Why Pioneer FCU Tops The Leader Boards In Share, Loan, And Member Growth

The Idaho credit union uses marketing, deposit, lending, and ALM strategies to increase member value.

 
 

Share, loan, and member growth are three major metrics that help formulate a big picture of a credit union’s performance.

In a third quarter clean sweep, Pioneer Federal Credit Union ($438.0M, Mountain Home, ID) topped the leader tables for all three of those measures, besting 343 credit unions in the $250 million to $500 million asset range.

Leaders at the 63-year-old former air base credit union that now serves most of southwest Idaho have relied on upgraded systems and processes to fuel growth. A merger, relationship lending with a twist, a core processing conversion, mobile apps, and some good, old-fashioned asset liability management have underpinned growth as well. And, of course, people make a difference, too.

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“You need to establish the right chemistry, find the right employees, and then growth should come,” says Curt Perry, who joined the credit union in 2002 and became CEO in 2011. “Bigger doesn't always lead to better, but better can easily lead to bigger. Do your part to nail down the culture and work atmosphere first, the rest will follow.”

Here Perry and his vice president of marketing, Elizabeth Thomas, share a deeper look behind Pioneer FCU’s financial performance numbers.

Click through the tabs below for an in-depth discussion about Pioneer's financial performance.

MEMBER GROWTH

FOR ALL U.S. CREDIT UNIONS $250M-$500M | DATA AS OF 09.30.16
© Callahan & Associates | CreditUnions.com
# Name State Total Assets (In Millions) Members 3Q16 Members 3Q13 Member Growth: Past 3 Years Member Growth: Past 3 Years CAGR
1 Pioneer ID $444.3 50,798 31,707 60.2% 17.0%
2 Atomic OH $262.1 42,322 26,486 59.8% 16.9%
3 Del-One DE $415.3 54,529 38,680 41.0% 12.1%
4 Safe America CA $439.0 34,442 24,981 37.9% 11.3%
5 People's RI $450.6 38,479 28,201 36.5% 10.9%
6 Guardian AL $375.2 47,783 35,338 35.2% 10.6
7 UniWyo WY $296.0 26,075 19,370 34.6% 10.4%
8 Cornerstone Community Financial MI $278.2 27,709 20,610 34.4% 10.4%
9 Team One MI $488.6 47,746 35,725 33.7% 10.2%
10 Frankenmuth MI $457.7 35,652 26,887 32.6% 9.9%

Source: Callahan & Associates

A merger in 2015 added a few thousand members and contributed to the momentum already underway at Pioneer Federal Credit Union. New products and services as well as a focus on helping members improve their financial wellness, including their credit scores, all underpin a growing membership roster.

“Some credit unions grow by any means necessary for the sake of growth,” says CEO Curt Perry. “I don't believe in growing to establish bragging rights. We don't offer the highest rates in the market to inflate deposit growth. We don't offer the lowest rates in the market to corner the loan market. We don’t have to.”

Pioneer absorbed $15 million, 4,000-member Cornerstone Credit Union in June 2016. Lending, meanwhile, grew through both direct and indirect channels, and the credit union dramatically broadened service options after a core platform conversion in 2012.

“With the new core, we were able to put in place some of the programs and systems we had wanted for some time,” says Elizabeth Thomas, the vice president of marketing for the 50,000-member cooperative. “We could start building a service model that allows our members to be served in a way that works best for them.”

That service model includes 14 branches with more on the way, mobile banking complete with bill pay and check deposits, and interactive teller machines that expand personal service hours at many of Pioneer’s drive-throughs to 7 a.m. to 7 p.m. on weekdays and 9 a.m. to 2 p.m. on Saturdays. Members can also apply for loans and new accounts through online and mobile channels.

LOAN GROWTH

FOR ALL US CREDIT UNIONS $250M-$500M | DATA AS OF 09.30.16
© Callahan & Associates | CreditUnions.com

# Name State Total Assets (In Millions) Loans 3Q16 (In Millions) Loans 3Q 13 (In Millions) Loan Growth: Past 3 Years Loan Growth: Past 3 Years CAGR
1 Pioneer ID $444.3 $354.2 $157.0 125.6% 31.2%
2 Glendale Area Schools CA $341.5 $84.7 $39.4 114.8% 29.0%
3 Fairfax County VA $370.7 $291.1 $138.8 109.7% 28.0%
4 Guardian AL $375.2 $278.3 $133.2 109.0% 27.8%
5 SafeAmerica CA $439.0 $395.6 $189.4 108.9% 27.8%
6 Sun Community CA $407.6 $293.5 $149.6 96.2% 25.2%
7 UNCLE CA $355.5 $244.6 $127.5 91.2% 24.3%
8 Dover DE $455.4 $297.6 $159.4 86.7% 23.1%
9 IH OH $298.3 $165.5 $89.0 86.0% 23.0%
10 Alliance CA $410.9 $336.9 $197.0 71.0% 19.6%

Source: Callahan & Associates

“We presented an engaging marketing campaign that focused on individual member success stories and promoted our Credit Score Analysis program across many mediums,” Thomas says.

