A Shrinking Network Of Branches

Like banks and thrifts, credit unions are shuttering more branches while stepping up technology at their remaining locations.

 
 

For much of credit union history, the thinking has been that the more branches a cooperative has, the more potential customers it can reach. And for years, the number of branches steadily rose nationwide even as the number of credit unions declined.

Today, that trend is reversing with no end in sight. Credit unions are closing branches that are struggling and looking to do more with the ones they already have. Technology and the recession are to blame for this reversal. As consumers increasingly go mobile to manage their finances, savvy credit union executives are improving technology in the branches not only to accommodate new ways of banking but also to curb costs.

TOTAL BRANCHES AND CREDIT UNIONS OVER TIME
DATA AS OF DECEMBER 31, 2012
© Callahan & Associates | www.creditunions.com

total-branches

Generated by Callahan & Associates' Peer-to-Peer Software.

If there was ever any doubt that the recession had a hand in culling the numbers of credit union branches, consider these figures. In 2003, there were 19,190 credit union branches, and by 2008, that number had peaked at 21,401. When the recession came and earnings for the industry fell, credit unions stopped opening new branches. Between 2008 and 2009, there were 60 fewer branches, and by December 2012, the total number had shrunk to 20,995, down 434 from the year before, a 2% reduction. Most of this decline was because the number of credit unions also fell, by 280, as a result of mergers and liquidations.

Even though the industry overall lost branches, the decline was not spread evenly across the country. The South and West both saw virtually across-the-board decreases, while the Midwest and Northeast reported many states actually having more branches this year than last. Wisconsin, for example, added 71 branches — the highest number for any state — over the last year.

The map below was constructed using data from the National Credit Union Administration. The data is based on actual branch locations, not simply grouping all branches into the state where the credit union is headquartered. For example, Navy FCU has branches in multiple states, but relying only on data about where each credit union is headquartered mistakenly would place all of those branches in Virginia.

CHANGE IN NUMBER OF BRANCHES BY STATE
DATA AS OF DECEMBER 31, 2012

change-in-branches

Generated by Callahan & Associates' Peer-to-Peer Software.

Although the network of branches has largely stopped expanding, some credit unions are bucking this trend. Navy, which has the second-highest number of branches, added nine to its network just since 2011. That same year, 24 other credit unions added at least five branches, followed by 13 credit unions adding five or more branches in 2012.

LEADERS IN NEW CREDIT UNION BRANCHES
DATA AS OF DECEMBER 31, 2012
© Callahan & Associates | www.creditunions.com

Credit Union State Branches In 2012 Branches In 2011 Change In Branches Assets
Navy VA 229 220 9 $52,436,122,890
BCU IL 37 30 7 $1,778,825,531
Members First MI 8 2 6 $316,929,120
Royal WI 48 42 6 $1,295,129,210
Security First TX 16 10 6 $372,393,336
State Employees NC 246 240 6 $25,475,783,710
USAlliance NY 17 11 6
$803,138,256
Connexus WI 12 7 5 $458,700,694
Educational Systems MD 11 6 5 $750,490,978
Landmark WI 31 26 5  $2,117,379,313
Mountain America UT 74 69 5 $3,367,630,484
Rogue OR 14 9 5 $805,473,141
Self-Help NC 24 19 5 $410,035,233


Generated by Callahan & Associates' Peer-to-Peer Software.

Although the branch network may be shrinking overall, the remaining branches are becoming more technologically advanced. In 2012, 463 credit unions reported having kiosks in at least one of their branches. Kiosks, which have been called ATMs on steroids, can be used to do online banking, apply for a loan, or make a deposit, as well as other transactions. The number of credit unions with kiosks soared 33.4% over the past year as executives increasingly delegated non-value-added transactions to the kiosks and reserved employees for tasks that bring in more revenue.

Branches in high schools are also becoming more common as credit unions reach out to the next generation of members before they have a chance to form a relationship with another financial institution. More than 390 credit unions had branches in schools at the end of last year, up from 357 in 2011.

The trend of consolidating branches is not unique to the credit union industry. A recent Wall Street Journal article noted that banks and thrifts are decreasing the number of branches they maintain. In 2012 alone, banks and thrifts shuttered 2,267 branches, bringing the total number down to 93,000. The trend is continuing this year. PNC recently announced that it will close 200 branches in 19 states by the end of 2013, according to Patch.com, and New York consulting firm AlixPartners predicts that the number of bank branches will drop to 80,000 over the next decade.