United Federal Leverages Expansion Scorecard
With $1.8 billion in assets and 133,000 members, some may say United Federal Credit Union is small. But a unique scorecard tool it has developed is helping the credit union create a big footprint around the country by pinpointing optimal sites for new branches.
Today the St. Joseph-based credit union has nine branches in its home state of Michigan, as well as one branch in Indiana, two in North Carolina and two in Ohio. And just three weeks ago, new branches opened about 700 miles away in Arkansas, where the credit union now has four locations, and some 2,000 miles away in Nevada, where it now has six. That brings the total to 24 branches in six states. It also recently opened a second corporate headquarters in Niles, Mich.
President and CEO Gary Easterling (pictured), who arrived at the credit union in June 2007, said he and his team created the scorecard over several years after they realized they were asking the same questions about different expansion opportunities. It considers a variety of factors, such as the number of other financial institutions in the market, business growth and area demographics. It provides what Easterling calls a “readiness indicator” of how prepared the credit union is to capitalize on the opportunity.
The tool has provided a lot of insight, he said.
“Just generically, I can tell you that a marketplace that's in a very high-density metropolitan area – that's not our sweet spot,” he said. Instead, the scorecard has helped United Federal look at small and medium-size towns carefully. For example, South Bend and Reno rank closely in terms of demographics and market size, Easterling said.
“We've used it for several years now to figure out where we're going to make the next branch investment,” Easterling explained. “Then also, if a merger opportunity comes along, we look at that scorecard to evaluate that. This way we're actually getting a sense of the comparative opportunity cost and the return on that opportunity cost between a merger and a branch investment. It gives us a way to put everything on the same measuring device, so we think it improves our decision-making.”
The scorecard isn’t for everyone, he warned; it was created to fit United Federal’s goals of being convenient and local. And as the head of a credit union whose loan-to-share ratio is about 122%, Easterling said, he’s focused on finding deposit-acquisition opportunities this year.
United Federal’s spread-out nature is part of its DNA, Easterling said.
“If you go back to 2006, First Resource Credit Union, which was originally Whirlpool Employees Credit Union, and United Federal Credit Union, both of them were headquartered here in southwest Michigan. United Federal Credit Union was actually originally Clark Equipment Credit Union,” he explained. “When they decided to merge, it was the largest voluntary merger at the time. With that merger, you had this very diverse footprint because the Whirlpool footprint went from Michigan down to Arkansas to Ohio. The Clark Equipment footprint went from Michigan to North Dakota and to North Carolina.”
In 2009, the credit union entered Nevada after acquiring Clearstar Credit Union. “When we looked at that, since we already had this diverse footprint, it seemed like it wasn't that big of a stretch for us. We already were used to serving across time and distance,” Easterling noted.
In some ways it’s a diversification tactic, too, because each market has its own economic cycle. “It just helps to reduce our risk in the marketplace,” he said.