It’s happening throughout the country--credit union memberships and accounts are swelling at record numbers as more Americans heed the call to move their money from high priced banks.
According to NCUA, nationwide credit union membership increased to 91.8 million, a rise of more than 1.3 million in 2011.
This year it doesn’t appear as though the membership revolution is going to die down anytime soon. In the southeast alone, the League of Southeastern Credit Unions (LSCU) reported that credit unions in the region added $2.8 billion in assets and 68,000 new members.
Mike Bridges, VP/Marketing and Communications for LSCU said that for Florida, the asset growth pushed the total credit union assets to a record $45.3 billion. In Alabama, it was also a record - $17.5 billion in assets. For membership, Florida added 48,000 new members in the quarter for a record 4.65 million members, while Alabama’s 20,000 new members in the first quarter bring the total membership to a record 1.8 million members.
“The record growth for Alabama and Florida credit unions follows a trend that began in the third quarter of 2011,” said LSCU President/CEO Patrick La Pine. “The jump in assets and membership proves once again that consumers are looking for locally owned financial institutions. The money they deposit in credit unions stays in that respective community and helps their neighbors purchase a car or a home. It goes right back into the local economy.”
Steve Swofford, President of Alabama Credit Union ($510 million, Huntsville, AL) says that his credit union’s strong growth began last year. “We’ve experienced significant growth due to a combination of factors from the fees banks are charging to Bank Transfer Day, which brought public relations to credit unions. The League has also run a very aggressive image campaign and we’ve been very forthcoming with our message and growth within the branch footprint.”
He adds that in the coming months Alabama Credit Union plans to update its menu of technology products and services. “We are a growth oriented institution and have an objective to achieve the $1 billion in asset mark by 2020. We believe that we need to be there for economies of scale going forward. One way is through providing the highest quality technology.”
“We are making a major commitment to upgrade mobile online account opening, mobile product, remote deposit, website and home banking--all by year end,” he adds.
Like Alabama Credit Union, CFE Federal Credit Union ($1.4 billion, Lake Mary, FL) is experiencing outstanding growth. Suzanne W. Dusch, VP/Marketing provides staggering business services growth numbers from year to year. She says that in May 2011, deposits stood at $15,450,269.46, open accounts at 1,870, loans at $7,099,428.00 and the pipeline report (what was in process for the month) had three deals, totaling $564,876.87.
What a difference a year makes. In May 2012, CFE FCU’s deposits grew to $22,950,749.02, open accounts swelled to 2,405, loans increased to $12,715,688.80 and the pipeline report now has nine deals totaling $2,672,712.20.
“We have been assertively marketing internally to our existing members and externally during the past year, and that has paid off for us,” Dusch says. “Our best results have come from targeted online advertising using key words; however, we also pull a number of calls and inquiries through simple digital billboards in our market.”
Credit Unions Report Growth Nationwide
In regions like Michigan, where the economy took quite a beating during the recession, 25,000 people joined a credit union during the fourth quarter alone--a substantial increase in the last five years.
“Credit unions,” say David Adams, CEO of the Michigan Credit Union League & Affiliates, “are stronger than they have ever been with high levels of net worth and earnings, lots of liquidity and improved asset quality.”
Heading west to Arizona, credit unions are celebrating strong numbers as well. According to local publication The Republic, first quarter profits were nearly double or more for some of the larger credit unions as compared to what they were a year ago.
"Credit unions in Arizona have felt pain in a big way," Scott Earl, president and CEO of the Mountain West Credit Union Association told The Republic. "To their credit, they tightened their belts to protect members' interests and turned things around. The hard work and sacrifices are paying off now."
In the heartland, credit unions in Kansas experienced a $200 million increase in loans between first quarter 2011 and first quarter 2012--plus a 10% increase in assets. However, the Kansas Department of Credit Unions reports a membership drop during first quarter, which is puzzling to examiner administrators. “We’re not exactly certain why membership declined significantly in a 12 month period,” Michael Baugh, KDCU’s financial examiner administrator told The Wichita Eagle.
However, according to John Smith, KDCU administrator, membership and overall growth numbers could be the result of state credit unions closing inactive accounts. “I view the results as favorable, particularly that Kansas credit unions continue to perform probably better than the average credit union nationally,” Smith told The Eagle. “I would caution that one quarter doesn’t make a trend, either.”
Looking at efficiencies and maintaining a healthy portfolio is important. Bridges notes in his first quarter data report that loan quality in his region has been excellent. For the third consecutive year, delinquent loans to loans has fallen in each state and net charge offs to loans has also decreased, he writes. Alabama credit unions delinquencies and charge offs are each well below the national credit union average. In Florida, the delinquency rate has fallen 50 basis points since 2010 and net charge offs have fallen 78 basis points.
Credit Unions Continue to Take Care of Member Businesses
According to LSCU’s report, Alabama credit unions added $13 million in new member business loans (MBL), which equates to a 3.1% growth, nearly double the national credit union average. Alabama credit unions have made $114 million in member business loans in the past five years. Florida credit unions also continue to make member business loans, but saw a flat growth for the first quarter.
“While the arbitrary cap on MBL loans for credit unions stays intact – 12.25% of assets, the needs of many small businesses will not be met,” said La Pine. “Alabama credit unions have done a great job of working with small businesses to get them the loans they need. The economy continues to hinder the growth in Florida. However, there is so much more credit unions could do, if given the authority by Congress.” S. 2231, which would raise the credit union lending cap to 27.5% of assets, is currently in the Senate, awaiting a vote.
Earlier this year, US representative Fred Upton expressed the same frustration many businesses and credit unions are having with the cap. “While conditions in financial markets have improved, access to credit remains difficult for many small businesses and entrepreneurs that depend on financial institutions for such funding.”
Swofford says that taking a deliberate approach to member business lending has allowed his credit union to continue to make member business loans. “We have not been constrained by the cap,” he explains. “We have been very deliberate as it relates to member business loans and because of the cap we didn’t really gear up and hire extra staff to do business loans if we were going to be limited in total outstandings.”
“We’ve done this with our existing staff,” Swofford adds. “We haven’t done any marketing or promotion, but are still getting them (member business loans). In fact we just had our biggest quarter by a long shot.”
He says that although LSCU reports robust growth for Alabama and flat for Florida, he notes that his area wasn’t as hard hit by the recession.
“Except along the coastal areas, Alabama never had the same severe problems that Florida experienced in 2007 and 2008. We’ve had our issues but the turnaround has probably been quicker here because our market has not been as seriously impacted.”
Whether you are a consumer looking for great rates and low fees or are a business owner in need of a loan, joining a credit union has never been easier.