The biggest credit union gets even larger

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Last Wednesday, a prospective customer walked into the Navy Federal Credit Union branch aboard the Naval Support Activity base in Panama City, Florida.

After signing on as a new member with the world's largest credit union, that person became the $166 billion-asset institution's 13 millionth member.

To put that in perspective, the next five largest credit unions in the country by assets had less than 9.5 million members combined at the end of the first quarter, according to the National Credit Union Administration.

The nearly 1.2 million members Navy added during the past year is more than the total membership of all but five credit unions in the U.S.

By comparison, total U.S. credit union membership increased by 4%, to 136.6 million, in the first quarter. But each of the NCUA's asset categories below the largest saw a drop in membership.

So how is the Vienna, Virginia-based Navy FCU growing so quickly?

Part of it is the result of a heavy dose of advertising.

Navy Federal spent $46 million in marketing and promotion in the first quarter, according to NCUA call report data. The next closest credit union in terms of ad spending was the $35 billion-asset Pentagon Federal Credit Union, which spent about $16 million.

Navy Federal serves all branches of the military, including the Navy, Army, Marine Corps, Air Force, Coast Guard and Space Force and their families.

Carrie Foran Sepulveda, vice president of membership for Navy Federal Credit Union, said its membership growth is fueled by several factors including brand awareness driven by national marketing campaigns, ads and word-of-mouth. 

"We research where our members are, what events they participate in and what media they consume," she said. "This way, we can reach them with our brand messaging on the right channels at the right time."

Another notable factor, Foran Sepulveda said, is that existing members play a role as advocates and often share the benefits of joining Navy FCU with their friends and families.

Technology has also played a role in member growth as Navy FCU has ramped up investments in its digital channels.

Foran Sepulveda said the credit union's growth has been especially strong on the East Coast, in Texas and California.

Last year, members visited one of the 354 Navy branches worldwide more than 21 million times. That is 1.4 million more service experiences than 2021, she said.

"Technology is no substitute for a personalized human touch, which is something we focus on in our growing branch presence," Foran Sepulveda said. "We're constantly looking for more opportunities to expand in our existing key markets, as well as new markets."

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Not everyone is thrilled with Navy FCU's exceptional growth.

Robert Flock, vice president in the office of strategic engagement for the American Bankers Association, said the "tax-exempt" credit union industry is receiving a subsidy from the American people to help provide access to financial services for traditionally underserved groups. 

"While some portion of Navy Federal's 13 million members undoubtedly fit that definition, it is clear that this nearly $170 billion financial institution has expanded far beyond its original mission — and taxpayers are footing the bill," Flock said.

Navy FCU's positioning with the military undoubtedly gives it a competitive advantage against other credit unions and banks, said Vincent Hui, managing director at Cornerstone Advisors.  

In an interview, Hui also said that having facilities in military locations helps as does a strong member service record. He listed PenFed and USAA, which have a similar focus on the military and a similar marketing presence, as Navy FCU's primary competitors.

"But their size and scale gives them the ability to deliver capabilities and member experiences that other credit unions will find hard to match," Hui said.