Smaller Credit Unions Expanding
A pair of local credit unions have opened their first new branch locations in several years. My Personal Credit Union, formerly Multi-Products Credit Union, launched its new branch at
The fifth branch for both, the growth is a positive sign toward the health of smaller credit unions, which have worked hard to re-position themselves with open memberships since the Credit Union Modernization Act of 2004 provided Michigan-chartered credit unions the opportunity to adopt community charters not directly aligned with employer groups. A similar change paved the way for federally chartered credit unions.
During the transition, many credit unions struggled, particularly those with less than $100 million in assets. As Multi-Products Credit Union, for instance, MPCU was closely tied to Delphi Corp., the largest of the 180 employers it represented. Other credit unions faced similar problems: Steelcase Employees Credit Union (today Community West Credit Union), Stampers Federal Credit Union (now Rivertown Federal) and Grand Rapids Federal Employees (FEDCom), among several others.
"We feel good about how we've done considering the challenges we've had with so many companies in the area struggling," said Joe Beckwith, My Personal Credit Union marketing director. "We'd love to see how we could have done without all the employment issues that our region has had."
Since adopting its new identity, membership at MPCU is up 2.4 percent.
"Those aren't huge numbers to get excited about," Beckwith said. "But it's better than what most credit unions have been doing."
Dave Adams, president and CEO of the Michigan Credit Union League, said that members began reporting deposits and membership growth in the first quarter of this year, bucking a negative trend primarily affecting its smaller members.
"I think that all small financial institutions, including community banks, have this conundrum," he said. "People who have the option to do business with a large bank, credit union or brokerage firm, especially lower to middle-class households, tend to favor smaller, more personable institutions. But larger providers have an advantage because of economies of scale. They are going to be more profitable and more competitive."
Tim Hemenway, manager of Michigan One Community Credit Union in Ionia and chairperson of the
"There are really fewer choices out there," he said. "We have a very, very small piece of the pie, but our consumer awareness is growing. People are able to see what we have to offer. And as we expand, it gives the consumer more choices and variety, and that is a positive for retail and consumer banking."
Michigan One has plans to add its third branch within the year. Architectural drawings are underway for a site adjacent to the South State Street Wal-Mart in
"The smaller credit unions seem to be doing surprisingly well, considering the challenges they've faced," said Dan Adrianse, principal of financial service consulting group Adrianse Marketing Services in
Adrianse noted some critical differences between credit unions such as these and larger institutions such as the billion-dollar Lake Michigan Credit Union. He believes the consumer has difficulty distinguishing the larger credit unions from banks. He also highlighted the starkly different business models that can be found among the smaller firms — MPCU has looked for growth through electronic services, while