Correction: An earlier version of this story said that Bank Transfer Day was associated with the Occupy movement. Although the Occupy movement supported the values of Bank Transfer Day, the two movements are not formally associated. Bank Transfer Day was founded by Kristen Christian, originally of Arroyo Grande.
SESLOC Federal Credit Union was founded in 1942 with 32 members as a way for local public educators to pool their savings.
Now, 70 years later, it has more than 34,000 members of all professions, four branches across the county and plans in the works to build a 40,000-square-foot operations center and branch on South Broad Street in San Luis Obispo by 2014.
A credit union is a member-owned nonprofit, designed to provide lower interest rates and fees to its members. SESLOC has a volunteer board of seven members.
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Key changes led to SESLOC’s growth: In the mid-1950s, the union was opened to Cal Poly employees. In the early 1980s, credit unions were approved to provide increased financial services, including checking accounts. In 2001, federal regulators gave SESLOC a community charter, which meant it could serve any member of the public. And in 2011, “Bank Transfer Day” brought public and media attention to credit unions as alternatives to traditional banks.
As of June 30, SESLOC reported a net income of $1.5 million, compared with $713,000 during the same period a year ago — a jump that President and CEO Geri LaChance attributes in large part to Bank Transfer Day.
But SESLOC has not been immune to challenges. It had to dig deep into its capital in 2009 when the corporate credit union WesCorp, of which SESLOC had an approximately $5 million share, went under. Credit unions nationally had to pay higher special assessments because of it.
“We had saved for rainy days, but it was pouring for the last couple of years,” said LaChance, who joined SESLOC in December after longtime president Bertha Foxford retired. “Unlike a traditional bank, we can’t recapitalize with investors.”
SESLOC’s capitalization ratio, which compares debt to capital in order to assess risk, is healthy at 8.14 percent. Six percent is considered adequate, according to the National Credit Union Association. But LaChance says the goal is 10 percent — where it stood in early 2008 before the recession.
Also, it took until the middle of this year for loan volume to increase for the first time since late 2008.
“People are holding on to cars longer and not buying new homes,” LaChance said.
As a result, the credit union put technology and other investments on hold but avoided layoffs, she said.