Why 1 Region’s CUs Are Leading Nation

SEATAC, Wash.— Credit unions in the Pacific Northwest have been consistently leading all other CUs in the nation in lending growth, and one expert says the reason is cooperatives here do a great job of consistently explaining their value to consumers.

Credit unions in Oregon, Washington and Idaho typically appear at the very top of NCUA’s quarterly state-level data for lending, and other business categories as well. According to NCUA’s June 2018 data, for example, the highest median loan growth rates in Q1 were in Oregon (11%), Washington (10.3%) and Idaho 9.1%.

Troy Stang, president/CEO of the Northwest CU Association, said he believes the reason for the nation-leading performance lies in doing a great job of demonstrating—in dollars—what credit unions give back to members. Underlying that, he added, is the good understanding in the region of the cooperative model, observing that having worked for years with agricultural, dairy and other types of co-ops, consumers here clearly understand what a credit union is and the benefits they deliver over banks.

“I think that is very clear in the fact that more than 50% of all consumers in the Pacific Northwest are members of credit unions,” Stang said, suggesting results CUs are achieving here are an indication of what credit unions can achieve when they overcome some existing barriers and misconceptions, such as a belief by many consumers around the country that they can’t join a credit union.

What the Numbers Show

The impact Pacific Northwest CUs are having on consumers is also clear in median asset growth, according to NCUA Q1 data. Idaho (6.9%) was second in nation, Washington fifth (5%) and Oregon 12th (4%). For the same period, Idaho (5.8%) ranked second in median growth in shares and deposits, with Washington (5.2%) fifth and Oregon (3.9%) tenth.

“You need money to be able to lend at the levels our credit unions are reaching, and consumers are placing their deposits and trust in our credit unions. We are seeing amazing savings behaviors from members,” Stang told CUToday.info.

It also hasn’t hurt, acknowledged Stang, that the Pacific Northwest has been seeing strong population growth, noted Stang, who said that as more people migrate to the region a large percentage join credit unions.

Oregon (2.2%) was fourth in median membership growth at the close of Q1, Washington (2%) was fifth and Idaho (1.7%) seventh.

“The credit unions are here to serve the needs of families that are coming to this part of the country and the word about credit unions gets out quickly,” Stang said.

Expanding Fields of Membership

What has also been a boon to the Pacific Northwest’s credit unions and helped to drive the impressive lending results is the significant number of credit unions that years ago moved to expand their fields of membership.

“Pacific Northwest credit unions were some of the first CUs in the nation to expand their fields of membership,” explained Stang. “I believe we are ahead of the curve in getting consumers to understand that really anyone can join a credit union. Credit unions here have overcome that consumer misperception that they can’t join a credit union. There is a credit union for everyone to join.”

With most Pacific Northwest consumers understanding they can be part of a credit union, what happens, said Stang, is it come downs to a comparison of what they get from a bank and CU. He said when consumers look closely, they see the best choice is a credit union.

“When consumers know what a credit union is about and understand the cooperative business model, they will choose a credit union,” he said.

As CUToday.info reported, a 2017 NWCUA three-state analysis by economists at ECONorthwest documented an $8.4 billion positive impact on the economy from Pacific Northwest CUs—measured by credit unions’ jobs, real estate, better rates when compared to other providers, and other goods and services produced or purchased.

Not Keeping Quiet

Having a good story to tell isn’t enough, however, said Stang, noting most Pacific Northwest CUs do not sit quietly back and simply let consumers arrive at their own conclusions—they are vocal about the value they deliver. He said that is accomplished through extensive advertising in the three states, but also through programs designed to let members know exactly what they are getting back from the cooperative on a monthly, quarterly or annual basis.

“For example, in just two years’ time Oregon CUs have doubled the total economic value they are returning to consumers,” said Stang. “That is remarkable. There is a long list of credit unions that are doing a great job of sharing the value consumers receive from their membership. And this happens on a regular basis. When consumers begin to truly understand what credit unions return to them, that is when you start to see the outstanding performance numbers we are experiencing in the Pacific Northwest.”

Two Examples

Stang cited Rogue CU in Medford, Ore. for its “Member Contribution Account” in which each month the member receives an extra deposit from the CU based on the member’s participation.

“Members of Rogue CU clearly see what they are getting back from their credit union and it has generated a great deal of momentum for Rouge,” he said. “Consumers recognize that the more they engage with their CU, the more they get back.”
The $1.5-billion Rogue CU stood at $943 million in assets in 2014 and has added $15.7 million, $19 million and $17.2 million in net income, respectively, in the last three years. Through Q1 2018, net income for Rogue was $4.9 million.

Stang also pointed to a program at Tukwila, Wash.-based BECU that automatically lowers members’ loan interest rates when they improve their credit score and make on-time payments, and then telling members when that happens and making a big splash about the program in the media.

BECU has also developed a very effective member onboarding program, which will be featured as part of the CUTomorrow Conference in Austin, Texas, Sept. 9-11.

The Cumulative Effect

Stang summed up that what is occurring in the Pacific Northwest is simply a cumulative effect of a lot of positive things happening for credit unions over many years—consumer understanding of the co-operative business model, expanded fields of membership, breaking through the misperception that people can’t join, and returning superior value to consumers.

“From an advocacy perspective, we believe that everything that is done in the for-profit bank model, that consumers should have the option of doing those same things in not the not-for-profit framework,” said Stang. “The profits of the company should be directed back to its owners, and it is that value that makes credit unions credit unions. Armed with that philosophy, from an advocacy perspective, we have been able to remove many barriers for credit unions—barriers that limit markets and products, and barriers that limit joining a credit union. The rules have been freed up for the cooperative business model in the Pacific Northwest. That keeps credit unions relevant, and it shows in credit unions’ performance.”

Posted in NWCUA in the News.