SAN FRANCISCO-SF Fire CU says one lesson the financial crisis has really taught it is the importance of a diversified loan portfolio.

"Firefighters make great incomes in San Francisco, so our real estate portfolio made up about 70% of our entire loan portfolio and had never had a delinquency of more than 30 days in 50-some years," said Richard Smith, SVP of member experience here.

The recession and all its effects on workers, spouses' incomes and home values, however, has made it clear to SF Fire that it needed to build a broader loan portfolio.

Delinquencies on SF Fire's real estate portfolio rose to $7.3 million at the end of 2009, from $379,000 just two years earlier. It has since seen a decline in delinquencies.

As a result, SFFCU has placed greater emphasis on its Moneyline feature in online banking, which pre-qualifies members for secured and unsecured loans up to a specific amount, while also working with car dealerships to build up indirect lending business.

Nevertheless, real estate is still the #1 game at SF Fire, and Smith said that "with rates as low as they've been, I need as many real estate loan processors as I can get."

The objective is to get to a 60/40 blend of real estate and consumer loans within the next year, he said, as the $785-million, 38,700-member credit union continues to sell off parts of its portfolio to the secondary market.

Another lesson: keeping costs down. "We're definitely needing to be very aware of expenses," he said. "Our expense ratio is great right now-it's below 2.5%-so cutting expenses is a challenge when we run such a tight ship already."

SF Fire is extraordinarily fee averse, said Smith, and rebates extensively. One change it has made, however, has been to limit the number of rebates on foreign ATM transactions to 12 per month.

"That was a big decision for us, because we're all about the convenience of the member," said Smith, but that decision alone has saved the CU more than $10,000 per month.

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