News Column

Bartlett-based First South Financial Credit Union uses its stable base to expand

June 10, 2014

By Jennifer Backer, The Commercial Appeal, Memphis, Tenn.



June 10--As more customers bank online, banks are closing brick and mortar branches in an effort to reduce expenses in an era of tepid loan growth.

U.S. banking companies shuttered more branches than they opened during the first quarter of 2014, according to market researcher SNL Financial of Charlottesville, Virginia.

That makes Bartlett-based First South Financial Credit Union an exception in the Memphis finance landscape.

The credit union's diverse loans and strong capital reserves have allowed it to put branches in locations where other banks have closed their doors, said First South chief executive officer Craig Esrael.

"I think of our Shelby Drive office," he said, referring to the credit union's branch in Whitehaven near Southbrook Mall. "Banks have moved out of that area. It's not really a profitable area to be in" for most banks.

Esrael commented Tuesday at the Bartlett Area Chamber of Commerce luncheon, where he received the chamber's Entrepreneur of the Year Award for First South traits such as community impact.

Although credit unions are regarded as small institutions, First South actually ranks 6th in asset size among the 30 financial institutions based in Greater Memphis.

Despite meager profits in some neighborhoods, First South is able to expand its branches. It can offset losses with more profitable lines of business throughout its market area. These include credit card, auto, mortgage, real estate and business lending.

In areas like Whitehaven, a largely middle- and working-class area of 80,000 residents, some consumers have very few financial options, Esrael said, making it difficult for families to save and invest for long-term goals.

"We serve people that are extremely wealthy and people who don't have much," he said. "But my real satisfaction comes from serving those who don't have very much."

Since Esrael took the helm of what was then the financially crippled Navy Memphis Federal Credit Union in 1983, the institution has grown from roughly $30 million in assets to $476 million in assets as of March 2014, according to data from the National Credit Union Administration. In 1993, the credit union changed its name to First South Financial and converted from a federal to a state charter.

The credit union is the second largest credit union in the region behind Orion Federal Credit Union. It's also the only financial institution to receive an "A+" ranking for financial stability compared to 13 other peers in the area from Jupiter, Florida-based financial research firm Weiss Ratings, as of December 2013. Since 1983, the credit union has expanded it's branch network from two to fifteen, including five acquisitions.

Consumer lending insulated First South from the mortgage struggles that crippled many banks amid the 2008 financial crisis.

"We've seen tremendous growth on the consumer side," Esrael said. "Auto lending and credit cards are on fire and have experienced unprecedented growth in the last decade."

That strength allows the credit union to offer unique products like 10- to 12-year fixed mortgages with no closing costs or points, he said.

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(c)2014 The Commercial Appeal (Memphis, Tenn.)

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Source: Commercial Appeal (Memphis, TN)


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