MONTREAL, Quebec–Three credit unions posting robust growth numbers have made it clear that there is substantial ROI to be had in effective (and aggressive) community outreach.
Speaking to NAFCU annual meeting, from left, Paul Economy, Daniel Weickenand and Bob Marquette.
Executives with Members 1st FCU, Orion FCU, and Member One FCU shared with NAFCU’s annual meeting here details of their community outreach programs and why they have been so effective, with annual membership growth at the three CUs, for instance, in the 10% range. Below is a look at each of the three.
Members 1st FCU, Mechanicsburg, Penn.
Assets: $2.9 billion. Members: 287,501
Bob Marquette, CEO of Members 1st CU, said a key philosophy behind the credit union’s strategic plan is “if you’re not growing, your dying.” Members 1st certainly isn’t dying, averaging 10% growth each of the past five years. Its goal is to hit $3 billion in assets by year-end.
Members 1st is heavily involved in being a part of its markets—and that means a lot more than “sending a check.”
“Why?,” asked Marquette, before answering his own question: “To continue to establish and develop relationships. We are not a credit union that is going to focus on being the lowest priced in the market. That’s not our business model. Our business model is to develop and retain relationships. We have a culture of service excellence we call ‘Delivering unparalleled experiences’ that is modeled on the Ritz Carlton hotel chain. It’s about service excellence throughout the whole organization, front line and back office. We are also about community presence and identity. We are everywhere. When we go to events we don’t just send a check, we send people, we send a booth. We are recognized at every event we attend.”
Staff of Members 1st CU participate in an Orange Out.
Members 1st also hosts what it calls business mixers for local businesses that gives not just its own staff the opportunity to meet with those businesses, but a chance to many of the business owners and executives to meet with each other.
“We were afraid it might undermine the perception of us as a viable financial institution,” admitted Marquette. “But what it’s done is just the opposite. We have become very recognizable throughout the community.”
In 2014 Members 1st staff provided 5,500 hours of time at community events.
“We sponsor many events. Our banners are everywhere,” said Marquette. “We’ve been very active in events being attended by local businesses, especially. We ask all of our business lending customers to become SEGs. We also require our branch managers and department heads to be active in the community.”
Members 1st has 60 branches (including seven in high schools and six inside grocery stores). Marquette said the credit union uses a hub-and-spoke strategy with branches, siting one larger branch and then locating smaller facilities around it. He said Members 1st got aggressive in branch expansion in 2008 when it saw banks retrenching and an opportunity grab marketshare.
“We are very branch-centric,” he said. “We actually feel it’s important for us to project our presence in the communities we serve. People recognize our branches and it reinforces the thought that we are convenient. We are big on branches mainly for membership acquisition. We try to get people to join us and once they do, hopefully, they migrate over to electronic channels.”
Working to Get More From Indirect Members
Nearly one-quarter of Member 1st’s new members coming via indirect loans. Marquette noted he is often asked if those members are “good members,” and that the credit union is able to turn about 30% of those members into “more active, more engaged members.”
Members 1st is not community chartered and instead is a multi-SEG chartered credit union.
‘The (American Bankers Association) ABA sued over our community charter. We had to go back to a multi-SEG charter and it was the best thing that ever happened to us,” Marquette said. “Although we’re multi-SEG we can go anywhere we want. It’s been very good for us.”
Members 1st uses association membership (it has four in its FOM) to bring aboard those members who do not work at one of its SEGs–most especially the indirect members who are signed up for one of the associations. “We have about 6,000 SEGs, but a car dealership not going to go through 6,000 companies,” Marquette observed.
Beyond the community events Members 1st does a lot of advertising, including TV and billboards.
And while Members 1st’s brand has grown in awareness, so has Marquette’s personal brand, as he has become well-known in its markets for a media campaign in which he wears a cape and is known as “the Advice Guy.”
Marquette noted the role of the branch manager has changed “dramatically. We require them to be active in local organizations, chambers, Rotarians. Years ago our marketing guy said it was the same people who were volunteering, and they were burning out. So we now require all of our associates to perform two community events per year. If it’s after-hours, we have to pay them. And we include it in their performance evaluation.
Orion FCU, Memphis, Tenn.
Assets: $575-Million. Members: 60,629
Orion Federal Credit Union has made some significant changes since 2010, after the former Memphis Area Teachers Credit Union suffered through $25 million in losses over two years and a resulting management shake-up. But perhaps none moreso than a new brand that is heavy on community involvement.
Now back in the black with a new name and a new CEO, Daniel Weickenand, who chose that new name, Orion Federal has in five years gone from 40,000 members with an average age of 55 to 60,000 with an average age in the mid-40s (and that average age is declining).
It has also seen loan growth of 41.6% over the past two years.
