SANTA ROSA, Calif.-For $2.1-billion Redwood Credit Union the recession did not bring the kinds of losses than plagued many CUs, but it did knock a hole in its normally robust lending portfolio.

Brett Martinez, president and CEO, told Credit Union Journal Redwood's biggest focus in 2013 will be on the lending area: "Not just loans by themselves, but driving growth through loans."

"We are performing very well in all areas, which is a good place to be in, but the area that changed during the recession was on the lending side," he said. "Our loan-to-deposit ratio normally is 95% to 100%, but it shrank to 76%. Our California peer numbers are 65% so we are better than some, but it is outside our comfort zone."

In response, Martinez said management is rethinking everything RCU is doing on the lending side, from automation to systems to people. He noted membership growth has been "very strong" since Bank Transfer Day, but he wants to focus on attracting new members through loans.

"This is a new strategy so we need to figure out how to do that well," he said. "We will be advertising and pre-approving non-members for loans. They get the loan and they become a member, and then we sell them other services. This is different from starting with the checking account."


Upgrading Technology

Redwood's other main focus in 2013 will relate to its substantial member growth-17% in 2012, Martinez continued. He said the rapid influx of new members has caused issues with infrastructure, so it will be "very focused" on upgrading technology in the year ahead.

He said a particular emphasis will be placed on integrating technology to get members to use it, while at the same time allowing RCU to gain efficiencies to offset the impact on infrastructure from strong growth.

Already, he pointed out, Redwood has replaced all of its ATMs with image-capable ATMs, the website was redesigned to be more interactive, and it added mobile banking and new phone systems.

"The next step is to get everyone, members and employees, using the technology for their benefit," he said. "We don't want to stop at 'build it and they will come.' We want to implement and integrate. Mobile banking that allows people to check their balances is one thing, but making transfers and capturing checks for deposits is more robust. In the first quarter we expect to add mobile deposit capture."

To get members and staff to use the technology, education in important, Martinez explained. He said the staff took pains to teach members how to use the new ATMs. By showing them what the new ATMs are capable of, and what benefits they bring, yields a greater connection, he said.


'Changing Way To Do Business'

"We want to use this same model with everything we are doing. We want to change the way people do business with us," he said. "Sometimes people don't like change or don't want to admit technology can be intimidating, so we will show them. A lot of people are using mobile banking and love it, but some say, 'I'm never going to do that on my phone.' That means it is an education issue. If we help them and let them know it is secure, then they'll use it."

Martinez believes "in general" market conditions are going to continue to improve going forward.

"We had an excellent 2012 and are budgeting for 2013 to be even better."

In its most recent Call Report, for Jan. 1 through Sept. 30, 2012, Redwood CU reported $23.1 million in net income, excluding a $1.7-million Corporate Stabilization assessment.

In 2011 it earned $18.6 million, excluding $4 million to the Corporate fund. In 2010 it had $9.9 million in net income, excluding $3.8 million in total assessments.

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