ways to get that person to come to the branch on a recurring basis, Hale said.

"Instead of drawing a hard line in the sand, I think we can be a lot smarter and pick things that are distance sensitive," Hale said.

New Products, New Members

One example that has worked to grow membership is Visterra's Visa Platinum Reward card. Rolled out a year and a half ago, more than 1,800 members have signed on for a total balance of $5.3 million. Members can choose either a low fixed interest rate of 11.40% annual percentage rate with no annual fee or a fixed interest rate of 7.99% APR with a $25 annual fee. Either choice earns reward points with every purchase.

In the spring, Visterra launched its Vantage money market account. It has a tiered yield and even though the minimum to open is $25,000, 76 members have parked $5.6 million in the accounts, Hale said. Another new offering is the Vantage checking account, which pays higher yields and other perks for those who keep a minimum of $10,000 in it. Nearly a dozen members have parked a total of $89,000 in the new account.

"We're trying to do whatever we can," Hale said. "We did the [Vantage checking] because we hear members want to keep liquidity but don't want to go long. We, like everyone else, are concerned about spread and we've always been competitive in this market for share certificates."

Don't think for a second that growing membership has been a cake walk, Hale emphasized. Over the last two months Visterra has lost 230 members. The main reasons? Members relocating and no branches in the area where they live. Visterra does have partnerships with the CU Service Centers Network and the CO-OP Network, but again convenience is key for many members.

"One of the challenges I can't get my arms around is how to retain membership," Hale said. "We need to stop the bleeding instead of putting a band aid on it."

To help to ease the lack of retention pain, Visterra launched a membership campaign on June 15. New members will receive five tickets just for joining plus additional tickets for each product opened. Existing members will get three tickets for each new member they refer who opens a new membership with a qualifying product, as well as additional tickets for each new account opened. The tickets are entered into a drawing for a 2007 Chevrolet Cobalt, a LCD television, $500 applied to a Visterra Visa card, and a barbeque grill. The credit union is also holding monthly drawings for five vacation packages. So far, 40 new members have joined and another 200 members have come through the indirect lending route via the campaign.

To help those who are finding it hard to open a checking account, Visterra is also offering a "second chance" alternative. Two months in, fourteen members have signed on. Hale calls it a niche that more credit unions should consider to grow membership and help those to re-establish credit.

Competition in Riverside County and Southern California for that matter, is fierce and tight. In addition to Bank of America, Wells Fargo, Washington Mutual and now Wachovia, community-chartered credit unions are going head to head. Hale said the scramble for members has unfortunately pitted some credit unions against each other.

"One of my concerns is as credit unions go community charter, you start to look at your friends as competitors," Hale said. "It really diminishes cooperatives. Our goal is to stay on the high ground. We don't purposely go after another credit union's members but we won't turn them away either."

Many people who move to the area already have accounts at national banks like Bank of America and Wells Fargo and the "last thing they want to do is think about changing all their accounts" to another local financial institution.

"Our potential members belong to big banks and have yet to learn a credit union has their best interests at heart," said Hale, who wishes there was a wide scale branding campaign especially since the serious decline in credit unions should be of "major concern" across the industry.

"As we get smaller in numbers, our appeal gets weaker with legislators," Hale lamented.

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