MECHANICSBURG, Penn.—Members 1st FCU here saw a doubling of the number of new members it typically signs up after many consumer became “fed up” with a local bank’s merger.
During February and March Members 1st had consumers lined up inside its lobbies and out the doors of many of its 59 offices across central Pennsylvania. The $3-billion CU signed up 7,721 new members in February and 7,419 in March, almost twice the average number of monthly new enrollees.
The new members were coming over largely from Metro Bank, which had just been acquired by FNB.
“It was unbelievable,” said George Nahodil, EVP of retail delivery and marketing. “There were times when people were standing 20 to 35 deep in line, waiting 45 minutes to open an account, because they were fed up with the bank.”
Bank Customers Frustrated
Nahodil said that many of the new members told the credit union that they were already frustrated with the bank before the merger was announced and system integration problems developed that caused some customers to be denied access to accounts for about a day.
On top of that, added Nahodil, a number of Metro Bank customers had been talking on social media early in the year about looking for another FI.
“With any merger you surely have people who are concerned that they will lose their jobs, so morale goes down in the branches and customers sense that. We are well known for great service and for not having a lot of fees, and people began chatting on the Internet saying, ‘Go to Members 1st,’” said Nahodil, who does believe that when a big bank is involved in a takeover it ony adds to consumer fears that greater fees will be implemented.
George Nahodil
Nahodil said that the bank converts also told the credit union that they were looking for a financial institution that they could trust and was “going to be around.” Nahodil noted that in the past 18 months there had been three additional bank mergers within central Pennsylvania.
Those market conditions had already contributed to strong membership growth at Members 1st prior to 2016. It enrolled approximately 57,000 new members during 2015, after enrolling an equal number during 2014. “Among our staff we had been talking for some time that these mergers would create opportunities for us,” said Nahodil, adding that Members 1st stepped up its advertising following the announcement of the Metro Bank consolidation.
“We began promoting the credit union more heavily,” he said. “We used flyers, radio TV, billboards . . . Despite consumers being unhappy with their bank, getting a lot of new members doesn’t happen by the credit union just being there. You have to make sure the community is thinking about you.”
Members 1st didn’t cut any corners with the new enrollment process to accommodate the volume. Nahodil said staff were very careful to do what they always do—listen to new members and understand their needs.
“That resulted in us paying a lot of overtime to the staff,” said Nahodil. “Staff told us that it would take longer hours during this rush of new members—staying later and working on their off days. But they were happy to do it.”
Turning New Members Into Profitable Accounts
Some analysts have questioned whether credit unions have been successfully turning the record new memberships into profitable relationships. Members 1st said it has been doing so, reporting that of the new accounts signed up in February and March it averaged almost five services per member.
Members 1st is a SEG-based CU that switched to a community charter a few years ago, only to be driven back to an SEG charter after local bankers sued the NCUA for the chartering move. The credit union has more than 800 SEGs, which Nahodil said made it easy to accommodate the new members.
Nahodil believes that consumers turning to the credit union has more to do with what the CU delivers than how it is structured.
“I am not sure that people care much about our not-for-profit status and how we operate as much as they care about how they are treated well when they come here,” said Nahodil. “So this rush of new members is not a result of the credit union structure as much as it is what that structure creates.”