Redwood Credit Union named best in the nation

Credit unions aren’t flashy. There are no quarterly earnings reports or big baseball stadiums named after them. They typically don’t make a lot of news, even though the nonprofit industry grew by 3.6 percent in 2014, its largest gain in 20 years.

So when officials at Santa Rosa-based Redwood Credit Union were examining how to better promote services it has been providing around the North Coast for 65 years, they didn’t see the need for a massive overhaul.

Through focus groups, surveys and meetings, executives struggled. Finally, inspiration struck, and a slogan was born: “We love to help you succeed.”

Redwood’s marketing job may have gotten a little easier, as the 242,000-member cooperative recently was named the best of the nation’s approximately 6,100 credit unions in an analysis by North Carolina-based Glatt Consulting. The firm, which does not have Redwood as a client, used 11 areas to rank credit unions, including net worth, return on assets, loan charge-offs, deposit growth and ratio of loans to deposits.

“We didn’t look to rebrand … We were looking to articulate our brand,” said Brett Martinez, Redwood’s chief executive officer. “We knew we had a really strong brand with our membership growing.”

Tom Glatt Jr. said Redwood is a healthy financial institution that ranks very highly on his scorecard, while having a good management team that serves members well, but not at the risk of safety and soundness.

For example, Glatt said he recently met up with a member from Redwood’s technology team at an industry conference. He noted how few other credit unions have their own in-house technology staff, preferring to outsource everything to third parties.

“They’ve actually taken upon themselves to look at their members and respond to them and their needs,” Glatt said.

Martinez said Redwood has placed an emphasis on its technology offerings for the past six years, responding to the rapid growth of desktop and mobile banking, especially used by younger members. But what Redwood found was that while it needed techies, it also had to have customer services representatives to explain the technology to customers.

“It’s not something where if you build it, they will come,” Martinez said. “You have to build it and show them how to use it.”

Redwood still is benefiting from customer growth from those who got fed up with large banks in the aftermath of the 2008 financial crisis, spurred by Bank Transfer Day on Nov. 5, 2011, declared by organizers of the Occupy Wall Street movement.

Given their nonprofit status, credit unions typically are able to return profits back to their members through lower loan rates and higher interest on accounts, rather than back to shareholders. Like banks, they also have National Credit Union Administration insurance that covers up to $250,000 per account.

That message especially has resonated in the politically progressive North Bay. Redwood’s growth has increased by 18,000 members from 2012 to 2014, and its assets climbed from $2.1 billion to $2.5 billion during the period.

“We’re not here to make a bunch of stockholders rich,” Martinez said. “We don’t do anything unless our members ask us to do.”

But it still operates like a business. For example, last month its insurance subsidiary bought Sonoma-based SST Insurance Brokers to serve as an in-house broker for the credit union, which also offers auto, home and commercial insurance products to its members through a network of outside brokers.

Those services complement Redwood’s mortgage and auto lending business. Its loan balance has risen to $1.83 billion at the end of 2014, about a 20 percent increase over two years. It is especially noted for its one-stop auto service on Santa Rosa Avenue, where a customer can buy a new or used car without haggling, finance and insure the vehicle, plus do all the DMV documentation.

Redwood receives a lot of referral business from its auto services program, which Martinez says is because Redwood’s approach is less stressful than traditional car buying.

“Our goal is not to sell you a car. Our goal is to get you into the car that you can afford and a good loan that you can pay back,” he said.

One area that concerns Martinez are those who do not use financial institutions or are underserved, many of whom have to rely on more unscrupulous predatory lenders.

The FDIC reported in October that so-called unbanked households declined from 8.2 percent in 2011 to 7.7 percent in 2013, while underbanked households were relatively unchanged at 20 percent.

“It frustrates me that are people are being taken advantage of. … I see that when I am driving by these check-cashing places,” he said. “It’s frustrating because we are here. … Our door is open.”

Some credit unions have sought to expand their customer bases by offering alternatives to such payday-oriented loans.

The U.S. Consumer Financial Protection Bureau has proposed rules to rein in the $46 billion payday industry, but Ben Rogers, research director for the Filene Research Institute, which studies credit unions, noted that some credit unions are concerned their safer products may get lumped in with more predatory ones.

“Like any business, they are afraid that they can get caught up in a big net,” he said.

Rogers said some of credit unions’ problems in recruiting members is that they were mostly created as banking institutions for employees of large companies or government, as well as their families. As a result, outreach has been more limited within communities than traditional banks. In addition, credit unions don’t have the brand recognition of Citibank or a Wells Fargo.

“It’s like people on a dating website: They would be perfect for each other; they just haven’t crossed paths yet,” said Rogers, whose group receives funding from some credit unions.

EDITORS NOTE: This story has been updated to remove an incorrect reference to the agency that insures credit union deposits. Credit unions are insured through the National Credit Union Association.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.