By Ray Birch
MANCHESTER, Conn.—The CEO of one small credit union here says growth isn’t all that important to her shop and that its limited assets are what have helped it to return more value to the membership.
Lori Herrick heads $23-million Manchester Municipal FCU, which was recognized by CUNA with a Benefits of Membership honor for 2017. The award recognizes CUs that return great value to their account holders. This past year, according to CUNA, Manchester Municipal gave back an average of $576 per household.
“You always hear that small credit unions have to grow to survive, that we have to get scale. I have heard that again and again sitting in credit union meetings. But I have never thought that is what we need to do,” Herrick said. “We are very happy and successful at our asset size.
Indeed, Herrick said the credit union enjoys being small.
“We like it. We have grown 5%-10% each of the last 20 years, that is as long as I have worked at the credit union,” she said.
Net Worth Steady At 10%
Manchester Municipal has averaged about $150,000 in annual income over the last five years while its net worth has hovered steadily near 10%.
“We just keep moving along,” Herrick said.
Being small keeps the credit union closer to its members, insisted Herrick, who said that leads to great personal service and strong account penetration.
“We have 1,865 members who are very active in using the credit union,” she said, noting that members average three accounts in addition to the standard share account. “They are incredibly loyal—we serve the municipality of Manchester, so police, firefighters, the Highway Department… Some credit unions that are our size tell me they have 30,000 members. I ask them, ‘How can their members be using the credit union much if they have that many members and the same assets as us?’”
That closeness and personal service a small credit union brings to a closed field of membership simply leads to a stronger bond with members, said Herrick.
“You’ll never see any of my members going to BofA,” she said. “The people in this town know us, they know we have great rates, they know we care about them, and I really think they look at the credit union as a special place for them.”
Herrick believes that type of connection would not be present if the credit union moved to a community charter.
“I know many community chartered credit unions across the country are growing well, and that more CUs are seeking those charters,” said Herrick. “But I am also aware of a few community chartered credit unions in our town that are facing challenges.”
Manchester Municipal’s wide range of services, too, keeps members active, she said.
“We offer all of the services of the big banks—mobile, bill pay … We were one of the first in the area to offer remote deposit capture,” Herrick said. “Years ago I knew we needed that service, as we have one location. This addressed that situation. It’s about staying relevant with our members.”
Top-Of-Market Rates
Manchester Municipal’s rates are top of market, including its 1.99% APR for A paper on new car loans and 2.49% for used. The CU’s regular share account pays 40 basis points.
“And we don’t charge hardly any fees,” she said. “We have free checking, our overdraft charge is $20, and our late payment charge is $10. We don’t believe in fees.”
While Manchester Municipal is not looking to dramatically grow assets, it has been focused on increasing the number of younger members.
“You do need to bring in younger members and we do that,” she said. “We started several years ago by offering student loans, a product not many financial institutions here provide. Now many of those Millennials are taking our car loans and have our checking accounts.”
About all of the advice small CUs are given to gain scale, Herrick said she prefers to “go with her gut. I go with what we know. We’re small, our members love our service and services, so they use us a lot. One day we might be $30 million in assets or more, and if we get there, great. Meanwhile, we are very happy with where we are.”