Study: CU Branch Growth To Continue

Register now

Credit union branches are the top source of loan originations today, responsible for half of all new loans, And the branch remains the most popular place for members to do business, according to new research.

Callahan & Associates said a new study, "The Credit Union Branch: Expansion Trends and Strategies for Improving Member Service," has found a successful track record continues to spur growth in the physical branching system nationwide.

In 2002, CUs experienced double-digit brick and mortar growth for the third consecutive year as their investments in land and buildings rose to $8 billion, according to Callahan's.

"This trend is expected to continue, as nearly 60% of credit unions participating in the Callahan survey reported plans to open a new branch this year," the company said. Only 12% said they expected to close a branch this year.

Despite increases in electronic transactions, credit union branches now generate about one-third of all transactions, just 25% less than in 2001 when fewer members used Internet home banking, online bill payment and debit cards, the company noted.

"Credit unions responding to the survey also reported improving their branching operations through technological enhancements and programs that provide member feedback," Callahan's said. "Technology upgrades included the introduction of automated lending software and cash dispensers, as well as greater use of e-mail, Intranets, and software for training and document imaging."

The study targeted credit unions with more than $50 million in assets. The 81 credit unions responding to the survey operate a total of 746 branches nationwide and hold $59.6 billion assets, representing 10.5% of industry assets.

"Our study shows that branches continue to be an important component of the credit union service delivery network," said Callahan's Executive Vice President Jay Johnson. "Survey responses indicate that credit unions are delivering higher value services to members through branches, and effectively integrating them with e-channels."

For reprint and licensing requests for this article, click here.