Credit unions shift tactics as member growth slows

Faced with flat growth in membership numbers, credit unions in northern Nevada increasingly focus their efforts on deepening their relationships with existing members.

That's particularly important for credit unions that spurred their membership figures in recent years by offering loans through car dealers loans that generated new members who had little other connection with the credit union.

In an annual analysis of the state of the industry statewide, the Nevada Credit Union League said membership figures were essentially unchanged from year-earlier figures.

The 0.14 percent growth in credit union members in Nevada during 2006 was one-tenth the national average, said the credit union league's analysis.

While no one tracks industry-wide figures for northern Nevada, institutions in Reno and Carson City said the trend appears to be holding true here as well.

"There's a lot of competition out there among financial institutions," says Phil Doss, marketing manager of Carson City-based Greater Nevada Credit Union.

Along with big banks and community banks, credit unions also must battle brokerage-house accounts and Internet-based companies for deposits and loans, Doss says.

Elizabeth Hadler, marketing director of Reno-based Great Basin Credit Union, says competition among financial institutions is especially spirited among Hispanic and other minority groups that are a fast-growing portion of the northern Nevada market.

And Hadler says some credit unions face tough year-over-year comparisons because they signed on many new members through loan programs offered through auto dealers in 2005.

Those loan customers, she says, became credit union members by opening small savings accounts say, $25 but had little interest in the credit union other than the availability of car loans.

Greater Nevada Credit Union, in fact, bills itself as the No. 1 vehicle lender in northern Nevada.

"It's been a positive factor for us," says Doss. "We haven't seen a drop-off in 18 months.

Today, he says, those customers present an opportunity for credit unions to sign them up for additional services with checking accounts topping the list. The institution that provides checking to a consumer generally has a strong position to sell more services as well.

As credit unions seek to sell more services to existing customers, Doss says they face a conundrum in their marketing message.

On one hand, he says the not-for-profit credit union movement has positioned itself as different from its for-profit competitors such as banks and investment houses.

At the same time, however, credit unions that want to deepen their relationships with customers need to tell them that credit unions offer the same services as banks.

"We struggled to get our arms around which tack we ought to take," Doss says.

Credit unions strategies differ, too, depending on their charters. While some institutions remain close to the credit unions' traditional roots with memberships drawn from specific employers or community groups, others have throw their doors open.

Great Basin, which was chartered in 1951 as a credit union for Bell Telephone employees, today has 15,000 members and is open to the entire community. Great Basin, which has some 51,000 members, is open to any one who lives, works, worships or goes to school in 10 northern Nevada counties.

By contrast, Frontier Financial Credit Union in Reno is among the institutions that haven't sought a community charter. Its 8,400 members work in local government or the health-care industries.

Frontier Financial's chief executive officer, Bruce Rodela, says the recent slowdown in membership growth isn't reason for alarm.

In his 31 years with nonprofits, Rodela says he's seen membership numbers ebb and flow several times, and he says credit union managements learn to shift their approach with each shift in the market.

Like other credit unions, Frontier Financial today is working to deepen its relationships with existing customers, and it's also looking to widen its reach through new branch locations.