San Diego Metropolitan Credit Union and Cabrillo Credit Union have entered into a rather unusual agreement. The two have decided to share the same retail outlets at two locations in the city, a decision that could make customers’ lives easier for each of the two, or which could make their customers’ heads do a collective spin.
Joe Schroeder, San Diego Metropolitan’s chief executive officer, is willing to give the experiment a shot. He said he wants to see if the value added for the customer outweighs the confusion sharing a single location might cause.
He doesn’t know if the experiment has been attempted in other parts of the country, but said it does save the cost of renting retail space for its customers.
“We’re around $300 million in assets and we’re trying to compete with credit unions and banks that are 10 times our size,” Schroeder said. “I’m smart enough to know that I can’t open five or six branches in a year or two, so I’m trying to get out of the box and figure out who I would try this with.”
He said he discussed the idea with Robin Lentz, chief executive officer of Cabrillo, who responded that she loved the co-branch idea, and the two decided to try it.
“I think a lot of people would say that they would never do it this way because it would impose on their own branch, but I think members are happier this way,” he said.
Currently, the Scripps Ranch branch of Cabrillo Credit Union and the Kearny Mesa branch of San Diego Metropolitan are identified to be used for the co-location experiment.
According to Schroeder, both institutions have agreed to pay each other $1 per month for rent when they share a branch.
Schroeder said that the two CEOs don’t fear competing for business inside the same building, and the two have an informal agreement not to engage in aggressive marketing to convince customers to switch.
“If I had to put together a list of my top ten competitors, Cabrillo doesn’t make it,” said Schroeder, adding that the same observation goes for Cabrillo.
Vice President of Marketing Linda Rossi said that the credit unions have more in common than not with their real competitors: banks.
“I think the reality is that most of us (credit unions) really compete with banks,” Rossi said. “We both had a discussion that if a new client walks in, we’ll make sure they go to the right credit union.”
Schroeder said that he’s willing to try other branch co-location agreements with any credit union that’s willing to do so.
“Real estate is so expensive that you can’t afford all the locations that your members want,” Schroeder said. “I want to give convenience to my member but not have to pay for all of it. I can’t guarantee that it’ll work, but I thought, ‘Hey, let’s try it,’ and the board of directors gave the go-ahead.”
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Celebrating A Milestone:
National City-based Neighborhood National Bank celebrated its 10-year anniversary Jan. 19 and plans to celebrate throughout the year with new programs and services, as well as various events.
President and Chief Executive Officer Bob Adkins said that the bank has two causes for celebration: One, being the one-decade landmark; and the other being that the bank closed 2006 boasting assets in excess of $100 million compared to $89 million in 2005.
“We have a dual mission,” said Adkins, reflecting on his bank’s position as a nationally chartered community development financial institution. “(The first is) one of banking; making a profit and growing. The other is to provide banking services to all underserved areas in the county.”
Adkins said that banking services for the poor primarily take form in small- to medium-sized business loans, targeting loans that provide expanded job opportunities for low- to moderate-income workers.
“(The borrower) can hire people from the community and provide goods and services for the community,” Adkins said.
On the deposit side, Adkins said that Neighborhood National is a member of a coalition of banks that can insure deposits above and beyond the $100,000 limit set by the FDIC. The mega-deposits are called Certificate of Deposit Account Registry service, or CDARS (pronounced cedars).
“We were the first bank to offer CDARS in San Diego County,” said Adkins, adding that between six and eight other local banks have since joined the club.
“Basically, we match deposits with other banks: If a depositor put in $1 million, in theory $900,000 of it would go to nine different banks, but it really wouldn’t leave our bank,” he said. “We would sort of trade deposits and, as for the individual depositor, the entire $1 million would be insured.”
The bank currently operates out of three offices in southeast San Diego, but as a federally chartered bank, the institution can expand into other states should it choose to do so, Adkins said.
However, Adkins said there are no immediate plans for new offices and the bank will focus on expanding current operations at existing offices.
“Our newest office in Spring Valley (which opened in August 2005) is relatively small and it’s grown rather well,” said Adkins. “This year, our goal is to relocate to a larger facility.”
Send any news about local finance to Andy Killion via e-mail at
. He can also be reached at (858) 277-6359.