Big Challenges Confronting Small Credit Unions

The entire CU movement is building a broad base of support to help small CUs survive and thrive.

March 01, 2012
/ PRINT / ShareShare / Text Size +


Big Challenges Confronting Small Credit Unions


  • Small CUs face enormous challenges in the
    marketplace and economic environment.
  • The CU movement remains committed to helping small CUs survive.
  • Board focus: Collaboration is one way to share expert resources and help your CU thrive, no matter its size. 


It’s tough to fight economies of scale. Huge factory farms are replacing small family farms. Malls are replacing Main St. We’ve become a nation of Wal-Marts, chain restaurants, and national retailers. Fading fast are the neighborhood grocery stores, delicatessens, bike shops, and hardware stores.

Small credit unions face the same daunting challenges. Many of them have merged with larger credit unions to offer their members a wider array of products and services. Other small credit unions are surviving by doing a few things extremely well.

Today, approximately 40% of all U.S. credit unions have less than $10 million in assets, meeting NCUA’s definition of “small.” CUNA defines “small” as those with less than $35 million in assets. Nearly two-thirds (63%) of all credit unions would fit within CUNA’s definition.

Whatever the definition, small credit unions face enormous challenges in the current marketplace and economic environment. Some of the more pessimistic observers go so far as to say the challenges are insurmountable. But others see a brighter future.

“Small credit unions fill a niche large credit unions just can’t fill,” says Frank Michael, president/CEO of $21 million Allied Credit Union, Stockton, Calif., and chairman of CUNA’s Small Credit Union Committee. “Large credit unions do a great job of providing multiple services efficiently. Small credit unions excel at member service because we know our members. There’s a need in the marketplace for both.”

The entire credit union movement remains committed to ensuring that small institutions thrive. One strategy is collaboration.

Driven to collaborate

The slogan “We’re better together” sums up the purpose of the Southern California Credit Union Alliance (SCCUA), says Jon Hernandez, who founded the group in 2008. He’s president/CEO of three California credit unions: $8 million asset City of Downey Federal Credit Union; $25 million asset Mattel Federal Credit Union, El Segundo; and $58 million asset CalCom Federal Credit Union, Torrance.

Hernandez says SCCUA exists for two reasons. “One is to reduce operating expenses,” he says. “The second is to do things we couldn’t afford to do otherwise, some of which now are being mandated.”

About 60 credit unions belong to SCCUA. Membership is open to credit unions of all sizes, but most members have less than $100 million in assets. To belong, members pay $50 per meeting or $200 per year.

The format of the quarterly meetings includes a morning executives-only forum at which participants discuss concerns and devise ways to collaborate. “Our meetings follow the ‘Las Vegas Rule,’ ” Hernandez says. “What’s said here, stays here. We want to be able to talk openly.”

Vendors join the meetings in the afternoons. Participating vendors have agreed to provide discounts to SCCUA credit unions.

Collaboration possibilities among members are numerous: electronic funds transfer processing, loan processing, conducting due diligence, and marketing. One of the major successes so far is partnering with an insurance company to lower the costs of employee benefits. “Our credit unions have saved from $1,200 to $25,000, depending on their number of employees,” Hernandez reports.

SCCUA members also gather for two free training events each year, and this summer will mark the group’s first conference, where attendance will be open to members’ volunteers, as well as nonmember credit unions. “It will be a sort of SCCUA expo,” Hernandez says, “so people can come see what we do.”

Next: On a mission

Post a comment to this story

What's Popular

Popular Stories

Recent Discussion

Who Should Be the 2015 CU Hero of the Year?

View Results Poll Archive