5-Year Process Yields 11.69% Average Annual Growth
LEWISTON, Idaho-Bigger has proven better for Potlatch No. 1 FCU here, which has averaged 11.69% average annual growth over the past five years.
Chris Loseth, CEO of the 50,000-member, $450-million CU, noted that the five-year growth numbers were the result of a five-year process during which Potlatch No. 1 "advanced our branch structure throughout our 13-county operational area. We added five branches over that period of time, with the anticipation of having strong member growth and the goal to have more penetration in the various markets."
Potlatch, which was recognized for its growth by Callahan & Associates, is one of 46 financial institutions in its 13 county region. Loseth said its objective is to maintain at least a 5% market share in that region, and data from NCUA and FDIC indicate the credit union has captured approximately 5.8% of the market.
With a crowded financial services market, Loseth said that the recession-and the banks' bad press-have served as a driver for the CU's growth.
"We've had several institutions that have received bad press in our area, and each time articles hit the local newspapers, folks that maybe didn't move to the credit union before wanted to, and now were taking the time to switch their accounts over and going through the process of changing ACHs and bill-pays," explained Loseth.
The membership growth and new branches are part of the business plan Potlatch No. 1 has created for each of those 13 counties, "whether that be though strict media marketing, through enhanced community involvement or enhanced community volunteering-whatever it takes to impress that Potlatch Credit Union is a good opportunity for quality financial services."
Demographical Analysis Is Key
For credit unions looking to emulate Potlatch's success, Loseth advised analyzing the demographics of a particular location, and pointed out that before the CU expanded, it did extensive demographic studies in order to understand where the potential for membership growth was strongest and what areas attracted consumers who were most likely to join a credit union. Additionally, the credit union qualified as a community development financial institution in the summer of 2010, allowing it to serve more members in its expanded charter area.
But keeping that 5% market share is key, Loseth stressed. "We can't handle everybody, and we understand that," said Loseth. "We have determined that we want to maintain that 5% market share, and we make every effort to do that. As the market grows, we have to grow with the market."
He emphasized that when it comes to branching strategies, it's crucial to ensure decisions are based on what's important for the member, rather than on the institution's desire to grow.
"We spend a lot of time in Northern Idaho/Eastern Washington understanding the market we're in, and that's how we stay reasonable with the goals we set," he added. "Five percent has become a number that we can maintain and still provide the services that members and potential members need to keep us relevant in their lives."