Redwood Credit Union CEO Sees Opportunities in Branch and Digital Banking

After 16 years of steady growth despite natural disasters and an economic downturn, Brett Martinez has more he wants to do as the leader of Redwood Credit Union.

Martinez, 53, CEO of the Santa Rosa- based financial services nonprofit cooperative, can roll off his tongue all of Redwood’s accomplishments during his tenure. One of the biggest is the almost 10% annual membership growth. Redwood has 344,000 members and $4.7 billion of assets, making it the eighth-largest credit union in California.

The credit union has been ranked high in employee satisfaction levels among local companies by the North Bay Business Journal, as well as being named one of the healthiest credit unions in the United States, according to an independent consulting firm.

When devastating fires ignited in its backyard in October 2017, Redwood played a major philanthropic role helping to raise more than $32 million for fire relief efforts in the community.

“At the end of the day as hard as we work, we get to go home and feel good about the impact we have had on people. That’s a pretty cool feeling,” said Martinez.

But Martinez doesn’t intend to let the credit union rest on past achievements amid the competitive landscape in the financial services sector.

Martinez sat down recently with Staff Writer Bill Swindell to discuss Redwood’s future, the local economy and the overall banking sector, among other issues. The interview has been edited for brevity and clarity.

Q: What is your opinion on the ongoing rebuilding efforts as we approach the second anniversary of the 2017 wildfires? Do you think we’ve made sufficient progress?

A: Everybody has an opinion with the recovery. But when you compare it with other recoveries in other communities and other disasters, we’re doing a great job. We cleaned up faster than what other people did. Cleaning up faster allows you to start rebuilding quicker. There’s a lot of positive things when you are driving around those communities, houses are being rebuilt. The emotional roller coaster that goes with 5,300 homes lost. We had a housing crisis before the fires. I don’t know what’s after a housing crisis? A housing catastrophe?

I co-chaired the Economic Development Board’s Strategic Sonoma project, which was coming up with a strategic plan for the county. We were weeks away from issuing the final report, then the fires happened. We went back, and that report was rolled out in the spring of 2018. The report said we need to build 25,000 homes in the next five years. When you look at 5,300 compared to 25,000, it’s a small percentage of what needs to be done.

Q: Do you have any other specific concerns regarding fire recovery at nearly the two-year mark?

A: My big concern is October when rental insurance reimbursement for living expenses is expected to end for many fire victims. There is all this money that’s been paid for living costs and it’s going to vanish. There will be a psychological impact come October for people who haven’t completely rebuilt. I know it because I’m seeing it. I’m talking to them. They’re employees. They’re members. They’re friends. People who lost homes will say, ‘What do I do?’ That’s a big deal.

Q: How are you handling growth within Redwood amid the area’s housing challenges?

A: We bought a building and a piece of land over by the Napa airport. We’re building a 106,000-square-foot facility for 600 employees over there. That doesn’t change our footprint over here, but now we are going to have access to people that we didn’t have access to before. People who live over that way in Napa and Solano counties aren’t going to have to clog the roads coming this way to Sonoma County.

Q: You opened a branch last month in American Canyon. Are you still committed to bricks-and-mortar branches in an era of digital banking?

A: People still want to come into the branch to open an account. In San Francisco, we have a branch there on Market Street. We moved into what we call the hub, so we have a significantly larger branch and it’s full of technology. We have a plan to open some smaller branches in San Francisco, but this would be the hub. We have insurance agents, financial investment groups, a business lending group — it’s all there. It’s a full-service branch. We’re also customizing product lines such as renter’s insurance for San Francisco. We’re just rolling out a bicycle loan program because that is a big deal there.

We are opening a branch in Lake County this fall, too. We have a lot of members in Lake County and we have employees there. They have been asking us for a branch, so we are building a branch from the ground up. We also are remodeling branches, giving them a whole new look and feel with the technology.

Q: Where is Redwood in terms of members using technology to access your products and services?

A: We had 2 million logins in July, which is huge for our mobile and online platforms. And mobile is blowing past computer online logins for us. Everybody wants to do their banking in their hand. Even the security on your mobile access is better than on your laptop. Our members are able to access us more.

A lot of financial institutions put their technology systems out to third parties. We write them and we control them. We have this very cool platform in which we take all member and employee feedback. I don’t have to sit in a room and tell my staff what’s next. It’s almost like a social media site. If everybody agrees that this is the next best thing in digital that we should do — and it’s legal — it’s going to get done.

Q: What are the new efforts Redwood is touting outside of traditional banking services?

A: Insurance, interestingly enough, has had a high interest after the wildfires. Our insurance policies are going through the roof. For some people it’s about price. They were overinsured or underinsured, but nobody sat down and talked to them. We have been consulting with our members and with people who will probably move their policies to us. We are this trusted source and tell them what they need. We have multiple insurance carriers, which is a nice thing, and we have gone in and fought like crazy on our members’ behalf and really have helped a lot of people who were impacted by the fires get through that and have a better outcome.

Q: Any interest on making inroads with products for the legal cannabis sector in Northern California?

A: It’s illegal at the federal level. And it’s a cash-intensive business. There are very few things that we don’t do. But we don’t currently serve cash-intensive businesses. Our branches aren’t designed for that. If cannabis becomes legal federally and it’s no longer a cash-intensive business, then of course we will serve them here.

Q: What do you make of the state of the local banking sector? A Washington state banking company recently acquired AltaPacific Bank of Santa Rosa and the Bank of Marin bought the Bank of Napa. Do you see more consolidation here and what are the local ramifications?

A: One of the things about Redwood is that we can’t be bought. We’re the 42nd-largest credit union in the country. If there is a merger in the market, we aren’t going to be taken over by somebody else. We’re not out looking for mergers. Sometimes a merger can get you off your game, get you focused on the wrong things.

The reality in the banking industry is the bigger banks are getting bigger and the smaller community banks are shrinking. Bank of America, Citibank, JP Morgan Chase and Wells Fargo — they own the market share. We are growing like crazy because they are doing what they are doing, and people are looking for an alternative.

Q: You are serving this year as chairman of the board of a major trade group, the Credit Union National Association. How is that going, given that banks and credit unions have battled for years in Washington over policies, such as the federal tax-exempt status that credit unions retain? Do you see any change in this debate?

A: Credit unions own 7% to 8% of the market — assets and loans for depository institutions. Our rates are down here and banks are making money hand over fist right now. If you are paying a lot of taxes, my question is how much are you making? And we pay taxes. We pay our local taxes and the taxes stay in the community to benefit the community. The members are the ones who benefit with the lower rates and fees.

I’ll help any bank who wants to convert to a credit union. I offered that and I have never had one bank take us up on it.