Seeking more marketplace penetration, a few credit unions are opening branches in grocery stores, and more are expected to follow, according to industry officials and observers.
"Having a branch where our members shop is a way for us to be more convenient," said Jean M. Trainer, president of John Deere Community Credit Union, Waterloo, Iowa. The credit union said it plans to open its third supermarket branch this fall.
Banks have been doing branching through supermarkets for more than a decade. But for years, credit unions' limited customer bases made the practice unfeasible, said Charles W. Filson, president of the consulting firm Callahan & Associates.
"Most credit unions can't serve the general public so their ability to be cost-effective in supermarkets is limited," he said.
But now, through new branching strategies by community-chartered credit unions and "shared branching" -- a practice by which a group of institutions share a facility -- credit unions are starting to make inroads.
This summer, Citizens Equity Federal Credit Union, Peoria, Ill., opened a supermarket branch in a small community within its nine-county customer base.
The $1.2 billion-asset institution already has added more than 100 new accounts through the supermarket branch, according to David Brugger, Citizens Equity's vice president of branch operations.
"We'd been looking at how to serve the people there because the community isn't large enough to support a full-fledged branch," he said.
The branch helps customers cut one stop from their day, Mr. Brugger said.
"Our members can deposit their paychecks and then do their grocery shopping," he said.
Cheaper Than a New Branch
Making supermarket branches even more attractive, Mr. Brugger said, is that it is less expensive than opening a stand-alone site.
Because both John Deere and Citizens Equity serve entire communities, they could reach a lot of customers through a supermarket branch.
Credit unions with narrower customer bases can get into the act through shared branching, said Dale Verderano, vice president of operations for American First Federal Credit Union.
This fall the La Habra, Calif.-based credit union, which serves retail store employees, is slated to open a grocery store branch. Because the credit union is part of California's shared branching network, customers from about 50 other institutions will be able to use it.
"There are about 10,000 to 12,000 credit union members in about a two-mile radius around the store," Mr. Verderano said.
He estimated start-up costs for the branch to be between $180,000 and $200,000; opening a full-service branch would cost nearly four times
Customers also feel safe going to a grocery store branch because other people are around, he said. The credit union recently closed a branch that was robbed several times, he said.
Bonnie Irving-Strain, chief executive officer of Credit Union Service Corp., California's shared branching network, said the group was exploring opening facilities at other grocery stores.