In the year since consumers were urged to move their accounts from big banks to credit unions on Bank Transfer Day (Nov. 5, 2011), credit unions in Michigan have reported an “extraordinary” surge in new members, according to a report from Michigan Credit Union League & Affiliates.
Using data from the National Credit Union Administration and the Credit Union National Association, MCUL said the 71,739 new members who signed on to credit unions in Michigan between June 2011 and June 2012 represent the fastest rate of growth since 2001 — and it occurred during a time of contraction in the state’s population. The membership growth rate was pegged at 1.6 percent, according to an analysis done by MCUL.
MCUL said that during the same 12-month period, Michigan’s credit unions statewide also saw a higher-than-average increase in the number of new checking accounts opened: 84,777 new accounts, up 3.9 percent from the same period a year earlier.
Across the U.S., the country’s 7,100 chartered credit unions added 2.2 million new members in the 12 months ending June 2012, a growth rate of 2.2 percent — the fastest since June 2000 to June 2001.
Total membership in U.S. credit unions today stands at more than 95 million.
A record number of nearly 2.9 million new checking accounts were opened at U.S. credit unions in the 12 months ended June 30, the most since at least 1989, according to data from NCUA and CUNA.
MCUL & Affiliates CEO David Adams attributes membership growth in Michigan and nationwide not to any one campaign by credit unions but to the reaction to increased fees imposed by banks.
“Bank Transfer Day urged consumers to transfer their accounts from banks to credit unions — and more than 2 million discovered credit unions nationally, including 71,739 here in the state of Michigan,” Adams said. “But the numbers show consumers in the past year have been acting as if every day is Bank Transfer Day.”
Credit unions are financial cooperatives owned by their accountholders rather than outside investors. Because they are member-owned and not-for-profit, credit unions return excess earnings to members, typically in the form of higher rates on savings accounts and lower rates on loans, and by charging lower and fewer fees.
MCUL provided the Business Journal with a spreadsheet of all Michigan credit unions that indicates their growth from the second quarter of 2011 through the second quarter this year. About 23 credit unions are based in Kent County; the largest is Lake Michigan Credit Union, which increased its statewide membership from 175,816 to 192,587. The second-largest credit union is Option 1, which went from 31,169 members statewide down to 30,552 this year.
The third-largest based in Kent County is West Michigan Credit Union, which went from 15,790 members last year down to 14,809 this year. The fourth-largest is Grand Valley Co-op, which had 14,087 last year and 14,002 this year. Fifth-place Community West went up, from 13,486 members to 13,952 currently.
Below are the four largest credit unions headquartered in Muskegon County out of 13 total, and their membership change from last year to this year:
- Service 1, from 16,674 to 17,111
- Harbor Light, from 10,890 to 10,836
- Muskegon Co-op, from 8,509 to 8,738
- Muskegon Governmental Employees, from 5,466 to 5,446
The MCUL data shows only three credit unions with headquarters in Ottawa County. The largest, Tri-Cities Credit Union, went from 4,801 members last year down to 4,647 this year.
Out of 39 total credit unions listed for Kent, Muskegon and Ottawa counties, 26 saw a decline in membership from 2011 to 2012. One stayed the same, and the other 12 increased. The largest increase was for Lake Michigan Credit Union, with 16,771, or slightly more than 9.5 percent above last year. The largest decreases in the group were West Michigan Credit Union, down 981 or 6.2 percent; and Option 1, down 617 or 1.9 percent.
The survey by MCUL also shows that of the 39 credit unions, 24 increased their number of checking accounts, known as “share drafts” in the credit union industry. Nine saw a drop in the number of checking accounts, and three did not change.
The survey data for the year running from Q2 of 2011 through Q2 of 2012 indicates Lake Michigan CU had a decline of more than 7,000 “share drafts,” and Option 1 had more than 450.
“At Option 1, we did a cleanup of duplicate or unused checking accounts in July, but we’ve since been adding new accounts,” said Jerri Schmidt, vice president of marketing at Option 1. She said the change from June to October was a net increase of 155.
Schmidt said there is a long history of credit unions in West Michigan, with many in the Grand Rapids area approaching 70 years or more.
“For example, Option 1 is 76 years old this year,” she added. Option 1 is the result of mergers and has its roots in the original telephone company employees’ credit union.
Schmidt said people became more concerned about their money a few years ago as the Recession dragged on and some banks began to fail.
“They know a credit union is a cooperative concept,” she said.
“I think that once (the recession) became an issue, a lot of folks took a look at credit unions and said, ‘I don’t belong to one, but it’s time. I’d better join one,’” she said.
Many individuals in West Michigan have accounts at both banks and credit unions, she noted, so it’s hard to tell how much business, if any, banks have lost to credit unions here.
“Consumer awareness has always been challenging for credit unions,” said Schmidt. She believes that “has a lot to do with the fact that people didn’t think credit unions were as sophisticated, but now they’re finding out that they are. And in some cases, a lot of credit unions are more sophisticated than banks when it comes to loan approvals, to online services, mobile banking …”
She believes credit unions are more likely to embrace new technology because they are smaller organizations than banks, and banks have stockholders to think of first.
“You have to be making those people who own you happy,” she said.
According to a CUNA analysis, Michigan consumers save about $200 million a year by using credit unions rather than banks, which averages out to about $81 a member or $154 per family.
About 80 percent of credit unions provide at least one free checking account with no minimum balance requirement and no maintenance or activity fees, according to CUNA.
Organized in 1934, the Michigan Credit Union League is a trade association representing credit unions statewide. Based in Lansing, the MCUL offers credit unions assistance in the areas of regulatory compliance, legislative advocacy, media advocacy and operational information.