WASHINGTON – It’s no secret that credit unions have been trying to find ways to jump start what has been a near 10-year low in share growth. As strong loan growth continues to stretch the loan-to-share ratio and liquidity issues remain top-of-mind, credit unions are being forced to look for alternative sources for funding. In a Callahan & Associates Webinar held Dec. 7 on “Share Growth Strategies: Addressing an Escalating Concern,” credit unions got to listen to steps three innovative credit unions are taking to grow their share accounts and differentiate themselves from the competition. According to Callahan Industry Analyst Tom Geggel, who hosted the Webinar, “the credit union industry is caught in a transitional period with a flat yield curve, a low return on assets and a narrowing gap in dividend rates between banks and credit unions. Additionally, most credit unions are reliant on share certificate growth, while their regular share, money market and share draft accounts continue to struggle.” Although the average credit union share growth rate is 4.2%, Geggel noted that 75% of credit unions are growing at a slower pace. Joining Geggel on the webinar were: Amy Sink, CFO, Teachers CU, South Bend, Ind.; Peter Paulson, EVP, Corporate America Family FCU, Elgin, Ill.; and Chad Curtis, Controller/VP of Finance, Mountain America CU, West Jordan, Utah. Sink explained that TCU’s average share balance runs about $1,700. The $1.5 billion CU has started several programs to attract new deposits. For example, it cross-sells investment services with its share draft accounts, has an active business deposit program working with small businesses with balances between $5,000-$100,000, and buys share draft accounts by paying members $25 to switch over an account or start a new one with the CU. It’s also focused on growing its Money Market share accounts by offering three types of products – Indexed Money Market, Money Market Checking, and Money Market Account. The minimum to open any of the three accounts is $2,500, and higher dollar accounts over $50,000 are referred to TCU’s investment services personnel. Corporate America Family FCU’s Paulson said the $618 million CU has also launched several innovative strategies to promote new and current member deposits. The credit union, he said, focuses on “straightforward products” such as Money Market products and share certificates. When advertising in newspapers and on radio and cable TV, the message emphasizes the rates CAFFCU offers – it prices its rates at the top of the market. It doesn’t offer promotional rates or buy accounts. In addition to courting new members through its New Member Nurturing program, CAFFCU is also getting ready to launch a relationship-based program it’s been working on since December 2003 to support share growth with its current members. The program will calculate each member’s points on a monthly basis and make it visible to them. Members will be able to earn up to 10 points based on length of membership (20%), services per member (40%), and aggregate share and loan balances (40%). Mountain America’s Curtis explained a slightly different tactic the $1.5 billion CU has taken to foster share growth. It created a share product that alleviates its members’ concerns when considering whether to lock in a long-term rate. `There needs to be an incentive for members to “lock in” their money,” he said, adding that “the continued flattening of the yield curve lessens the attractiveness of certificates.” It also recently began offering a five-year term deposit where members can “jump” the rate one time. MACU previously offered the same deal on its 18-month term deposits. Interestingly, while the product has been attractive to some members – it brought in $40 million in deposits – Curtis said 70% of MACU’s members never exercise the jump option. -

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