You’d need a keen eye to pinpoint a federal credit union in the Hawkeye State. Of the 88 credit unions operating in Iowa, just one is a federal charter.
Despite broader opportunities for field of membership expansion under a state charter, the $150 million First Federal Credit Union is sticking with the federal charter, and CEO Tom Chalstrom says it’s doing just fine, thanks. “We provide a member experience that sets us apart,” he explained. “We compete with state charter credit unions, community banks and big banks. Charter doesn’t matter. It’s the experience you provide for your members.”
While acknowledging the opportunities of the state charter, including field of membership, First Federal Credit Union is a federal charter “because it fits the operational capabilities that fit our field of membership,” according to Chalstrom. First FCU serves Linn, Dickinson, Clay and Buena Vista counties. In fact, the credit union converted from a state to a federal charter, Chalstrom said, sometime before he became CEO.
The credit union recorded membership growth of 9.89% as of September 2018, and 16.88% loan growth (above the state average of 8.2% as of June 2018). The $150 million credit union has a 105.66% loan-to-share ratio. Chalstrom credits its digital transformation, a strategy set forth by the management and board, as a big piece of the credit union’s success. Not only is the credit union growing according to its financials, but it’s also growing in sophistication to ensure members have an excellent experience across all channels.
Chalstrom said First FCU is currently working with NCR to modernize its branches with Interactive Teller Machines. “We want to provide a superior experience to members when, where and how they want to use us. Some are high touch and others are high tech,” he said. The key is developing a strategy and fulfilling the mission of the credit union, Chalstrom added.
Score one for the little guys, but what are the larger credit unions in the state that have taken advantage of the state charter’s broader authorities? Dupaco Credit Union (currently $1.6 billion in assets but just $518 million as of June 2008) is helping members out this holiday season with its popular Holiday Club savings account. The credit union recorded a record $4.93 million was saved throughout the year and was paid out Oct. 30, 2018, to 4,882 participating members. The payout came within two weeks of Dupaco members also collecting more than $2.6 million in Thank Use, a campaign that rewarded members for using Dupaco’s services to boost their financial wellbeing.
“The habit of systematically saving money is a core principle of Dupaco,” Dupaco President/CEO Joe Hearn said. “Thrift by way of a Holiday Club account, which also earns daily dividends year-round, better prepares members when the holidays arrive.”
In other Iowa state news, one large credit union highlighted the contentious competition among financial institutions in the state. The $5.3 billion University of Iowa Community Credit Union will spend about $2.5 million to change its name, according to the Des Moines Register. The name tied to the Big Ten school has been controversial for years – plus the credit union’s massive size and growth. Finally, this summer Gov. Kim Reynolds signed a bill that bans Iowa credit unions from using state university names in their names. Unfortunately, in the bankers’ decision to continue to fight this battle, the $22 million University of Northern Iowa Credit Union in Cedar Falls was also caught up and will have to change the name its held since 1955, according to CU Times.
Larry McKibben, a board member of the Iowa Board of Regents that governs the state university system, raised reputational concerns in March that a scandal at UICCU – specifically naming Wells Fargo’s fictitious accounts scenario. Jim Disterhoft, CEO of UICCU, did not deny that reputation risk could be a legitimate concern, but also pointed out that McKibben did not disclose during the proceeding that he is a partner with a law firm in Marshalltown, Iowa, and also a part owner of Farmers Savings Bank, based in the same city.
But the drama and competition haven’t hurt Iowa’s state-chartered credit unions, which currently amount to 1.16 million members, $18 billion in assets and 8.2% loan growth, according to CUNA. Iowa’s credit union average $205 million in assets and post a 99.8% loan-to-share ratio. At the same time, the state’s credit unions’ net capital is a healthy 10.21% and delinquencies are just 0.7%.