Uncontrollable environmental factors such as stiff competition, low loan demand and regulatory changes have posed challenges for CUs looking to grow. But some are managing to do just that. Here's how three credit unions, two in Oklahoma and one in Iowa, achieved growth in the midst of a recession.

Halliburton Employees FCU

When Chris Bower came on board at the $100 million Duncan, Okla.-based Halliburton Employees FCU as its new president/CEO at the end of 2008, he took a careful look at how he could change the CU's operational system to spur growth. He tweaked some loan rates and tier levels in the CU's lending department, renegotiated contracts to save on vendor costs, re-evaluated the efficiency of his staffing and rolled out an indirect auto lending program that allowed the CU to reach beyond its membership.

As a result, assets have grown by approximately 50% in the past three years, the CU said. In this past year alone, assets increased by 20%, from $82.5 million to $100 million, according to the CU's financial performance report. Bower also noted a current return on assets percentage of 1.6% and a 26% total loan increase since 2008.

“I looked at everything and decided which areas would be most beneficial to implement new strategies,” Bower said.

Marketing also played a key role in the CU's growth. In 2009, the CU set a large marketing budget and leveraged television and radio advertisements to build its brand and spread the message that it does not limit membership to Halliburton employees. A robust online banking system and its “$mart Checking” product, a checking account with a 3.55% yield on balances up to $25,000, has helped the CU attract new members.

The CU built its indirect auto lending business using the auto lending CUSO CUDL's platform. Through its indirect lending, the CU has stayed true to its philosophy of seeking high-quality credit and actively established relationships with auto dealers, Bower said.

Bower said an increase in deposits contributed to the CU's asset growth, but a favorable total loan to total share ratio of 72% demonstrates that loan volume helped build assets as well. And with a less economically distressed location and members who work for the oil and gas services giant, Halliburton Employees FCU has been lucky.

“We've been blessed geographically,” Bower said. “Oklahoma hasn't been hit as hard with layoffs and the economy. Halliburton had some layoffs in '08, going into '09, but the company is growing.”

FAA Credit Union

The $502 million FAA Credit Union, Oklahoma City, just celebrated its 65th year in business with a major milestone–reaching $500 million in assets. Since January 2010, the credit union has grown in three key areas of asset size (19%), direct consumer loans (43%) and membership (5.76%), Vice President of Marketing Alison Wolf said. The CU serves nearly 50,000 members in eight of Oklahoma's counties.

How did they do it? Wolf said the CU attributes much of its success to quality customer service and strategic marketing. Nearly half of the CU's new members are the result of referrals, she said.

“Most of our growth has been organic,” Wolf said. “Our focus has been on improving member service and we have spent a lot of time reassuring our members and helping them through the tough economic times. Because of that, they continue to be loyal to us and bring us more of their business while also referring their family and friends to us.”

The CU has turned its marketing efforts inward lately, Wolf said. Instead of spending money on branding campaigns, which the CU did in the past, it focused on recapturing business from its members.

Low auto loan rates offered by competitors and a loss of income have challenged the CU in recent years, Wolf said. But according to the CU's latest financial performance report, from March 2011 to June 2011, its interest and noninterest income figures have nearly restored to their June 2010 levels, from $5 million to $10.2 million and from $1.5 million to $3 million, respectively.

“Income is a big issue considering all of the regulatory changes that continue to impact the bottom line of all credit unions,” she said. “Fortunately, our investments and other growth areas have made up for some of the losses on the income side, and we continue to evaluate ways to make up for this as it's needed.”

As with Halliburton Employees FCU, FAA CU's location has worked to its advantage. Since Oklahoma has not suffered as much as some other states have, neither have its credit unions.

“We are fortunate that the real estate and unemployment market in Oklahoma has not been hit as hard as other parts of the country, so we've been able to make minor changes in our loan policies to reflect these concerns,” Wolf said.

FAA CU President/CEO Steve Rasmussen said the CU's recent growth means better service for members. “With growth comes many advantages for our members,” he said. “Being larger gives us the means to offer access with more branches, affordable products and the latest technology. It's our members who have helped us achieve this milestone and we use this opportunity to serve them better.”

Dupaco Community Credit Union

Dupaco Community CU is a two-time recipient of the Lombard, Ill.-based Raddon Financial Group's Crystal Performance Award, which recognizes the top ten credit unions with $500 million or more in assets for exceptional growth, income, efficiency and margin management, and the CU's 2010 financials show why.

In 2010, loans grew by 9.45%, deposits by 19.31% and membership by 7.75%; in December 2010, the CU had an equity to asset ratio of 10.17% and a return on assets percentage of 1.10%. According to year-to-date 2011 numbers, the CU has enjoyed continued success: as of August 31, 2011, loans have grown by 6.87% this year, deposits by 5.33% and membership by 5.32%; its current equity to asset ratio is 11.41% and it has a return on assets percentage of 1.73%.

The president/CEO of the Dubuque, Iowa, credit union, Bob Hoefer, credits the good news to a combination of efforts: watching expenses, focusing on consumer loans, keeping delinquencies in check, making fee structure adjustments and reaching out to the CU's community.

“With an eye on financial literacy, we emphasized staff training among our nearly 250 employees and stressed the importance of looking for opportunities to make a positive difference in the lives of our members,” Hoefer said. “We worked hard to maintain a high profile within the communities we serve by giving back and proactively providing relevant information and consultative financial solutions.” Dupaco Community has assets of $957 million.

The biggest challenges facing the CU, Hoefer said, include operational challenges created by new regulations, slowing loan demand and increased competition.

“Overall consumer loan demand remained flat, as consumers in our market continue to deleverage,” he said. “Competition was also a huge factor. All financial institutions in our market are gunning for loans, and we're all flush with deposits.”

Despite the challenges, Dupaco Community CU reached a number of milestones in 2010 aside from earning the Crystal Performance Award, including making a core system conversion from Harland Financial Solutions' UltraData Enterprise Core to Phoenix EFE Core, opening two new branches and becoming the first credit union in Iowa to receive the Iowa Credit Union League Heritage Award for outstanding leadership.

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