All those positive numbers, said Weickenand, stem from Orion’s extra efforts to be involved in the community and to help build a better Memphis. He noted the credit union is more involved in the city than even the bigger name, hometown Federal Express and First Tennessee Bank.
“We encourage all of our representatives to be on boards in the community to understand what’s going on in the community, so we can get on board to help,” he said. “There are many organizations that we support, whether its monetary or by providing people. Each of our branches has adopted a school near it, as we were originally a schools credit union.”
Another pragmatic reason for the community is the new name, Weickenand acknowledged. “When we rebranded people would say, ‘Orion? What’s Orion?’”
The loan growth numbers and many of the new members are also the result of an aggressive move into indirect lending. Weickenand said that when Orion FCU launched its program it did so with an extremely attractive rate, 1.79%, that “no one was touching at the time.”
“We got all the A and A+ people refinancing with us and that really got us going,” he said. “An examiner said to us, ‘Do you realize you’re not making a lot of money on these loans?’ And I said, ‘Do you realize that no one knows who Orion is?’ Now we have pivoted, and we’re not only focused on the indirect, we are focused on everything. The indirect program and our community involvement are what helped to bring in new members.”
Orion has gone from a 30% loan-to-share ratio to a 78% ratio, with north of 80% of its portfolio remaining A and A+ paper.
What Banks Won't Do
“The thing is the banks will not do what we have the ability to do in community outreach,” Weickenand said. “We have 11.5% capital, and there’s not a lot of risk out there. We are controlling and sustaining our growth. You want to grow with the community. It can take a year and a half to two years to get people to recognize this. A lot of kids today want to save the world and they believe in the things we’re going. They want to be involved in organizations that give back.”
Member One Credit Union, Roanoke, Va.
Assets: $706 Million. Members: 85,671
Although community outreach efforts would seem to imply community charter, Like Members 1st Credit Union, Member One is also SEG-based.
It’s a strategy the credit union has chosen in order to retain all of the relationships it has built over the years, according to Paul Economy, SVP-retail operations.
“ We are proud to say 51% of our business does come from our community involvement and our SEG relationships,” Economy told the NAFCU meeting.
Like Members 1st and Orion FCU, as well, the fast-growing Member One is the number-one indirect auto lender in its markets.
“However, (indirect) should not define our business and run the financials to make bad decisions,” said Economy. Member One has moved to flats on indirect, and also assigned one dealer representative to manage those relationships, a move Economy called “critical.”
The credit union over the past three years has seen 9% average membership growth, including those indirect members. “Our goal is to remain consistent and strong. We say good members; we want members who want to contribute to our co-op.”
To get those contributions, Economy said investment in its communities has been “key to growth.”
“One of the steps we’ve taken to build this culture has been to identify leaders in our markets,” said Economy. “Again, it is important that you know the faces of your markets. Who is branding your credit union out there? Currently have a handful of people doing business development, and 12 market managers who are engaged in the markets. Our mortgage loan originators are also a crucial part of a nice revenue stream of fee income. You can really engage those originators in your business.”
Economy said its employees are involved in local organizations that include the Rotary, Kiwanis, and Lions Club (at least three employees are Rotary presidents). It is active in various Chamber of Commerce events, too.
“It is so critical to have your market leaders and other leaders out there meeting the other business owners,” said Economy. “Our SEG relationships are key. They have to share the same values. One of our questions we have in partnering with a company is how can we give back to you? What are your values? What causes are you aligned with?”
Community Engagement Plan
For the past 18 months Member One has supported a Community Engagement Plan that specifically focuses on younger generations. “It’s important that they see what the credit union is doing. They want to be part of any business that supports their values. Environmental. Sustainability. Health. Youth. Those are all the areas where we get involved. (Community involvement) has helped to drive the vision, our areas of focus. It allows our leaders to become visible not only in the credit union and in peer groups, but also it puts them in the community. That allows us to understand the communities.”
There is another advantage of being involved in community that is often overlooked, said Economy, and that is the affect it has on internal culture.
“Workplace satisfaction is imperative. It’s important we manage our internal environment and we do have a healthy place to work,” he said. “We engage our employees in their communities, and they get to bring forward what they want to see us invest in. We want to be an employer of choice. We want leaders to come to our credit union.”
Economy said Member One’s community outreach all falls under the category of what it calls ACE, for Arts, Culture and Education. “We look for quality of life impacts in our community. This is important,” he said. “When leaders see your brand beside it they definitely want to align with it, and will ask questions about how you’re doing it. We find that strategy really working well with us. This can also do good things for your company’s morale.”
Economy said Member One offers its employees eight hours of paid time off annually to put toward community organizations. “That supports a healthy work environment,” he said. “And people want to give back to things they are passionate about.”
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