The primary challenge for Reno’s Frontier Financial Credit Union (FFCU) is maintaining a sound financial organization while adhering to regulatory laws. “The credit union is not taxed on a federal level,” said Bruce Rodela, FFCU’s president/CEO. “Because we are tax-exempt, we operate under restrictions that limit what we can do.”
The focus of the state-chartered, 501(c)1 institution is service, not profit, said Rodela.
“Our purpose is sustaining reasonable financial services for those eligible to be part of the credit union.”
FFCU’s offerings for individuals and small business owners include savings and checking accounts, loans (auto, mortgage and home equity), VISA cards, certificates of deposit, individual retirement accounts, online banking and disability insurance. “Funds stay and are reinvested in the community,” Rodela said.
FFCU is locally owned and operated. Each member is part owner and, unlike organizations with shareholders, each member has an equal vote in determining who is elected to the Board of Directors, composed of five credit union members. FFCU employs 23 people, mostly full-time workers.
The State of Nevada Financial Institutions Division monitors and enforces the rules for FFCU, one of which is whom it can serve. When the organization was formed in 1958 as Washoe Credit Union, the original membership group consisted of employees of Washoe County government and Washoe Medical Center. Over the years, as regulations allowed, the credit union expanded its membership to 800 employer groups, totaling about 8,600 people.
In 1988, Northern Nevada union members were added. In 2004, FFCU took on healthcare and local, state and federal government workers. Last year, employees of any business affiliated with the Builders Association of Northern Nevada were included. “Our membership gives us a great canvas to work with,” Rodela said.
Regulations also limit the regions FFCU can serve. Now, in addition to Washoe County, its service areas include Storey, Lyon, Churchill, Humboldt, Douglas and Carson City counties. Earlier this year, to better reflect the entire service area, management changed the organization’s name from Washoe Credit Union to Frontier Financial Credit Union.
FFCU has two Reno locations and five automated teller machines. It also is part of the CO-OP Network, which offers surcharge-free access to 26 Northern Nevada and 24,400 U.S./Canada ATM and deposit locations.
The organization’s annual operating budget is between $4 million and $5 million. Credit union capital must come solely from retained earnings (income from interest charges). Those receipts cover the credit union’s expenses and pay dividends on members’ savings. “We give back as much as we can to members for their benefit,” Rodela said.
FFCU experiences intense competition from banks and other local credit unions, which number about 10. Yet, it can’t compete by rapid expansion, since restrictions on membership and servable regions limit growth. While FFCU wants to increase its size and is advertising on television, radio and in print, it’s not aggressively attempting to grow. “Our philosophy is not to grow for growth’s sake,” Rodela said. “It’s to serve.”
Restrictions on income also limit the number and size of capital projects FFCU can undertake; expansion must be gradual. Now with $70 million in assets, FFCU has broken ground on a new, 4,800-square-foot branch in Sparks and is expanding its Neil Road drive-through facility.
An additional challenge for Rodela and his board is that credit union officials must deal with objections – via lawsuits and lobbying – from bankers who believe credit unions should be federally taxed. FFCU devotes time and resources to defend against bankers’ attacks.
“If the credit union were to fall under taxation, it wouldn’t survive,” Rodela stated.
However, he doesn’t see that happening. “We’re very confident we’ll be able to sustain our structure,” he said.