By Ray Birch
GRAND BLANC, Mich.—One credit union ranked highly for performance and which has an eye-opening 1.89% ROAA, says its formula for success can survive even if some deep fee income cuts should lie ahead courtesy of the CFPB.
As CUToday.info reported, the $1.529-billion ELGA Credit Union is ranked No. 1 on Forbes' list of America's BEST-IN-STATE Credit Unions for 2024.
ELGA EVP David Brandt told CUToday.info the award is largely based on the quality of financial advice, financial services fee structures, ease of navigating through the organization—digital and in-person—and the trust the credit union inspires.
“I think we won because we deliver a great experience to our members,” Brandt said, noting the survey covered primarily 2023. “In our measurements, we're always trying to find out how we’re doing for our members. How can we do better? With over 5,000 surveys completed in 2023, we had a Net Promoter Score of 86.56.”
Bain & Company originated the Net Promoter Score, and any score over 50 is considered excellent and anything over 80 is considered world class.
“USAA is widely known for its service and customer loyalty and their Net Promoter Score is 75,” he said.
Credit to the Staff
Brandt attributed the member loyalty and high Net Promoter Score to ELGA Credit Union’s employees.
“One-hundred percent, it’s due to our associates,” he said. “When you walk into our branch, when you call on the phone, when you go to online chat, you get great service. You get friendly empathetic responses. We work hard to not only serve our members but our communities. In 2023 we provided more than 6,000 hours of community service. Our Elga Foundation for Community Impact raised funds through four special events that then contributed more than $314,000 to community organizations.”
Brandt emphasized ELGA works hard to do well, and as a result is able to give back to members in the form of better rates and lower fees.
Getting to Friday
David Brandt
“We recognize that as a low-income designated credit union we serve a population that oftentimes struggles to get to Friday,” Brandt said. “So, we took a really hard look at overdraft coverages and not sufficient funds fees and jumped out in front of that. We cut our overdraft charges and NSF fees by 40% beginning in January 2022. As a result, in 2023 our members saved $7.3 million.”
The credit union’s overdraft fee is currently $15.
How is the CU faring with that price cut amid growing non-interest income revenue pressures?
“We work hard to ensure that we have a great relationship with our members, so they trust us and use our products,” Brandt said. “Our checking penetration is 73%, and a lot of those members are actively using debit cards and helping to drive non-interest income. Our credit card program is managed in-house. We take the risk, but we maintain the revenue and 32% of our members carry our credit cards.”
An Efficient Operation
Brandt estimated that accounts average two to three core products per household.
“What’s driving our success, too, is being efficient and making sure we're delivering services in the best way possible. It costs us less than 55 cents to make a dollar,” Brandt said.
That efficiency, combined with a loyal member group that utilizes the CU’s core services and which pays the CU first in times of hardship, combined with great service is what is driving that high ROAA, he said.
Brandt said the model works well for the organization, which is demonstrated by its ability to cut its overdraft fee nearly in half, save members $7 million in one year, and still keep ROAA high.
Preparing for the CFPB to Act
Brandt believes it’s an approach that is critical today as the CFPB zeroes in on fees.
“There's always a concern that something might be painfully reduced (by Washington), and that's part of the reason we've worked really hard to grow,” he said. “One of the things the higher earnings allow us to do is grow a bit faster, and then get some economy of scale so we could survive anything. Let’s say the CFPB puts put a new rule that slashed our fee income. Well, we're still going to be in a good place.”