Opening Doors Is Key, But That Doesn't Mean Turn Key
DUBLIN, Ohio-Moving away from a single sponsor to a wider field of membership creates much-needed balance, which leads to greater growth and longevity, according to BMI FCU.
But the credit union also reminded that just "opening the doors" to the community is not sufficient to bring in business and staying close to sponsors has paid dividends.
Ten years ago BMI became a multi-occupational credit union after serving the Battelle Memorial Institute for more than 50 years. CEO Sharon Custer said the decision has improved the credit union's assets, membership total, and even helped it weather the latest recession.
"The groups we serve all suffered from the economic turndown-experiencing layoffs, cutbacks, and salary reductions-but they felt the effects at different times. So the credit union is not at risk as it would be when it serves one sponsor that goes through trouble," said Custer. "We serve 250 companies now and the effects of the recession were spread out."
The credit union had diversification in mind when it expanded its field of membership in 2001. Yet Custer said BMI initially began seeking companies to serve that were similar in makeup to Batelle, a research company that had highly paid, white-collar engineers. "We began to realize that it would be better to serve a number of different types of employers, spreading the risk if you will. That way you don't end up with too many of the same type of members, which allows you to offer a wider range of products. They don't all save the same way, need the same products, and borrow identically."
Similar Borrowing Habits
Borrowing was an issue the credit union faced when it served only Batelle. Custer explained that Batelle employees were very conservative and great savers. "But they did not borrow much and when they took out a car loan, many were about the same. They all wanted Honda Accords because Consumer Reports said it was the best buy."
Expanding its charter has paid off for BMI, which has grown over the last 10 years by 5% annually in assets and has shown "steady" membership gains. While Custer said the credit union never thought the move would open the membership floodgates, she agreed that many in the industry mistakenly viewed a wide charter as the panacea to growth.
"I question whether credit unions going to a community or expanded charter has been as successful as some hoped it would be," surmised Custer. "In central Ohio, for example, we are in the bosom of Chase Bank and Fifth Third, big outfits that bring a lot of competition. It is difficult for credit unions to compete head-to-head with these banks. I'm sure there are successful credit unions that do it, but it is not easy. I think many credit unions initially believed that just opening up the doors after getting a community charter was the answer to greater growth."
What BMI has learned about its new charter is that credit union must understand if the potential new SEG is going to support the credit union and make the relationship worthwhile.
"Over the years we have learned that developing that strong relationship with the employer, having people inside the company who actively support us, is how we grow," Custer related. "Frankly, there were some companies that have invited us in that we tried to establish good relationships with the employees and then the company did not give us the support we needed to be successful. Our business development staff really focuses on deepening that relationship and providing a valued service so the sponsor looks at the credit union as an important employee benefit."