The credit-building service helps members consolidate and eliminate debt as well as raise their credit score. And when members qualify for the credit union’s 720 Club, they get better rates that can lead to significant savings.

Community and family relations also contribute to the credit union’s lending success.

“Our employees ask friends, family, and members to see if we can lower their monthly payments and raise their credit score,” Thomas says.

Third-quarter lending in 2014 was up 70% from the year-ago quarter before falling to level with its peer group and then above average again last year. Perry says the 2014 lending surge occurred across the portfolio: RV loans increased 68%, auto loans increased 169%, credit card lending increased by 30%, for example.

“We fine-tuned our indirect lending department in 2014, but our growth was not isolated to indirect lending,” the Pioneer CEO notes.

SHARE GROWTH

FOR ALL US CREDIT UNIONS $250M-$500M | DATA AS OF 09.30.16
© Callahan & Associates | CreditUnions.com

# Name State Total Assets (In Millions) Shares 3Q13 (In Millions) Shares 3Q16 (In Millions) Share Growth: Past 3 Years Share Growth: Past 3 Years CAGR
1 Pioneer ID $444.3 $256.1 $403.1 57.4% 16.3%
2 Frankenmuth MI $457.7 $245.2 $384.8 56.9% 16.2%
3 Guardian AL $375.2 $202.0 $313.0 55.0% 15.7%
4 Freedom First VA $453.0 $241.0 $356.8 48.0% 14.0%
5 Fairfax County VA $370.7 $194.8 $283.0 14.0% 13.3%
6 Southwest Airlines TX $426.4 $259.8 $372.5 43.4% 12.3%
7 Superior Choice WI $352.9 $214.2 $303.1 41.5% 12.3%
8 Partner Colorado CO $325.4 $205.4 $285.9 39.2% 11.7%
9 Piedmont Advantage NC $327.2 $202.0 $279.3 38.2% 11.4%
10 Family Trust SC $442.7 $254.8 $352.0 38.2% 11.8%

Source: Callahan & Associates

Perry says efforts to increase core deposits over the past few years have included instant issue cards, personalized debit and credit cards, programs that round up debit card purchases, reward and youth checking accounts, and self-service conveniences.

Those, along with competitive savings rates, have helped give the Idaho credit union the liquidity needed to sharply grow lending. Pioneer’s loan-to-share ratio is now 88.3%, versus 75.5% for its $250 million to $500 million asset-based peer group and 77.2% for all credit unions nationwide, according to data from Callahan & Associates.

Asset and liability management strategies came into play as Pioneer worked with share growth dips and spikes, including year-over-year jumps of 35% in second quarter 2015 and 19.5% in third quarter 2016. The latter ranks in the top 5% nationwide regardless of asset class.

“When I took over in 2011, I wasn’t crazy about our balance sheet composition,” Perry says. “Especially on the deposit side of the house.”

At the time, Pioneer held 55% of its deposits in certificates that were five-year obligations locked in at the elevated rates prevailing in 2008 and 2009. That when the credit union entered into a net worth restoration plan with regulators.

“By the end of 2014, 32% of our deposits were in certificates, with the rest sitting in core deposits,” Perry says. “Morphing your deposit mix takes time, especially with long-term certificates.”

The Idaho credit union’s average rate for share certificates was 1.49% in third quarter 2016. That’s more than twice the 0.71% average of its asset-based peer credit unions and nearly three times the 0.50% average for credit unions nationally.

“It isn’t a secret what our focus has been since 2010,” Perry says. “Over that period of time we’ve increased our core deposits by $111 million while reducing our certificate balances by $170,000.”

At the same time, total dollars in regular shares and checking accounts doubled.

“Certificates serve a purpose when it comes to asset-liability management,” Perry says. “However, you can throw a high rate out there and grow certificates without any effort. When you can grow your core deposits as we’ve done, it shows you’ve strengthened member relationships and trust across the board.”

 

 

 

Feb. 6, 2017


Comments

 
 
 
  • Am I just not understanding the Share Growth Leaders slide or are the 2016 and 2013 share totals backwards? It appears that all credit unions share balances fell from 2013 to 2016...
    Nick Brown
     
     
     
  • Nick - you are right. The column headers are reversed. We will fix that now!
    Alix Patterson
  • Am I just not understanding the Share Growth Leads slide or are the 2016 and 2013 share totals backwards? It appears that all credit unions stare balances fell from 2013 to 2016...
    Nick Brown