The credit union is located in Woodbridge - an area heavily populated by Canadians of Italian origin. But the appropriateness of the credit union's location has less to do with the obvious cultural ties than the fact that Woodbridge is a booming, affluent suburb of Toronto.

Italian Canadian Savings is the newest entrant to Ontario's credit union system, having just opened its doors in October, 2000. It was not an auspicious beginning. ICSCU's CEO, former trust company executive, Fausto Gaudio, remembers being met with skepticism from others in the system that his "risky" enterprise would work. "I had to downplay predictions in the business plan for fear that people would laugh at us," he says.

But there is no arguing with success. In just three years, the credit union boasts close to 2,000 members and over $70 million in assets. The figures are impressive, more so when you consider that the credit union has no ATM, no Web site (although one is being developed) and does very little in the way of marketing and advertising. And it's just the beginning. A second, recent share offering of $3.25 million sold out in just four days, which will position the credit union to grow to $130 million in two to three years.

What's unique about ICSCU is that 97 per cent of its portfolio is in real estate--primarily residential mortgages, but with a significant chunk in "small scale" commercial mortgages too. Italian Canadian's winning formula is a clear and unwavering focus on its target market.

The credit union relies largely on business that the banks don't want: commerical mortgages under $500,000, and home buyers who don't meet the banks' formulaic criteria. The latter are largely the product of automated credit decisions at the Big 5, a process that does not give credit managers input into whether someone is approved for a loan or not.

Gaudio says this high-tech, low-touch approach means plenty of otherwise worthy borrowers are being turned down for loans-business that can turn out to be very lucrative for a smaller player that takes the time to get to know a prospective member, yet can respond quickly to his or her loan request. The results speak for themselves: the credit union is making a good spread on residential mortgages and hasn't had a single default yet.

Gaudio believes the banks' strategy provides a golden opportunity for credit unions. "Banks are intent on merging and monopolies they will create will focus on specific business lines. Credit unions can (take advantage) of the business they are dropping."

But how to attract this business in the first place? Fausto makes no apology for aggressively pursuing his target business. He regularly networks with builders and real estate agents, who are the source of both referrals and loans.

It also helps that Italian Canadian Savings paid out a three per cent dividend the first year of operation and seven per cent in its second year. That's helped keep the credit union's profit motive front and centre and helped its principal players promote the business as an enterprise -- a key selling point for sophisticated borrowers.

Gaudio believes strongly in sustainability for credit unions whose mandate is focused and long-term. Credit unions can survive by serving the specific needs of specific community, he says, "but if the community it serves is too small, there is little room for growth." Smaller financial institutions, he believes, need to "think outside of the box" by looking for banking opportunities that offer longevity and the chance to become real players in their market.