Spokane-based PrimeSource Credit Union, with nearly 6,000 members and two branches here, is experiencing strong asset and loan growth this year, during a time when the financial institution also is increasing its marketing efforts, says CEO Margaret Burkholz.

Formerly called Telco Credit Union, the financial institution eight years ago changed its name to PrimeSource and opened its North Side branch and headquarters, at 9707 N. Nevada, a move that Burkholz says significantly contributed to attracting new members.

PrimeSource's other branch, built in 1978, is located at 428 E. Third, east of downtown Spokane.

The credit union employs 20 people overall, including five who are based at the nearly 4,000-square-foot branch on Third Avenue and 15 at the building on Nevada.

The credit union's net income rose by 38 percent in the third quarter to $407,000, compared with $295,000 in the year-earlier period.

Burkholz says PrimeSource's total assets were $51 million as of Sept. 30, up by about $2 million since Jan. 1. She adds that the institution has seen significant growth in its loan portfolio to more than $40 million as of Sept. 30, up by more than $2 million since the start of the year, primarily due to consumer loans.

"That's robust growth for our size credit union, and the year isn't over," Burkholz says. "Next quarter, I'm confident to say we're going to experience considerable loan growth as well."

Credit unions also measure what is called net-worth ratio, which is determined by dividing the institution's net worth by total assets. The National Credit Union Administration says a credit union must have a net-worth ratio, also called a net-capital ratio, of at least 7 percent to be considered in good financial health.

"Our net capital is at 15 percent," Burkholz says. "Our return-on-assets is over 1 percent, which is income for our credit union and allows us to provide better loan rates, no-fee services." For example, the credit union doesn't charge fees for checking accounts, she says.

She attributes PrimeSource's strong financial position to several factors, including its range of products and services, online banking options, marketing, and loyalty among members seeking loans.

Burkholz says the credit union has experienced steady growth since the 2005 opening of its North Side building, which has nearly 7,000 square feet of floor space.

"Our additional branch has contributed to that growth because the branch is more convenient to members on the North Side," she says. "The physical branch definitely made a difference."

She adds, "We've grown by $15 million in assets since we moved into this building and changed our name," while the loan portfolio has grown by $16 million over the same time period.

PrimeSource also has added about 700 members since 2005.

Burkholz says PrimeSource has made a deliberate move in recent years toward offering online banking services, including a mobile phone app provided more than a year ago. In 2010, the credit union also joined a national shared-branching network, which enables PrimeSource members here to handle transactions at more than 6,400 financial institutions across the U.S.

The network is operated by Rancho Cucamonga, Calif.-based Financial Service Centers Cooperative Inc. Using the co-op system, customers can use the branches and ATMs of other credit unions for such services as making deposits, withdrawing funds, and transferring money.

She says the shared banking network has gone well, primarily because it offers PrimeSource's customers free access to that network's system of ATMs.

Online banking, shared networks, and a more diverse membership base represent huge changes for a credit union that dates back more than 78 years, when Pacific Telephone Co. employees here started managing assets for workers. By 1935, the workers formed Telco as an incorporated, state-chartered credit union for employees of all telephone companies, their subsidiaries, and affiliates.

Burkholz says another important milestone in the credit union's past occurred in 1996, when it switched from being a defined employer-based credit union to being a community-based financial institution for Spokane residents. Six years later, the credit union broadened that community charter further to include any residents within the state of Washington.

She says about 30 percent of its members today have some ties to telephone companies, either as current or former employees of telecom companies or their dependents. Most of the other 70 percent have joined in the past decade, she estimates.

"The year 1996 is when the changes with telephone companies started occurring," Burkholz adds. "The companies started outsourcing and moving headquarters to Denver. If we hadn't made that change, at 30 percent today, probably this credit union wouldn't be here. We made a change to keep members' deposits safe and keep the credit union alive."

She says the credit union still has some members who started with it in 1935.

Although PrimeSource hasn't done widespread advertising in recent years, she says the institution's board decided this year to launch a series of print and television ads that include members' testimonials, "just because we haven't for a few years since our name change."

"We have three TV commercials running right now," she says. "We're looking into radio ads. We find our current members are our best marketing tool. They refer their friends and family."

With a total 36-year career in the credit union industry, Burkholz has worked at PrimeSource and its predecessor Telco for nearly 28 years, starting as a teller supervisor. She has been CEO since 2000.

She says the economic downturn since 2008 affected many financial institutions that struggled to generate sufficient income, perhaps having to invest liquidity in certificates of deposits, which have minimal yields. As a counter to that, however, PrimeSource has continued to maintain steady income through its loan activity, she adds.

"We haven't seen a downturn with our members," Burkholz says. "We have a lot of loyalty from our members, and they know they're getting a good rate."

She adds, "Our loan-to-share ratio is 92 percent, which is the difference between how many loans we give versus how many deposits come in. If an institution has any liquidity, it needs to make sure to lend it or invest it. We're among the fortunate ones who are able to still lend it."

PrimeSource focuses mainly on consumer loans, such as for buying automobiles, motorcycles, and boats. It also offers personal credit card accounts through Visa, she adds, and does some mortgage lending.

She says PrimeSource hasn't ruled out eventually offering business loans, if members ask for them, but it doesn't handle commercial loans currently.

Burkholz says PrimeSource's healthy loan-to-share ratio stems from a central philosophy.

"Our philosophy is we deposit Member A's money and loan it to Member B," Burkholz says. "We're about the member, the consumer, the neighbor next door."

She adds, "On average, our members tend to buy a car every two years here, so we have a lot of repeat consumer loans."

Community involvement is another focus, she says, including donations and employees volunteering time to nonprofits.

Although the credit union is seeking steady membership growth, Burkholz says she considers the current size of the credit union to be "just right."

"We offer every product and service, all the bells and whistles, and still provide personal service," she says. "We're small enough that we follow our members' life events."