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Low fees, community involvement and customer service lead to blockbuster growth in Alabama’s credit unions.
Alabama Credit Union employees celebrate being named 2011 Credit Union of the Year in the category of credit unions with assets under $500 million by the League of Southeastern Credit Unions.
Credit unions in Alabama have been growing in recent years, adding 6,000 members in the first quarter of 2011, according to the League of Southeastern Credit Unions. This growth comes in spite of, or perhaps because of, the economic downturn since 2008.
“Credit unions have a conservative business model,” says Patrick La Pine, president and CEO of the LSCU. “Their bread and butter business has always been auto loans, home equity loans and mortgages. They didn’t make the sort of speculative investments that got some banks in trouble. I think a lot of people are turning to credit unions for security.”
As not-for-profit, member-owned institutions, credit unions can often offer lower fees than banks, a benefit members appreciate. “Whenever banks merge, credit unions see growth,” La Pine says. “Banks will often start to nickel and dime you with fees for checking accounts and services. That drives people to credit unions."
Serving a five-county area in central and northern Alabama, America’s First Federal Credit Union knows the value of keeping fees low. “We sit around in management groups, trying to figure out how to lower fees,” says Phil Boozer, vice president of marketing and business development. Once they sign up new members, America’s First works hard to keep them happy. “Everyone talks about good service, but we take it to heart on a daily basis,” Boozer says. “We send out surveys every week to members with a series of seven questions, such as did we call you by name, did we handle your account in a satisfactory manner, did we answer your questions? Our corporate goal is to maintain an average positive response of at least 6.7 out of 7.”
Kayce Bell, chief operating officer of Alabama Credit Union, agrees on the importance of good service to increase membership. “Many of our members became dissatisfied with the anonymity they found themselves encountering with a merged bank and the fees that accompanied it,” she says. “So they turned to a credit union. Although people may join a credit union for price considerations, they stay for the service. Today most financial institutions have very similar rate structures. The service makes the difference.”
One of the most common service related-complaints with any business is the delay in getting a problem resolved, and Alabama Credit Union has addressed this. “We have learned that our members hate automated phone trees,” Bell says. “Our members want to hear somebody when they call. When you ring us, 99 times out of 100 you’re going to get a live voice, and 93 percent of those calls never have to be transferred away.” The credit union also made it easy to get problems resolved after hours, setting up a sort of an email hotline that allows a member to contact the top management about a problem and have it resolved even on the weekend. The slogan “We’re listeners. Not tellers,” appears on the Alabama Credit Union web page, an attitude that Bell says helped fuel double digit growth in membership over the last few years.
Originally chartered in 1934 to serve employees of Bell Telephone, Alabama Telco Credit Union is one of the oldest credit unions in the state and now has branches from Huntsville to Dothan. “Our members come from all walks of life,” says President and CEO Linda Cencula.
“With all the information at our fingertips the public is way better informed now than they were back in the day, and I think they just do their research. They look for financial stability and they look for an institution that’s convenient,” Cencula says. “We’ve been around for a long time and have a five star rating from Bauer Financial, an independent rating service. Also, we’re online with home banking, bill pay and mobile banking, so that members can bank through their telephone and access their account pretty much wherever they are. All of those things combined have led more people to us.”
For sustained growth, even the best credit unions need to do more than rely on word of mouth referrals to bring in new members. Serving 12 counties in northwest Alabama, Listerhill Credit Union has used a number of marketing methods to promote the advantages of credit unions. Marketing Director Kristin Mashburn recalls that one effective tool was a billboard with a simple message—Join Us. It’s Easy. “This helped people understand that they didn’t need to belong to a member company to join the credit union,” she says.
A recent Listerhill outreach campaign relied more on face-to-face contact, however. “We reached out to schools by visiting them and making it really easy for the employees and parents of students to join and open accounts,” Mashburn says. “If there was a PTA meeting that was taking place, we would go there and have information available.” Listerhill tries to reach as broad a cross section of the community as possible, particularly younger people. “Our age demographic is older than the U.S. average,” observes Mashburn, “so we are trying to make younger people understand what their fathers and grandfathers know about credit unions. We do a lot of online work directed towards them; we have appointed a spokesperson for the younger generation; and we are actively making efforts on the University of North Alabama campus to educate them about credit unions.”
With more than 337,000 members, Redstone Federal Credit Union, headquartered in Huntsville, is the largest credit union in Alabama and one of the largest in the United States. “In Madison County, 90 percent of all families have at least one member who belongs to RFCU,” says Joyce Dye, senior vice president of communication. How did they achieve such a high saturation level? Although RFCU has placed TV ads in the past, by far the greatest part of their marketing consists of interactions with their member groups. “We have more than 1,800 companies and many organizations and service groups that are associated with us over seven counties,” Dye says. “We go to new hire orientations at the companies and to freshman orientations at colleges and universities. Last year on campus, we gave out branded laundry baskets and the kids absolutely loved them.” Being involved with fundraising for nonprofit groups is another way RFCU enhances its visibility. “We support more than 1,200 nonprofit events per year, more than any other credit union that I’ve ever heard of,” Dye says. “For most of the events, we try to have representatives there to give out credit union information and answer questions.”
Like many credit unions, RFCU makes business and consumer loans and is expanding this service throughout the state, giving more opportunities for growth. Jack Wright, vice president of lending and business retail, points out that a business owner doesn’t have to have a direct connection with Redstone Arsenal to join RFCU. “If a small business wants a loan from us, we can find a way to make them a member of the credit union,” he says. “They can join one of our affiliated organizations, for example, and become eligible for membership that way.”
William Stevenson is a freelance writer for Business Alabama. He lives in Huntsville.
