RIVERSIDE, Calif.-Lost among all the talk of growth strategies credit unions are or should be implementing is the fact CUs in some areas of the country are simply striving to eke out a small net income.

For these CUs, "growth" remains something of a future concept.

One example is $674-million Altura Credit Union, which is in the heart of the still-struggling "Inland Empire" region of Southern California, east of Los Angeles. CEO Mark Hawkins told Credit Union Journal Altura has seen its revenue decline for five straight years.

"We have plans to grow revenue, but we are budgeting as if 2013 will be the sixth consecutive year of declining revenue," he said. "However, we are hoping by the end of the year we will stop the slide."

In 2007, prior to the recession, Altura reported $7.7 million in net income. It lost $13.7 million in 2008, then lost $20.1 million in 2009 and another $5.8 million in 2010.

As reported in CU Journal ("Altura: Tough Decisions Start To Pay Off," Feb. 20, 2012), the turnaround started in 2011 with annual net income of $8.4 million and continued in 2012, with income of $17.49 million.

In Altura's most recent Call Report, from Jan. 1 through Sept. 30, 2012, it had $13.7 million in net income, excluding a Corpoate Stabilization Fund assessment of $589,445.

"In our neck of the woods things are still pretty tepid," Hawkins assessed. "We have strategies oriented toward growth, but not from a production perspective."


Five Areas of Initiative

Hawkins said Altura has initiatives readied in five areas: enterprise risk management, technology, product development, membership building and employee engagement.

ERM. Altura is looking to continue to balance risk and reward, he said, with the goal being sustainability. "We are working toward delivering revenue."

Technology upgrades. After four years of reductions Hawkins said Altura recognizes the importance of investing in infrastructure.

"We need to get our technology back up to speed," he declared. "We are in the final stages of rolling out remote deposit capture, we have refreshed our ATM network and are looking to replace all of them, and we are looking to replace computer equipment in our branches. We have a full list of things to get done, not all of which will be viewed by our members."

Product development. Given what Altura has been through in the past four years, including branch closures, Hawkins said the credit union needs to "re-engage" with members and deliver products they want. He cited the introduction of second-chance checking product "Reliance Checking" in 2012 as a success and said it is looking to expand on that move in 2013.

"We want to connect with people who were caught in the middle of the crisis, and now that things are getting better how can we help. This will be on the deposit side and the credit side."

Membership initiatives: Altura's membership has declined 20% over the past five years, so Hawkins said it is now focusing on building membership. "We have not been in the market as much as we have been historically, so we will be increasing our outreach," he said.

Altura serves the University of California's Riverside campus. The Riverside campus medical school recently earned accreditation. Hawkins noted there previously was no medical school in the entire Inland Empire region, an area of 5 million people, so the newly accredited program is a big deal for the area.

"It will have its first enrollment of students this fall, and with that we expect to see an increase in medical service industries nearby," he explained. "We want to get engaged in this in the very early years, with the expectation this could become a significant part of our service area."

Employee engagement: Altura wants to help its employees "dig out emotionally from what we have gone through," Hawkins said. "We are looking to get people re-energized, back feeling excited about what we are doing."

Hawkins noted Altura already brought back one closed branch and now has a nine-branch network, which he said "will have to be good enough for a while, until there is more evidence the marketplace has recovered."

The overall goal, he continued, is to be "well positioned" for 2014.


Resolving The 'Pain'

"For us 2013 will be an important year. We don't see much in the way of growth this year, but there is a lot that needs to be resolved from the pain of the last five years," he said.

While there is "increasing evidence" of improvement throughout the Inland Empire, Hawkins said it is not a "robust" recovery by any means.

"California has budget issues, which affects local government, school districts, community colleges and colleges, and the medical field, and all are under duress," he said. "Real estate values are on the way back up over the last 13 months, and are up 22% year over year. But when you have dropped 80%, it will take several years to get back.

"We are hopeful of better things to come, but are cautious," he added.

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