Branch Planning Tips From the Trenches

By Mary Mink

"Every credit union has to manage its organization based on its strategic vision," says Dave Maus, president/CEO of $1 billion asset Public Service Credit Union in Denver. That applies to building plans as well.

Credit unions must consider the role of branches in the Internet Age. "We believe in a personal touch," he says. "Some people think that with home banking and automatic services, people don't need branches. But people with automatic services still use branches. They just use the credit union more and have more touchpoints."

John Hirabayashi, CEO of $1.1 billion asset Community First Credit Union, Jacksonville, Fla., takes a slightly different approach. "We want to be strategic moving forward. It's expensive" mentioning that a new branch costs about $2.3 million, including land, facility, and operations.

"Our top priority is evening out the mix between branch transactions and online presence," Hirabayashi adds. “Over the years, we plan to invest more in the online experience and replicate the sense of community and needs-based sales online as in the branch environment.”

Other tips

Among other tips for branch strategists:

* Do your research. "Having the research done in advance is invaluable. Not only does it help management to make the best decisions, it helps add credibility to those decisions when it comes time to explain to the board of directors how you made your conclusions," says Christina Brown, president/CEO of $860 million asset Gesa Credit Union, Richland, Wash.

* Keep an open mind. "Be open to considering all options when selecting the site. It's amazing what can be accomplished with a little creativity," Brown says.

* Know your neighbors. "Consider not only what other types of establishments would be located next to your facility but also what could be there later," Brown says. "With that in mind, it may be wise to negotiate changes to covenants, conditions, and restrictions before signing a purchase and sale agreement."

* Consider who uses your branches--and who doesn't. "There are clear trends emerging in how branches are being used,” Hirabayashi says. The industry’s year-over-year branch transaction decline "isn't temporary. There's a trend toward more use of other channels.... Who are you trying to attract down the road?"

* Look at properties now even if you're not ready to build. Maus says, "With real estate values down, it's a great time to buy."

Consider bank branches

Former bank branches can be an opportunity for credit unions looking for new locations. "Some of the best branches we have were bank branches bought for bargain prices,” Maus says. “I'd encourage credit unions in their planning process to recognize the tremendous opportunities in branching, filling voids in vacuums in the banking community."

Echoing that thought is Agnieszka Poslednik, chief operating officer for $1.2 billion asset Polish & Slavic Federal Credit Union, Brooklyn, N.Y.

"Seriously look at the current real estate market. Even if a credit union isn't ready to put a shovel in the ground, this is the time to buy. Even smaller credit unions can look at the future—two or three years down the road and see whether it's time to buy."