The Little Credit Union That Could

Originally bound to the railroad industry, this once-small cooperative struck out on its own and is now on track to become Southwest Virginia’s premier financial institution.

 
 

History might be set in stone, but Roanoke, VA, forged its future using steel, steam, and coal. Founded in 1850, the town was initially a way stop for the Virginia and Tennessee Railroad system, a 200-plus-mile track that ran from Lynchburg, VA, to Bristol, TN. When the V&T became part of the Norfolk & Western Railway after the Civil War, it joined a growing conglomeration of more than 200 regional rail systems that provided eastern cities with coal from Virginia, West Virginia, and Ohio.

For the next century, Roanoke served as not only the headquarters for Norfolk & Western but also the main hub for a transportation nervous system that supported a steady stream of people, jobs, and money. In 1940, employees of the railroad system pooled their resources and started Norfolk & Western Federal Credit Union. For decades, the institution enjoyed a growing core of well-employed and financially stable membership, but the good times couldn’t last forever.

Every Train Needs An Engine

In 1982, Norfolk & Western merged with Southern Railway. The company’s corporate headquarters relocated to Norfolk, VA — 280 miles away — and both jobs and Norfolk & Western Federal members began disappearing from Roanoke.

“We saw the writing on the wall and knew we were going to have a problem with the membership base,” says Wilson Potts, chairman of the board at Member One and a retired IT professional with Norfolk Southern.

CU QUICK FACTS

MEMBER ONE Credit Union
data as of 12.31.14
  • HQ: Roanoke, VA
  • ASSETS: $665M
  • EMPLOYEES: 205
  • 12-MO SHARE GROWTH: 9.7%
  • 12-MO LOAN GROWTH: 19.1%
  • ROA: 1.18%

So Norfolk & Western Federal merged with several small credit unions, partnered with multiple select employee groups (SEGs), and eventually rebranded as Member One Federal Credit Union, moves all designed to help shield it from the ebbs and flows of any one specific industry.

The approach worked for a time, and nearly 600 of the historic SEG relationships formed during that time are still in place today. In addition, Member One increased its assets roughly 12 fold over a 25-year period.

But the opportunity for new member growth within SEGs eventually began to plateau. Further complicating this matter was the fact Member One had not aggressively focused on community outreach, even though it was chartered to serve anyone who lived, worked, or worshiped in Roanoke, Lynchburg, and Franklin counties or the New River Valley. By 2008, the credit union was also looking for a suitable replacement for its CEO, who was retiring after 35 years of service.

Given these ongoing challenges, the board wanted Member One’s next CEO to possess a skill set that would help the credit union deepen community relationships and increase awareness of the Member One brand. Through an executive search consultant, the board found Frank Carter — formerly the chief marketing officer at Grow Financial Federal Credit Union.

“Once we started focusing on the marketing aspect of things, we took off,” Potts says. Under Carter’s guidance, the credit union grew from $360 million in assets in 2008 to $665 million today.

And unlike the credit union’s previous periods of expansion — which hinged on external factors — Member One’s current momentum has proven to be both internally driven and remarkably adaptable to changes in the marketplace.

In general we don’t worry about big banks. I think people here want a community feel, so that’s how we are competing effectively against all the other organizations out there. 

New staffing approaches have played a huge role in this turnaround, with Member One investing in operations, human resources, and IT as well as creating a new leadership role — chief risk officer — that the credit union filled with a former chief lending officer.

In addition to changes at the executive level, the credit union has invested in several down-in-the-weeds roles such as a compliance officer and an entire internal audit department, all of who help the risk officer and the management team spot potential roadblocks as they appear.

“We made these investments because I wanted to build a team that could grow this credit union to $1 billion,” Carter says. “And that’s where we’re headed.”

All Aboard For Opportunity

Major shifts behind the scenes set the course for future growth, but because they occurred largely out of sight of the general public, the credit union also needed to rethink its operational and communicative touch points.

For a growing credit union, limited resources necessitate taking some calculated risks. To date, these have included building a new headquarters, undergoing a core conversion, and redistributing resources to support other parts of its footprint.

For example, the credit union previously owned a single branch in Virginia Beach, more than 250 miles from its headquarters. In 2012, it closed that location and now serves this market through remote channels — including a shared ATM network and remote deposit capture. Meanwhile, it has shifted those branch dollars toward new, more efficient kiosk-based locations in other areas of the state.

When Bank of America moved out of the southwest Virginia market this November, Member One also had a great opportunity to market its cooperative values and local focus.

“Around the time Bank of America left, we did run billboards and TV ads that said, ‘We’re here, we’re local, and we’re not going anywhere,’” says Jean Hopstetter, chief operating officer at Member One. “In general we don’t worry about big banks. I think people here want a community feel, so that’s how we are competing effectively against all the other organizations out there.”

So far, this strategy has proven fruitful. According to Callahan & Associates, Member One has reported significant year-over-year growth in all major metrics for third quarter 2014, including 11% member growth, 9.7% share growth, and 19.1% loan growth. The credit union’s members-to-potential-members ratio also reached 21% in the third quarter; that’s higher than the average for similar-sized peers, credit unions in the state of Virginia, and credit unions nationally.

These impressive numbers are due in no small part to an evolving communications strategy at Member One, driven by data and implemented through agile and cost-effective channels like social media, which has allowed the credit union to make an impact in both new and old markets.

One notable example is its proprietary microsite — Save This, Buy That™ — that publishes money saving tips as well as recipes and short pieces about health or nutrition. Save This, Buy That™ helps position the credit union as a resource for membership in all areas of their lives.

Read our other articles in this series for an in-depth blueprint of the strategies Member One has used to offset challenges while taking steps to become the great institution members want it to be.

star-title

The fabric of Roanoke is far richer than just railroads and standout financial services. A closer look at the history of the region reveals a number of interesting facts.

Who?

Before he was Mr. Las Vegas, Wayne Newton grew up in Roanoke County, VA, where he learned to play the piano, guitar, and steel guitar all by the age of 6. It was Newton’s asthma and allergies, which were aggravated by pollen from trees in the mountains surrounding Roanoke, that prompted the family to move to the dry climate of Phoenix, AZ, in 1952.

What?

This region’s name comes from the Native American word "rawrenock," which refers to white shell beads once commonly worn in a necklace or on a belt and sometimes traded during ceremonies or as formal currency.

Where?

Also known as the Mill Mountain Star, the Roanoke Star is the largest illuminated free-standing star in the world. Constructed in 1949, it sits 1,045 feet above the city and is visible for 60 miles.

When?

The Hotel Roanoke was built by the Norfolk and Western Railway in 1882 and is currently owned by Virginia Tech. It has played host to an impressive roster of U.S. presidents — from James Madison to George H.W. Bush — as well as celebrities such as Jerry Seinfeld and Britney Spears, according to The Roanoke Times.

Why?

Residents here insist their hometown is hard to top, and they have the evidence to back it up. In fact, Roanoke has won the National Civic League’s American City Award six times, tying with Cleveland, OH, for the most wins of all time. 

Sources: waynenewton.com, visitroanokeva.com, nativetech.org, The Roanoke Times, roanokeva.gov

 

 

 

 

Jan. 22, 2015


Comments

 
 
 
  • Great article. Glad to see a Virginia credit union highlighted in this way. Best wishes for continued success to Member One.
    Craig Zuidema
     
     
     
  • Thanks for your feedback!
    Anonymous