And the credit union's board members wanted to remind members that many of their relatives were eligible for membership, and should be encouraged to open an account and apply for their next loan at the credit union.

The issues brought up in the meeting reflect many of the challenges for a credit union its size, according to Travis Hall, SVP and CFO for SCNG Federal Credit Union in Columbia, S.C. The meeting occurred just before staff and board members met to form their strategic plan for the coming year.

"If you listen to the members, they will tell you what to do next," Hall said.

Nearby at Palmetto Health Credit Union, President/CEO Hansel Hart knows his phone can ring anytime with a call from a board member with the story of a member who is having a problem, like having their debit card blocked while vacationing in Florida.

Hart has to steer through the narrow channel of providing convenience, while ensuring that members' debit cards aren't tapped by fraudsters.

While most of the financial risk from fraud is borne by the credit union, the credit union's reputation is at risk either by incidents of inconvenience or fraud.

"We're extremely cautious on security," Hart said. "If something goes wrong, you don't get too many chances to correct that."

SCNG ($70 million in assets, 6,449 members) and Palmetto Health CU ($70.3 million in assets, 12,418 members) are both healthy, but face the same challenges of other small credit unions – how to grow and enhance their service to members as technologies and expectations change rapidly.

Banks have recently adopted a tactic of contrasting small credit unions that existed in a warm, fuzzy past with "big credit unions" that banks portray as a strange new threat to their Norman Rockwell-like image.

However, data from the NCUA shows the credit unions that banks love the most might be those that are performing the worst.

Asset tiers used by the NCUA show the pain is greatest among the tiniest credit unions: Those with less than $2 million in assets. As a group, these 492 credit unions lost $1.3 million dollars last year with a combined ROA of 0.30%. Sometimes those kinds of numbers can be shaped by outsized results from a few institutions, but in this case, fully 42% of the credit unions – 205 of them – had net losses last year.

Making profits isn't the mission of credit unions, but net income is needed for long-term health. A significant loss, especially in the midst of a growing economy, is a red flag.

Other tiers had income last year, and their ROA rose steadily with size:

• 0.10% for the 1,069 credit unions with $2 million to less than $10 million in assets
• 0.31% for the 1,808 credit unions with $10 million to less than $50 million in assets
• 0.44% for the 727 credit unions with $50 million to less than $100 million in assets
• 0.49% for the 1,053 credit unions with $100 million to less than $500 million in assets
• 0.89% for the 540 credit unions with $500 million or more in assets

Steven Rick, an economist for CUNA Mutual Group in Madison, Wis., said all credit unions need to keep up with their area's growth in terms of members, deposits and assets.

"You have to be adding assets," he said. "You have to be generating sufficient returns on those assets to build capital and continue growing in the future."

Credit unions that are below about $50 million in assets have the greatest challenges. One of the biggest reasons for mergers is the need to expand services, Rick said.

"Basically credit unions below $50 million in assets have been losing members and loan growth has been relatively weak compared with the larger credit unions," he said. "They don't offer the full scope of services they need, and it's hard for them to afford the new mobile technologies a lot of people want."

Rick said the movement wants small credit unions to not just survive, but to thrive. "But if they're thriving, that means they're growing: They're adding members and they're adding assets," he said. "By definition, there won't be any small credit unions because they'll grow into medium and large credit unions."

A higher ROA allows credit unions to invest in new technologies, branches, marketing and other areas that will allow them to expand.

Credit unions with less than $100 million in assets represented 11.1% of members and 7.4% of assets as of December 2017. However, last year these credit unions accounted for the following:

• 14.6% of net losses among the 998 credit unions that were in the red, and 4.2% of the profits among the 4,692 in the black.
• Their return on average assets was 0.36%, compared with 0.82% for larger credit unions.
• Nearly three full-time employees for the equivalent of every $10 million in assets, compared with two employees for larger ones.
• Assets grew 2.8%, compared with 8.2% for larger credit unions.
• Loans grew 5.8%, compared with 11.5% for larger credit unions.
• Membership grew only 0.1%, compared with 6% for larger ones.

The disparities are greater if the comparison is shifted to divide at the $50 million mark, but not dramatically so. For instance, credit unions in the $50 million to $99 million asset range represent 3.7% of assets. Including this tier doubles the size of those measured among smaller credit unions, underscoring the extent of the challenge.

Both SCNG and Palmetto Health CU are products of past mergers that joined credit unions with similar membership bonds.

SCNG was formed with the merger of two National Guard credit unions in the area in 2007, and its ROA was 1.12% in 2017.

Palmetto Health CU is the result of a merger of two major hospital systems in Columbia about 20 years ago. Since the credit unions merged in 1999, Palmetto Health CU has doubled its membership and more than tripled its assets. Its ROA was 1.89% last year.

Its chief executive is among the most experienced hands in the credit union movement in South Carolina. Hart, 55, spent about 20 years working with the state's credit union league, frequently being assigned on a temporary basis to small credit unions that lost a key executive.

That practice later ended, and credit unions now must seek help on their own. Other credit unions still will step in when an institution is in crisis. Hart recalled Founders Credit Union, the state's largest ($2.1 billion in assets, 216,505 members), sending an employee to manage a small credit union after its chief executive died suddenly.

Hart said he tries to invest in technology not at the bleeding edge when it is at its most expensive and least reliable, but soon after it settles in to a more reasonable price. Waiting too long means losing opportunities, frustrating members and eroding your reputation.

Palmetto Health CU offers mobile banking, including mobile deposits, and an app that allows members to turn their debit card off or on to better balance security and convenience. Members can make payments to another financial institution online, and it is working to develop a capability to allow members to send payments directly to another person.

Palmetto Health CU has 30,000 ATMs available to members through a CUSO network. "Trying to get that across is a bit of a challenge."

Getting the word out about Palmetto Health CU's offerings is one reason the credit union hired a dedicated marketing professional this year. However, for technology, the credit union has leaned more on CUSOs.

Palmetto Health CU uses Member Driven Technologies, a CUSO based in Farmington Hills, Mich., to handle data processing. MDT, in turn, licenses Jack Henry & Associates' Episys core platform from Symitar.

"It's a very powerful system for a credit union our size. We didn't have the expertise to do it in-house," he said. "A credit union our size would typically hire one IT professional, and if they leave you're kind of in a lurch."