HOUSTON—Houston Police FCU has 65% of its members using its checking services and averages more than 4.5 services per account holder, which the $603-million CU credits to keeping to its roots.
HPFCU is among a shrinking number of CUs growing successfully without expanding its field of membership. The CU still only serves Houston police officers and their families.
Ayn Talley, who has led the credit union for 25 years, doesn’t think Houston Police would be as successful as it is today—posting 1.35% ROA with 13.12% capital—had it strayed outside its single sponsor.
“Serving a closed field of membership, we find it easy to focus on the specific and unique needs of our members,” said Talley. “That has helped us build extremely strong relationships.”
The checking account is the key service for cross sales. Houston Police FCU has two straightforward deals, one an interest bearing (.50%) account with a $6 fee when balances drop below $500, and a free non-interest-bearing offering.
Best In Checking
The credit union’s checking performance, with its high member penetration and $73 in annual revenue per checking account, landed it second in Moebs $ervices recent Best in Checking study.
One of the reasons is the credit union’s checking penetration is high is that it gets checking accounts in the hands of its members at an early age.
“We start with the cadets when they are in their pre-orientation class,” said Talley. “We talk to them about the credit union and how we are here to serve them throughout their careers, and then we offer them a specially priced credit card.”
That card charges no interest for the first six months and helps cadets cover the costs of equipment they purchase while training. Talley explained that cadets are required to buy two guns, handcuffs, a flashlight and a few other items.
“The card helps cadets out a great deal since what they are paid while they are at the academy is less than what they are paid once they graduate,” said Talley.
She said those kinds of efforts, including the credit union visiting the academy two times a week to help cadets with their CU business transactions, have helped HPFCU to sign up 95% of the graduates who become police officers.
Talley pointed out that the 4.5 services average begins right when cadets graduate.
“Cadets generally leave the academy with about five credit union services,” she said.
Focus On Checking
Checking is generally among the mix of services cadets take with them into their police careers, because the CU focuses on that service.
“We used to have about 45% checking penetration, but in the last 10 years we have taken that to 65%,” Talley said. “I think some of the appeal is that the service is priced straightforwardly. It’s pretty simple. And the majority take the free account. Again, I think most of our members take our checking account due to the relationship we build with them, more than the pricing.”
Overall, the credit union’s services are priced to be at the top of the local market, explained Talley.
Michael Moebs, Moebs $ervices
“Take our savings account. It is paying 2% on the first $100,000. And we actually had to change the pricing, because we were taking in too much money,” she said. “We used to pay 2% on the entire deposit, no matter how much. We reduced that to 1% on the balance portion above $100,000.”
Talley re-emphasized that catering to one type of member has helped the credit union build loyalty and grow.
“For example, not only can we structure services that meet the needs of police officers, we do the same with our hours,” she said. “We open our drive-through at 6 a.m. to serve those coming off the night shift.”
High Praise
“Houston Police is an old-fashioned credit union,” said Michael Moebs, economist and CEO of Moebs $ervices in Lake Forest, IL. “Their focus is entirely on their Houston Police members, and they serve these members extremely well. The Houston Police FCU’s expenses have been below 2% (expense to assets) for the past four years. HPFCU passes their expense control onto members with low loan rates and high dividends. They sell 50% more services than credit unions in their peer group because of their very tight control of expense . . . High capital, low expenses, high services per member, and low fees, Wow, that’s a good operation. My advice to banks and credit unions in Houston, forget any police business.”