Membership Grows In The Hawkeye State

Iowa is ahead of the curve in member acquisition.

 
 

The wild rose may be Iowa’s state flower, but its more than 130 credit unions reside in a less prickly economic field than most. While regional factors like a 6% unemployment rate and strong GDP growth drive stability in the state, the success Iowa cooperatives are experiencing with their membership is more a testament to their actions than their environment.

The more you give to members, the more you get back. It’s easy to say, but sometimes hard to do, especially as an institution expands its footprint to reach new individuals and markets. For Iowa coops, a system of efficiency and mutual growth has yielded a 0.95% ROA (near the peak of levels experienced by other states) without a heavy reliance on fee income from members. Now they are poised to put these extra earnings to good use.

Source: Callahan & Associates' Peer-to-Peer Software

At 2.9% member growth, Iowa cooperatives are bringing members into the fold at five times the industry average. But increasing the depths of these new relationships is another important part of the equation.

Source: Callahan & Associates' Peer-to-Peer Software

“We’re averaging 3.3 services per member,” says Mark Koppedryer, vice president of branches for Veridian Credit Union ($1.86B, Waterloo, IA). “We’re doing a great job of building relationships with current members, but are asking ‘How do we maintain that high standard while adding new members?’”

Part of Veridian's solution is a more in-depth onboarding process that starts at the first point of contact and continues through an active marketing strategy throughout the relationship. “We open about 16,000 memberships a year, but if we’re not bringing them in at that level of the 3.3 services, it’s going to be hard to maintain where we’re at,” says Koppedryer.

In Iowa’s lending market, credit unions have learned to retain their traditional strengths while embracing new market options. They maintained a roughly 25% auto market share level in a sometimes fickle market, dipping only slightly year-over-year (nationally credit unions saw a more substantial decline), and grew their member business loans balances by 21.7% from 1Q 2010 to meet new business needs.

Total 12-month loan originations for Iowa credit unions grew 18.1% from 1Q 2010, again surpassing the national average of 12.7%, while the average member relationship grew 7.1% to $14,747. Despite this extensive growth, the delinquency ratio remains 51 basis points below the national average, a testament to these coops’ ability to get the right loans to the right members in the right way. 

Bank backlash may have helped sway potential members toward cooperative financial options, but keeping members for the long haul will require vision in and out of the branch as competitors recover their footing. The recent defeat of a prize-linked savings bill in the state, in tandem with national legislative developments such as the Durbin amendment, should remind all credit union to stay vigilant, protective, and communicative about the services they provide to their communities.

The prize-linked savings legislation would have allowed credit unions to raffle off incentives and rewards in a drawing, based upon how much money the member socked away. Advocates felt it would have been a vital tool in helping credit unions educate members about the importance of fiscal responsibility.

“This [decision on the bill] is probably somewhat of a reflection of the opportunities credit unions in Iowa have to improve relationships with lawmakers,” says Jeff Disterhoft, CEO of University of Iowa Community Credit Union of bill’s defeat.  “Banks have strong legislative relationships in all states, so this is another reminder of that balance of power.”

 

 

 

July 11, 2011


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