Banking and Financial Services Sections

Arrha Credit Union Forges a Path of Smart Growth

What’s in a Name?

Mike Ostrowski

Mike Ostrowski says Arrha’s new name and logo reflect the concepts of trust and strength, two qualities that appeal to its members.

When Springfield Teachers Credit Union, after almost 75 years of exclusively serving teachers, decided to extend membership to anyone who lives or works in Hampden, Hampshire, or Franklin county, the institution’s leaders, led by then-President and CEO Gary Fishlock, shortened the name to STCU Credit Union.

It wasn’t enough, Michael Ostrowski said.

When he took the reins from Fishlock as president and CEO in early 2011, STCU had been accepting non-teachers as members for almost a decade, and the move had proven to be a wise one, growing the institution’s assets. But the name still didn’t reflect the wider community, he told BusinessWest. So he pushed for a more dramatic rebranding.

“When I got here, the board of directors expected me to make this place grow and thrive, but I was still hearing from lenders and staff that people thought you had to be a teacher to be a member,” he said. “They understood we needed a name change to better reflect what was going on.”

So STCU enlisted Cardinale Design, a Ludlow-based creative marketing firm, to rebrand the company. After considering dozens of possibilities, the leadership decided on Arrha, one of the oldest English words, meaning “money or other valuable things given to evidence a contract; a pledge in earnest.”

“It’s absolutely perfect,” Ostrowski said of the name change, which became official last year. “It says exactly what we do. I’m surprised no one picked up this name sooner. It’s an odd name, edgy, but not over the edge, and that’s what we wanted — something memorable, describable, but not over the top.”

The new logo — a stylized pyramid — is intended to convey strength and power over time, while its purple color reflects wealth, leadership, and trustworthiness. “These were all words that came back on member surveys. And ‘trust’ is one of the biggest words in banking. You have to trust where your money is,” he said.

“We want to tell a story,” he added, “and this is a great way to tell the story.”

It’s a story that begins at the dawn of the Great Depression, when many sector-specific credit unions planted roots. In 1929, 31 teachers — perhaps sensing the rough economic waters ahead — pooled their resources in an attempt to ensure their financial security. They named their institution the Springfield Teachers Credit Union and incorporated in late 1929 with just $2,160 in total assets.

For many years, the credit union operated out of a Commerce High School classroom, then purchased property on State Street in downtown Springfield. Again outgrowing its space, it purchased property on Industry Avenue in 1988 and moved its operations there the following year.

“They started in a room in Commerce and combined their assets and petitioned the government,” Ostrowski said, pointing to the original state charter hanging on his office wall. “My job is to protect that charter.”

From those roots has risen one of the larger credit unions in the region, with $127 million in assets, more than 11,000 members, three branches — in Springfield, Hadley, and the just-opened office in West Springfield — and an eye toward further growth driven by an ever-increasing public awareness of the role of credit unions in an age of big-bank consolidation.

Fueling His Fire

Ostrowski is a veteran of the region’s financial scene, but his lengthy career in banking came about by accident. He was fresh out of Springfield College, pumping gas on the Mass Pike, when Bud Doble, then president of United Co-operative Bank, pulled up. They chatted a bit, and something in Ostrowski’s demeanor impressed Dobel, who handed the young man a business card and asked him to call him. Ostrowski did, and was offered a job as a management trainee.

The problem was, he was making more money at the pump than the bank initially offered. When he told his father, the elder Ostrowski explained the difference between a job and a career, and told him to take the plunge.

As careers in banking go, it’s been a wide-ranging one, including stints at Ludlow Savings Bank, Multibank, and Pioneer Financial Co-operative Bank. He also spent nine years as vice president and chief lending officer at Freedom Credit Union in Springfield, and, more recently, senior vice president of lending at Barre Savings Bank.

With that much experience in what could collectively be called community banks, he knows a thing or two about what draws customers to those institutions, as opposed to, say the Bank of America or Santander type of institution. And credit unions like Arrha, he said, fill a similar role, though they have historically been “the best-kept secret in the Pioneer Valley.”

Still, the benefits are obvious to Ostrowski. “Our motto is ‘people helping people’ so our rates for loans are typically lower than at a bank, and deposit rates are higher,” he explained, noting that not having to answer to stockholders gives Arrha more freedom in those areas. “But we have our own difficulties — banks can go out and sell more stock to raise capital; we have to earn it on the job, which is a lot more difficult.”

But their ability to balance robust lending power with a community atmosphere is becoming more evident as so many smaller banks in the Northeast continue to merge with larger institutions, most recently Westfield Savings Bank’s acquisition of Chicopee Savings Bank.

“So many small, mutual banks that started in Massachusetts — Chicopee Savings, Ludlow Savings, Barre Savings — are gone now,” he said. “They were all great, small hometown banks where people went and trusted. Now they’re being taken over. Hopefully, Arrha is filling that void.”

Room to Grow

Most of Arrha’s programs are targeted at retail consumers, but the credit union plans to hire someone in the next six months to oversee an expansion of what, up to now, has been a limited portfolio of commercial loans. Like many credit unions, it sees plenty of opportunity in the small to mid-sized business customers that the larger banks neglect in their pursuit of $4 million and $5 million accounts.

“That’s not who we are,” Ostrowski said. “That’s not our niche. We want to help the smaller person succeed, with car loans, personal loans, student loans … we do excellent at home mortgages, with the lowest closing costs and rates in the Greater Springfield area. We have checking accounts that are dirt-cheap and don’t rip anyone off with fees. We’ve built a good foundation on those things.”

The foundation is fertile soil, he said, to grow the commercial-lending side over the next few years.

“We’re doing really well. We want to expand, but in this day and age, that’s very difficult. Do you build branches or build software? We want to have a few branches, but we don’t want to be inundated with buildings. Everything is electronic, and that’s where the money is, but we still need a physical presence, a few locations. Overall, the bank is very healthy and thriving.”

That progress puts Arrha at a sort of crossroads, he went on, but one marked by opportunity.

“We want to fill the void of the small, mutual savings banks people loved to go to. I’m positive we are doing that, but whether we can sustain it over the next five or six years and keep up with the Bank of Americas, that’s to be determined. I think we can find our niche, though. We always do.”

Joseph Bednar can be reached at [email protected]