No more coasting

No more coasting

Banking strategies by Mark Gordon | Managing Editor

As banks protect their turf, a Gulf Coast credit union seeks to be seen and heard on a greater scale.

Tom Randle says the credit union he presides over is equivalent to a gnat compared to just about every Gulf Coast bank, both those owned locally and nationally. Still, much to the chagrin of those banking leaders and executives, it's a typical gnat - annoying and persistent.

And now, Randle, the president and CEO of Sarasota Coastal Credit Union, is going on the offensive in trying to grab some more of the Gulf Coast market, including loans for certain small businesses - normally a community bank's lifeblood. The effort includes quirky new radio and television commercials touting the benefits and ease of joining Sarasota Coastal.

"It's time for us to be louder with our marketing," says Randle. "I think every man, woman and child should have access to a credit union. There is an alternative to the high-cost of banking."

Without reacting specifically to Randle and Sarasota Coastal, bankers, both in the Gulf Coast and throughout the state, have been just as aggressive in protecting their turf. Their main beef: Rules have changed in who can belong to a credit union to the point where merely being a resident of a county or jurisdiction is usually plenty. Yet the 70-year-old federal tax exemption given to credit unions and their members lingers on; Congress has reaffirmed it twice, in 1951 and 1998.

RBC Centura Bank West Florida Division executive Tram Hudson's succinct opinion mirrors that of many other bankers. Says Hudson: "Credit unions look and act like a bank. They should pay taxes just like a bank."

And Charlie Murphy, president and CEO of the Sarasota-based Bank of Commerce, says credit unions, especially a $1.6 billion dollar asset behemoth such as Tampa-based MacDill - which has a small presence in the Sarasota-Manatee market - are no longer simply performing the "common bond" style of banking they were set up for. For example, Murphy says, "Commercial loans are totally foreign to why federal governments set up credit unions in the first place."

Randle, 50, says nonprofit credit unions such as his are not the enemy - just a different business model, one that focuses on lower income customers such as fixed-income seniors and single mothers, as well as small businesses in the $2 million and under annual revenues category. The types of customers, Randle says, banks tend to ignore. "We haven't cut into their growth at all," Randle says.

As the theoretical debate rages on, both in Tallahassee and Washington, D.C., the example of Sarasota Coastal Credit Union getting aggressive in its marketing serves as a notice to banks that in practice, it's not going away.

Not just teachers anymore

Sarasota Coastal Credit Union's growth has been 50-plus years in the making. Seven Sarasota County teachers formed the original version of the credit union in 1953. The original certificate of organization totaled $130. The office was run out of a teacher's house and receipts were kept in a cigar box.

Within about 10 years, the organization had bought some property on Bee Ridge Road in Sarasota. It grew steadily over the next 20 years, both in new branches and new members. Eventually, the teachers-only union expanded to a mix of government and private sector employees and ultimately merged with other local credit unions. "All of a sudden," says Randle, who joined Sarasota Coastal in 1989, "we weren't just Sarasota teachers anymore."

The credit union currently has six branches covering markets in Manatee, Sarasota and Charlotte counties, with about 26,000 members. It has about 80 employees.

In the mid '90s, state rules defining who can be a member of a credit union were relaxed and that, combined with the mergers, led to more sustained growth at Sarasota Coastal. Indeed, in 1999 and 2000, Sarasota Coastal was one of the fastest growing credit unions in the country, as annual deposits and assets jumped 50%, from the $100 million range to the $150 million neighborhood.

Horn-tooting

Annual assets and deposits are approaching $250 million as 2006 winds down. Assets grew 12% in 2006 from the prior year, while deposits grew about 13%, says Randle. He'd like to see the credit union's yearly growth hover around the 8% to 10% mark.

Ranked by assets, Sarasota Coastal is the 37th largest credit union in Florida. Randle is cautions to make sure it doesn't grow too fast. Since his only reason to be in existence, he says, is to provide loans and other services for members, it would be self-defeating if the credit union's staff couldn't keep up with the growth. "We're not going to grow for growth's sake," he says.

Besides, growing as quick as a community bank isn't what Randle and the credit union is after with the latest marketing campaign. He's going for customer awareness: "Our biggest mission is to let people know we are here. We can't just build it and they will come. We have to toot our own horn."

For the tooting, Sarasota Coastal hired Sisti & Others and Design Marketing Group, two Sarasota-based branding and marketing firms. Work is already underway, with radio and newspaper ads highlighting, among other features, the ease in becoming a credit union member. (Sarasota Coastal ads have been published in the Review).

Randle says the credit union's annual $500,000 advertising and marketing budget was not raised for the campaign, it's just being utilized differently.

By the numbers

Selected Sarasota Coastal Credit Union financial numbers. Some statistics are from a perspective membership packet prepared in June.

GROWTH RATES

6/30/05 6/30/06 % Change

Total deposits 181,142,296 198,824,051 10%

Total assets 197,831,126 221,489,753 12%

Total loans 158,857,522 180,832,384 14%

Total surplus funds 26,442,904 25,687,654 -.02%

Total members 24,259 24,685 2%

ASSET QUALITY

6/30/05 6/30/06

Delinquencies/loans 0.1 0.1

Net charge-offs/average loans 0.3 0.2

Total borrower-bankruptcies 16 2

Bankruptcies per 1000 members 0.7 0.1

ASSET/LIABILITY MANAGEMENT

6/30/05 6/30/06

Loans/savings 87.7 91

Loans/assets 80.3 81.6

Long-term assets/assets 32.4 33.2

Core deposits/shares, borrowings 60.8 54.4

PRODUCTIVITY

6/30/05 6/30/06

Average shares/members 7,467 8,054

Average loan members 9,054 10,451

Source: Sarasota Coastal Credit Union, Credit Union National Association

A 'jungle eating' CEO

Tom Randle likes his perch behind the CEO desk of Sarasota Coastal Credit Union just fine. But if things turned out differently, he could have been behind the wheel of a bulldozer.

Before he began his 25-year career in executive roles with credit unions, Randle was part of a unique military squad whose sole job was to clear land in Vietnam. The troop, known as jungle eaters, had never been used before and hasn't been used since, says Randle, who technically served as a combat engineer for the U.S. Army from 1967 to 1970, with the last year in Vietnam.

Driving a fleet of 33 Caterpillar Crawler tractors, the squad cleared jungle terrain for several reasons: To eliminate enemy hiding spots; provide a path for American troops and open up trading lines.

After coming back to the U.S. and obtaining a bachelor's degree in business, Randle, 50, settled on the somewhat more staid career of money and finance. He worked with ITT Aetna Finance and then served in executive roles with the Government Employees Credit Union in Jacksonville and the State Department of Education Credit Union in Tallahassee.

Randle was born in Wisconsin and grew up in Greensboro, N.C. and Jacksonville. He began working for the Sarasota Coastal Credit Union in 1989.

Randle is a member of the Credit Union Executives Society and has been a member of the group's board since 1991. He also helped establish the groups' CEO Institute, a three-year training program for credit union executives.

-Mark Gordon