SANTA PAULA, Calif. — Nestled in one of California's many fertile farm valleys is Limoneira Company, a large produce ranch known for…you guessed it…its vast citrus groves. Limoneira is one of the nation's top lemon producers, and also grows oranges, specialty citrus, avocados, and row crops like strawberries and celery.

It's odd to think that WesCorp has an active presence in this agricultural environment, but the corporate is currently providing the company's unique credit union some simple financial guidance that could potentially determine the difference between survival and merger.

Credit Union Times joined WesCorp Account Executive Amy J. Rapp and Walter Laskos, director of Public Relations, as they visited the credit union and toured the farm.

Limoneira's 8,000-acre operation is every bit the modern agribusiness, but visiting the company is like stepping back in time. For one, Limoneira's headquarters building is an authentic 10,000 square-foot Craftsman-style building that looks more like an old movie set than an administrative wing. It faces the company's 80,000 square-foot packinghouse that's filled with modern equipment, but still retains signs of its 80 years in operation, like an art deco edifice and well-oiled, antique hardwood flooring.

Most interesting is that the farm is one of California's last remaining “ranchos”: not just a corporate farm, but a rural community built around one of the area's oldest and largest employers. Many of the farm's 280 employees actually live on company grounds, renting company-built homes in mini neighborhoods tucked throughout the hilly groves. The company is currently clearing ground to add another 200 homes on the property, providing even more affordable housing opportunities for employees in high-rent California.

Given all the recent publicity about illegal immigration, one could easily assume Limoneira employees are transitory male migrant workers.

They are not.

In fact, Limoneira employs many families, with husbands working in the fields or maintaining equipment and wives working in the packinghouse. Their children make up a significant percentage of students in the local Briggs school district.

And all are legal, many of them born of parents who also worked the groves.

Farming is a risky business, but Limoneira seems poised to not only survive, but flourish. The company has diversified beyond its successful agribusiness endeavors, leasing its scenic grounds and period buildings to the movie industry, and opening the property up for tours and corporate events. It also contracted out the harvesting of its produce, leaving the illegal labor and seasonal furlough headaches to third-party vendors. At Home With Limoneira Federal Credit Union

Next door to the hulking administration building is Limoneira Federal Credit Union, a $4 million, 806-member institution run out of an unoccupied employee home. Chartered in 1966, it still remains a single-sponsor, plain vanilla credit union.

Like many small credit unions, Limoneira FCU is a reminder of days past. Transactions are processed on a Mercury core system and the institution does risk-based lending, but Manager Marylyn Bruce is the institution's only full-time employee, acting as teller, loan officer and financial steward. Bruce has a couple of part-timers who help out a few hours a day, processing transactions and translating for Spanish speaking members, but for the most part, it's a one-woman show.

Despite its small size, the credit union has experienced healthy growth; in fact, assets doubled between 1995 and 2005. Still, Limoneira FCU lacks the economy of scale to offer all the products and services members want, like cash and checking accounts. Loans and deposit withdrawals are disbursed by check, which members must take to another institution to cash. And adding new services isn't just a matter of cost. The location of the credit union is also an issue.

“We've looked at [providing cash] several times, but there are so many security issues. With a lone person in the office, safety is a concern. And because everybody knows we're here, once word of mouth got around that we were carrying large amounts of cash, it would be so iffy,” Bruce said.

The manager also knows that online services are crucial in attracting young members, but cost makes those services difficult, too.

“You know, honestly, I don't know how many members would use it. Yes, the younger generations are more computer oriented, and they want to do their banking on the Internet at midnight from home. But we'd have to do some age group profiling or some type of member survey to see if the new services would be used enough to be worth it,” she said.

Make no mistake, Bruce isn't living in a bubble–the industry veteran has been active in league chapters and Shapiro groups for years and knows the slim odds of survival for a small, plain vanilla credit union like hers.

So when WesCorp Account Executive Amy Rapp suggested the credit union participate in the multi-corporate owned SimpliCD program, Bruce listened.

Rapp is a champion of laddering investments, strategically investing in CDs with maturity dates spread evenly throughout the year.

“Before, they were in very uneven investment increments, but we're evening them out into $100,000 lots. It regulates their cash flow each month and stabilizes their interest income. It's very simple, but it's a bread and butter type of process that can make a big difference,” Rapp said.

The SimpliCD program diversifies a credit union's CD investments, spreading them out among a variety of institutions in order to maximize returns and weather rate fluctuations. WesCorp tracks all investments for members, providing one simple statement that combines both WesCorp and outside certificates.

“We were able to get higher rates with SimpliCDs. It's really a good plan for your investments, because it helps you have liquid funds available. Before, we had to borrow off our CDs because they weren't coming due in time. I've already taken advantage of the program, using money to cover some recent large withdrawals,” Bruce said.

Rapp is also strongly encouraging Limoneira to gain low-income designation with the NCUA, which will provide opportunities to gain additional capital at low or no cost.

“It would help them become more competitive by allowing them to offer some new things. For small credit unions, capital expenditures are usually the biggest problem, often forcing them to pass on upgrading technology. This is something that could give them a competitive edge,” Rapp said.

Bruce said she would consider low-income designated status, so long as it benefits the credit union in both the short and long term. The manager questioned the wisdom of a credit union her size borrowing money for anything, knowing it would have to be paid back, possibly with interest.

“We'd have to be sure to invest in something that would produce revenue,” Bruce said.

Limoneira has received several grants, Bruce said, through WesCorp and the California Credit Union League.

“I've been successful every time I've applied for money–help is out there for small credit unions. Even with the small grants, a thousand dollars doesn't mean much to a large credit union, but it can buy a new computer, which means a lot to us. If you don't abuse it, don't ask for it every time you need something, and don't ask for a lot, you'll get it,” Bruce said.

Rapp said Limoneira FCU is a strong financial institution, given its financials and the stability and support of its parent company, and has a better chance of survival than even some much larger credit unions she works with.

However, succession planning is a problem for Limoneira as it is for all small credit unions. Bruce has managed Limoneira for 20 years, and although she has made no definite retirement plans, the industry veteran said she doesn't want to work forever.

Rapp said she sees succession planning as an issue for all small credit unions.

“It takes a unique person to run a small institution. Not only must that person have experience in all aspects of the credit union, it's also a challenge to provide a competitive salary and benefits package. Someday, Marylyn will want to retire, and they need to plan now for how they will make that transition,” Rapp said.

Bruce said she realizes the financial marketplace has changed, and each year it gets harder and harder to compete. But, the manager said she hopes small credit unions will survive, because the personalized service they provide can't be found much anymore.

“I think the uniqueness of the small credit union is that you really get to know your members. Not to say they don't do that in the large credit unions, but I think that one-on-one relationship is what makes small credit unions special. Members feel comfortable sharing their financials with you, because they know and trust you. Especially in a small area like this where everybody knows everybody, they don't want word to get around when there are problems. If you can provide that level of confidentiality, that's an advantage over the competition,” Bruce said. –ivanaknapp@gmail.com

Instant Insights /

How $4 Million Limoneira FCU Relies on Larger Players Like League, WesCorp to Improve Odds of Survival

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