There’s been more discussion about small credit unions than usual in recent weeks, much of it generated by NCUA Board Member Deborah Matz’s oft-expressed concern that their number is dropping faster than she initially realized. On the other hand, there is a lot less talk about large credit unions, unless it is negative. A lot of this negativity is caused by the ongoing attacks by banking industry lobbyists who have singled out the larger credit unions as their primary anti-credit union target. Why wouldn’t they? That’s where the majority of assets can be found. It’s the large credit unions that have become serious competitors. Unfortunately, even within the credit union industry there are those who perceive large credit unions bad for credit unions in general. For example, among some regulators, many small credit unions, and some trade group representatives, there is an obvious feeling that the only real credit unions are small CUs. Part of this mind set is that large credit unions don’t serve the underserved, can’t provide personal service, are run by former bankers, are not convenient, and only care about the bottom line. Truth is large credit unions serve all their members regardless of income level. With substantial and growing delivery systems, large CUs have redefined the meaning of personal service. Former bankers often become the most enthusiastic CU supporters. Every credit union, regardless of size, best pay attention to the bottom line or they will soon be history. It’s time someone spoke up for all the good about large credit unions. Besides having the lion’s share of CU assets, they serve about 90% of the 80 million-plus members claimed by CU spokespersons. They provide the most financial support for the multitude of local, state, national, and international credit union organizations. They also provide credit union members with the most branches, ATMs, and electronic channels for conducting CU business. They are open for business far more than 40 hours per week. And the bankers are right, large credit unions are very competitive. Sometimes large credit union critics forget that these credit unions were once small too. They got big by continually finding new and better ways of serving members. It didn’t happen overnight or automatically. Without large credit unions, the industry would be reduced to a niche presence. It would have lots of institutions serving only several million members in total with only a modest number of products and services. Banking industry lobbyists would love that scenario. Members would hate it. Statistically, there are only about 1,000 credit unions with at least $100 million in assets. Another 700 or so have between $50 and $100 million in assets. That adds up to about 1,700 credit unions over $50 million in size. In the last several years the credit union industry has gone from being an 80/20 industry to an 85/15 industry to a 90/10 industry. That means that today 10% of the credit unions have 90% of the assets, and not so incidentally, 90% of the members. The big keep getting bigger too. According to D.C. based consulting firm Callahan & Associates, it now takes just under $800 million to make the top 100 CUs. In the last couple of years, the number of billion dollar credit unions has almost doubled to 65. There are more than a dozen in the on-deck-circle. The world’s largest natural person credit union (not a corporate), Navy Federal CU, located just outside of Washington, D.C., is well on it’s way to $17 billion while number two, State Employees of North Carolina, is hitting $10 billion. Is there some type of magic formula that propels a credit union into the top 100 listing? Could it be location? After all, a huge percentage of those CUs over a billion dollars in assets are located in California. But, that’s also where a huge percentage of this country’s population is located. There’s a $2.4 billion CU located in Peoria, Illinois; a $2.3 billion credit union and a $1.1 billion CU located in Utah; a $1.5 billion CU in Colorado Springs; a $1.1 billion CU in South Bend, Indiana; and a couple of billionaires in both Georgia and Pennsylvania. There are also an abundance of small and mid-size credit unions in all of these locations as well. Location alone does not guarantee growth. Perhaps it depends on who a credit union serves? Not really. United’s and American’s credit unions are in the top 10 and they have strict membership qualifications. Other large credit unions serve the educational community, the military, an entire state, postal workers, police and firefighters, and a portion of a given industrial sector. Others are community based. All continue to grow rapidly. Surely then it must have a lot to do with being members’ PFI (primary financial institution)? Nope. There are very large credit unions that could only be considered plain vanilla with no desire to achieve PFI status. With all the recent charter conversions from federal to state, perhaps having a state charter is the secret? Evidence suggests that there might be something to that theory, but it depends on the state regulation. Even so, there are a good number of both federal and state charters in the top 100. Maybe it’s the delivery system? Forget it. One multi-billion dollar CU has over 150 branches with as many as 50 more on the drawing board. Another, serving an identical type of membership, has no branches, relying instead on hi-tech service. What can be derived from all of this? Simply that large credit unions also know their members and how best to meet those members’ changing financial needs. Also extremely important is the person sitting in the CEO’s chair and having a forward thinking board of directors with the moxy to set policies that benefit the most members. However, the most important conclusion of all is that at the end of each day, it is the member who benefits the most from large credit unions, millions of them. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected].

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Peter Westerman


Credit Union Times

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