A Fresh Market For A New Charter

Lessons learned during an expansion into Texas’ Rio Grande Valley have informed policies and practices throughout the NavyArmy footprint.

Chartered in 1955 to serve employees of Corpus Christi Naval Air Station, NavyArmy Community Credit Union ($2.1B, Corpus Christi, TX) has a proud history of meeting the financial needs of area civil servants despite fierce competition for that business.

“We made our mark by offering products and services to enlisted recruits and other civil workers,” says Ashley Smith, marketing director at NavyArmy.

In fact, the credit union focused almost exclusively on military affiliations including Naval Air Station Corpus Christi and Corpus Christi Army Depot as well as their support enterprises for the first 48 years of its operation. It also ventured into outside select employee groups (SEGs) through mergers with smaller credit unions like Texas Department of Transportation, Alice Teachers, and Gainan’s Chevrolet City Employees.

By the end of 2002, the institution counted approximately 87 local employers and more than 36,000 individuals among its field of membership. Its membership penetration was at 98.3%, but this slow and steady approach was not without its challenges.

“I did a lot of on-site marketing to these businesses encouraging them to offer credit union membership as an HR benefit,” Smith says. “That was a slow process, and it took forever just to get 10 people.”

Embracing Charter Changes

Base realignments and closings that threatened the military installations NavyArmy counted among its primary SEGs signaled a final tipping point for the credit union, and it began searching for new ways to protect its future.

“Our growth wasn’t slowing,” Smith says. “But it was time to make a change.”

The credit union saw near limitless potential for growth within its geographic footprint but realized it couldn’t tap this bounty with its original charter. In 2003, it converted to a community charter serving the counties of Nueces, where NavyArmy is headquartered, as well as Aransas, Bee, Jim Wells, Kleberg, and San Patricio.

These were underserved counties in which the credit union already had a presence and some name recognition, and a testimonial campaign that featured real members showing off how long they had been members served to further boost those feelings of familiarity.

(1) When NavyArmy converted to a community charter it began using real members of all ages to show membership was open to anyone. (2) The credit union launched its More Yes, Less No ads during the housing crisis to let members and potential members know it was in the market and ready to lend. (3) During the government furloughs, the credit union went to market with a message that underscored its stability and local ownership. (4) Moving into a new market prompted NavyArmy to launch an awareness campaign and trademark the phrase, Does your bank do that?

However, economic shifts plus the differing consumer priorities that come with a more diverse, community-based membership means NavyArmy now must communicate more frequently with its members than when it only served select portions of the populace.

“Every two years we change our message,” Smith says. “We went out to the market with the ‘you could be a member’ message. Next it was ‘more yes, less no’ in which we pushed real estate. Then we had ‘safe, sound, secure’ during the furloughs.”

According to CEO Sarah O’Brien, the one constant around which the credit union has built its business and its reputation is that it works to say “yes” more than “no.”

This notion has evolved into a deep-rooted culture that is ingrained in new hires starting from day one: if they can’t do what the member wants, what can they do instead?

“We take care of people who own a home and a couple of cars,” O’Brien says. “They have kids. Maybe they didn’t take good care of their credit and they need some help to rebuild it. That’s what we’re good at.”


4 Lessons From The Rio Grande Valley

NavyArmy Community Credit Union had research and market data prior to a 2011 expansion, but it still took boots-on-the-ground experience to learn all about its new membership.

  1. Family orientation is important for many member groups, so develop relationships and ask for the business.
  2. Don’t make assumptions about credit scores or income levels. A mix of affluent, average, and credit-challenged individuals are in every market and demographic.
  3. Be prepared to deal with a lot of cash, especially in regions with an abundance of off-the-grid commerce.
  4. Even if you already speak the language, take the time to learn about regional dialects.

In 2011, growth opportunities in unchartered counties beckoned NavyArmy.

“The norm for a community credit union is to serve approximately 20% of its potential membership,” O’Brien says. “There were about 440,000 people in our six counties, and we had well over 80,000 members.”

Unfortunately, NCUA declined the credit union’s request to expand into additional counties, so NavyArmy converted to a state charter.

“The state was more friendly toward field of membership expansion,” says Dana Sisk, the credit union’s chief operations officer. “We were about to tap out in this market. We had a huge market share, so we studied where we wanted to be.”

The credit union hired St. Louis-based real estate development firm Clayco to analyze expansion opportunities and in 2011 moved into Texas’ Rio Grande Valley (RGV).

With this expansion, NavyArmy picked up Cameron and Hidalgo counties, regions with a growing population that already exceeded 1 million people. What’s more, the residents of these two southern counties were similar to those within NavyArmy’s existing footprint.

“The Rio Grande Valley demographics lay right smack on top of ours,” O’Brien says. “That’s a big part of why we chose that market.”

According to the U.S. Census Bureau, homeownership for Corpus Christi is nearly 60%, the median value for homes is approximately $110,000, and the median household income is $47,000.

However, not all the similarities were positive. For example, two cities within NavyArmy’s market Corpus Christi and Harlingen have some of the lowest average credit scores in the country. According to a 2013 report by Experian, Harlingen’s average credit score of 640 puts it fourth from the bottom in a listing of 143 cities. Corpus Christi’s 647 average score fared only marginally better.

Despite widespread credit challenges, the credit union’s research also showed there were areas of opportunity.

“Especially in the Valley, we have some affluent first- and second-generation Hispanic members, “Sisk says.

Similar Markets Yet A Whole New World

Armed with the market study information, NavyArmy knew it had some challenges chief among them name and industry recognition.

“Our message down there was, ‘We’re not new, we’re just new in town,'” Smith says. “The campaign was all about credit unions and how they’re like a bank but better. That expansion was when we trademarked the phrase, ‘Does your bank do that?'”

The credit union also had to overcome a language barrier despite already having a large Spanish-speaking membership segment.

When a local broadcaster rejected a radio spot because the pace and syllabic emphasis did not reflect the way RGV residents spoke, NavyArmy submitted a script and the radio station provided the voice talent to re-record the commercial.

“We have to be careful with our messaging,” Smith says. “They have their own lingo in the Valley. We’re speaking TexMex Spanish and they’re speaking first-generation Spanish. That was something we couldn’t have known even from our market study.”

Third, the cost of marketing in the RGV is more expensive, so NavyArmy has had to deploy alternative methods of outreach. To date these have included electronic billboards, storefront branches, chamber of commerce events, and retail outreach.

Many retailers in the market must charge a fee for plastic bags, so in early 2014, the credit union ran a promotion in which it printed coupons on the back of H-E-B grocery store receipts encouraging shoppers to stop by a NavyArmy branch and pick up a free recyclable bag to use instead.

Finally, moving into the Rio Grande Valley has forced NavyArmy to think about accessibility in different ways.

“We have two branches in the Valley,” Smith says. “But they are storefronts, so they don’t have the facilities and resources that we do up here.”

To help compensate, the credit union is examining its hours of operation and is pushing its mobile capabilities. Additionally, on-site ATMs in the RGV face outward, which allows members to conduct business after hours.

The credit union is also considering deploying ATMs that allow users to deposit paychecks and make loan payments any time. This is especially important because RGV members prefer to pay loans with cash. In fact, the credit union’s McAllen branch is a net cash-out operation.

“We’re looking at different ways to accommodate these members’ preferences,” Smith says. “These are things that nobody could have told us. We just had to get down there and learn. But anything we’re doing in the Valley is going to help us up here, too.”

October 13, 2014

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