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Virginia CU membership growth highlights the importance of scale

Itappears that, in at least one state, size does matter when it comes to creditunion membership growth.

Virginiais home to two of the three largest credit unions in the country by assets inNavy Federal CreditUnion and PentagonFederal Credit Union, and both have seen strong growth in the pastyear. Vienna, Va.-based Navy Federal's growth was 11.6% on a year-over-year basisat the end of the second quarter of 2016 while Alexandria, Va.-based Pentagonsaw 7.8% membership growth in the past year. But membership growth for Virginiacredit unions excluding the two behemoths was just 2.8% during the same period,an S&P Global Market Intelligence study found.

Year-over-yearmembership growth for the entire industry was 3.8%with only three states— Louisiana, New Jersey and North Dakota — and the District of Columbiaexperiencing negative year-over-year growth.

Virginiacredit unions also had the second-highest number of total members in the nationwith 10.4 million. Only California with 10.7 million had more members at theend of the second quarter.

RickPillow, president of the Virginia Credit Union League, said in an interviewthat two-thirds of the credit unions in the state hold below $100 millionin assets. He said some ofthe largest Virginia credit unions have been actively merging with otherinstitutions, bringing more products and services to a wider customer base. "Ourlarge credit unions are getting after it on membership growth," he said.

Increased value for members can often be achieved by largerinstitutions through economies ofscale, which provide opportunities to save time and money. That canallow for increasedservices at no cost to members.

The third-largest credit union in Virginia by membership, , experiencedyear-over-year membership growth of 3.1%. The Richmond, Va.-basedinstitution had 251,676 members at the end of the second quarter. Deb Wreden, vice presidentfor product and delivery strategy, said in an interviewthat while the credit union is pleased to see its membership grow, a moreimportant target is member engagement. Wreden said that entails making suremembers are participating in the credit union and looking to it first for theirfinancial service needs.

Futureplans for Virginia Credit Union Inc. include enhancements in technology andmarketing strategies that can help with awareness and appeal to prospectivemembers, she said. "We believe that being on the forefront of technologyand delivering innovative solutions will continue to attract new members,"Wreden said.

She added that being located in the same state as behemothsNavy Federal and Pentagon has had little impact on membership as those twoinstitutions have a nationwide membership and their branch footprint is morefocused in Northern Virginia and the Tidewater region, while the bulk of Virginia Credit Union Inc.'s membershipbase is in greater Richmond.

Pillow said membership growth in the state might be a signthat more of the public is beginning to understand what a credit union is.Still, he said there is room for growth, especially with 18- to 35-year-olds."There's more that needs to be done in that area, but I think some creditunions are making some inroads," he said.

Pillow pointed to the corridor from Northern Virginiathrough Richmond and into the Tidewater region as an area of strong recentgrowth. He said 75% of the state's credit unions operate in that area.

The state's field of membership rules and recent legislationhas also helped with growth. For example, a bill was recently passed in thestate's general assembly that allows two state-chartered credit unions to mergeeven if they have dissimilar charters. Pillow said such mergers can lead tomembership growth because members could have access to additional services thatthey would not have without the merger.

So will the state's membership numbers continue to grow?"I don't see any reason that we wouldn't continue to see some pretty goodgrowth," Pillow said.

Marketing, promotion and overall awareness are helpingto drive membership, but the recent Wells Fargo & Co. scandal has not hurt either, although Wreden said it istoo soon to tell how big the impact might be. "I do think the trust thatour members have in their credit union is a critically important asset and onethat we do not take for granted," she said.

"That's certainly just not the credit union way,"Pillow said of the Wells actions. "I can see some credit unions being ableto get some more folks to move over."