DETROIT-It was once a city that rolled out new credit union charters almost as quickly as the automobiles that made it famous.
Tens of thousands of auto workers and those in related industries helped to form hundreds of credit unions in Detroit. In some cases, giant automobile plants had separate credit unions serving different floors.
Today, the Motor City's have had to change gears, much like the companies and consumers they serve.
There were some 521 credit unions in Detroit in 1963; by the end of 2009 that number had shrunk to 115. Instead of primarily serving manufacturing, a majority of Detroit credit unions now serve their communities.
David Adams has been president and CEO of the Michigan CU League for the last 13 years, and has watched Detroit CUs take the punches. "Around the late '90s, the auto industry was in a very good cycle and then it just plummeted in the last seven to eight years. The effect on Detroit, with hundreds of thousands of jobs lost, has been dramatic."
Since 2003, the CU consolidation rate in the Detroit area has well exceeded the national average, almost doubling nationwide totals in the last two years (see chart). In that same period, Adams said the movement to diversify has been led by the largest CUs - Detroit has 31 credit unions with more than $100 million in assets today. "We've had some very like-sized mergers."
Adams pointed to the $1.3-billion Genisys CU as an example of a shop that has had to merge and expand its field of membership. Formed from the union of TNC CU and USA Credit Union, both around $500-million in assets and serving specific industries, Genisys now has a community charter. "One served blue collar workers, one white collar. Now the credit union serves both in multiple counties."
Even in the ranks of the mid-sized, from $20 million in assets to $100 million, many of those credit unions are seeking to expand charters. "That is one of the toughest positioning plays," Adams offered, about a medium-sized CU going community charter. "They try to serve the general public, but with only $10 to $30 million in assets, it becomes challenging. They have had to put forth a really good storefront. If they have one office, they have to invest in that fancy new sign and renovate so they look bigger than they are."
What hasn't changed a great deal in Detroit are the very smallest CUs. Many continue to serve churches, union groups, hospitals, and municipalities function today much like they have in the past, Adams said, often serving 100-200 employees.
While the economic problems have been far more acute in Detroit than in other areas of the country, Adams believes Detroit credit unions are a "case study for what makes credit unions special, in terms of being able to manage conservatively and get through tough economic cycles. That's what credit unions in Detroit have been doing for years and years."
