Consumers and small business owners are attracted to an increasing variety of financial institution options.
Alachua County, with its large population of public employees and students, is a stronghold for credit unions, with their market share far above average.
“Credit unions have a big penetration in Gainesville,” says Mark Flannery, Bank of America Eminent Scholar at the University of Florida. “In addition to having a good base here, credit unions have benefited from membership requirements loosening up over the years.
“Now you just have to had walked across campus a couple times to be able to join a credit union.”
Nationwide, credit unions hold just 8 percent of federally insured deposits, according to the Wall Street Journal. Exactly what proportion they hold here is not clear, due to differences in reporting systems between banks and credit unions.
What is clear is that the three largest Gainesville-based credit unions are neck-and-neck with banks in the area in size.
Campus USA Credit Union has more than $884 million in deposits and 65,000 members. Although some of these are from its branches in outlying counties, Campus’ total deposits compare well to Wells Fargo, the bank with the highest deposits in the county, at $841 million.
Some Credit Dissatisfaction with Big Banks
Consumer ire directed at big banks is providing some benefits for Alachua County credit unions, which already had been gaining ground among local financial institutions.
Credit unions reported a surge in new customers this fall, which some say was due, in part, to the national “Bank Transfer Day” on Nov. 5, which was a grassroots campaign against big banks that called for a voluntary switch from commercial banks to not-for-profit credit unions.
Florida Credit Union gained twice as many members as usual during October, November and December, says Vice President of Marketing Chris Clore. “We didn’t do any advertising about Bank Transfer Day,” she says. “But we reaped the benefits.”
Compare that to previous months, which reflected a relatively flat period for credit unions headquartered in the county. Assets rose only $12 million, or .6 percent, from Oct. 1, 2010 through Sept. 30, 2011, according to the League of Southeastern Credit Unions. And membership in the local credit unions had even declined 1 percent over the year ending Sept. 30, says Mike Bridges, the spokesman for the credit union league.
What did grow substantially from October through September were business loans to members, rising $12.1 million, or 11 percent, which reflects the growing involvement of companies with credit unions, Bridges says.
But not all big banks are being hurt. Wells Fargo, which has nine local branches, has gained customers and deposits locally since it formally switched the branding of its office from Wachovia in June, says Kathy Harrison, vice president of corporate communications for the Florida Region.
“We’re able to offer our business customers an increased array of products and services with the merger,” Harrison says.
Emphasis on Service & Responsiveness
Florida Credit Union caters to small businesses, Clore says. She emphasizes that it has no fees on accounts and offers a full range of services, including credit card servicing and Small Business Administration loans. The credit union’s commercial representatives make a practice of going to businesses to meet with the owners and give out their cell phone numbers to business customers, Clore says. “We’re hands-on for the busy business owner.”
Like other Gainesville-based credit unions, all lending decisions at Florida Credit Union are made locally, Clore says. Loans up to $50,000 are made at branches.
Campus has the flexibility to customize its members’ needs, says commercial loan officer David Barber. “Our emphasis is on our members and empowering them to reach their full financial potential, which in turn strengthens the communities we serve,” he says.
Community-based banks also emphasize their responsiveness, says Don Davis, Gainesville president for Capital City Bank. Capital City enjoyed good publicity when the “Move Your Money Project,” a nationwide campaign that encourages people to transfer their accounts from large banks to local financial institutions, listed it, along with Merchants & Southern Bank, on its recommended list.
The nationwide interest in banking alternatives is helping Capital City. “We’re hearing from individuals and business owners who are looking for the flexibility of a community bank,” Davis says. “They also want to make sure that their new banker will take their phone call or get back to them right away.”
Wells Fargo stands up well in terms of responsiveness, ranking No. 1 among big banks in American Customer Satisfaction Index, Harrison says. “By knowing our customers and understanding their needs, we can respond quickly.
“We support and encourage local decision-making on loans.”
Strong Growth in Recent Decades
Regardless of the ups and downs during the last couple years, overall, local credit unions have grown impressively since the mid-1990s.
Campus USA Credit Union, the largest local credit union, has more than tripled its assets over the past 12 years, when it switched from a federal to a state charter, changed its name from Your Campus Federal Credit Union and opened its membership beyond the University of Florida to all people who live, work or go to school in Alachua, Marion and Columbia County. It has since opened membership to Clay, Lake and Sumter counties.
Sunstate Federal Credit Union has gone from $70 million to $283 million in assets, and membership has risen from 15,000 to 28,000 since 1992, says Robert Hart, the vice president for marketing. Florida Credit Union has gone from $74 million in assets in 1995 to almost $500 million today.
Like Campus USA, both Sunstate Federal and Florida Credit Union have expanded their membership beyond their original groups—federal employees in the case of Sunstate and teachers in the case of Florida.
Sunstate is in a good position—literally, Hart says. The credit union opened new branches in recent years, and the new branches are in more visible locations than the smaller branches they replaced, Hart says.
For example, the new Sunstate branch at 2516 N. 43rd Street in Gainesville replaced one that was hidden away in Magnolia Plaza on West 39th Avenue. “You know that the new branch is there,” Hart says. “We’ve solidified our footprint throughout the five counties we serve.”
Campus also has been building. It completed a $20 million, 95,000-square-foot new headquarters in Jonesville in August 2010 and a new branch in Alachua in November.
Lending Practices Vary
Credit unions vary in their lending criteria.
Sunstate Federal regards itself as relatively conservative, which has served it well in the economic downturn, Hart says.
On the other hand, Florida Credit Union regards itself as relatively flexible in its lending practices, Clore says. The credit union is able to help customers that other financial institutions would consider too risky because it’s small enough to have a good handle on the demographics of its customer base—and the reliability of various groups of customers, she says.
“When someone falls behind on their payments, we contact them in a financial-adviser mode,” she says.