SAN DIEGO-Hundreds of credit union representatives from around the country will arrive here this week for CUNA's America's Credit Union Conference, availing themselves of the sun, the sea and the perfect weather.

Not many will realize they are also arriving in what may be the most competitive market among credit unions in the U.S. While CUs in San Antonio or Utah might object to that title, there's little debate that a market that is home to eight credit unions of more than $1 billion in assets, in addition to 17 branches operated by Navy Federal, can put a strain on cooperation.

In all, there are 34 credit unions operating some 133 branches in San Diego County, where credit unions have an 18% market share (see related chart). In this issue, Credit Union Journal talks to some of the biggest players about what it's like to compete here.

Teresa Halleck, president and CEO of $5.7-million San Diego County CU, said differentiation is the biggest challenge.

"San Diego is a challenging market, that is for sure," she said. "It is a great market, but financial institutions have to do something different to stand out. Everybody wants to be here, so there are a lot of large banks and credit unions. We all have commodity products, so it is difficult. But there is an opportunity to grow because it is a strong market."

Stan Abrams, president and CEO of $257-million San Diego Metropolitan Credit Union, described San Diego as a "hyper-competitive market" due to the sheer number of financial institutions represented in the area. But he also noted there is a spirit of helpfulness.

"I know most of the CEOs here and we have always had good business relationships," Abrams said. "I have not hesitated to call and ask for help and they have been very good at offering assistance. We reciprocate as best as we can. Everyone sees the benefit of collaboration, even if there is not anything formal."


CUs Compete... Sort Of

The big question is, do credit unions see each other as "competitors"? Or do they see the competition as being mainly against the many national banks that dot the landscape?

James Harris, CEO of $742-million USE Credit Union, told Credit Union Journal his view is that banks are the main opposition, but noted he also has to deal with CUs.

"Banks are the primary competition, from market share to product pricing," said Harris. "But yes, we compete with other credit unions on a field of membership standpoint with so many community charters."

San Diego Metro CU's Abrams emphatically agreed: "I think everybody is a competitor; it would be naïve to say we are not," he declared. "The competition is not a bad thing-it provides better services for consumers. We keep the banking industry here in San Diego very honest by not charging excessive fees. Competition is good because it keeps us focused on how to grow market share and continue to be strong."

Offering a counterpoint is Debra Schwartz, president and CEO of $2.2-million Mission Federal Credit Union. Schwartz said San Diego "is a big market, and credit unions have a relatively small share, so I think most of us think of the banks as our competition, not each other. I have no interest in taking share from the other credit unions. I have about 156,000 members, and I don't want to go after someone's 100,000 members when there are 3 million people living in San Diego County."

Marla Shepard, president and CEO of $1.7-billion California Coast CU, noted there is a third leg on the stool to worry about.

"Other CUs are definitely our competitors," Shepard said. "Credit unions, banks and even car dealerships are all trying to get the same business. It adds another element, but it does not change what we are doing."


Advertising Raises All Boats

One area of agreement among the CEOs in San Diego was that the market has a de facto "credit union brand" due to the critical mass of CUs here. Several of the larger credit unions do extensive advertising on television and radio, which the CEOs said has served to raise consumer awareness to levels not seen in most areas of the country.

"Being with a lot of strong credit unions is a plus because consumers know credit unions are a viable option with a full range of products and services. I see that as a real positive," said Mission FCU's Schwartz. "Because the credit unions in and around San Diego have a significant physical presence and an advertising presence, it helps all of us."

Added San Diego County CU's Halleck, "We are out there in the media a lot. We are visible and let people know if they are disgruntled we are top of mind. Us, Cal Coast and Mission are all on TV, so people are hearing about credit unions. The common theme I see is, 'We are nice people who will treat you well.' The small credit unions in the area benefit from the big three credit unions being on TV."

Halleck believes competition in the market will only increase. "The big banks want this area," she observed, "which is why Chase is building so many branches."

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