Driven by a desire to grow and guided by demographics, Wright-Patt Credit Union($2.9B, Beavercreek, OH) is looking about 70 miles east for opportunity.

The Dayton-area credit union is a year into an expansion strategy that has included three new branches in Columbus, OH, and plans for two more in the coming months.

According to the credit union, it has a relationship with more than 35% of the households in its two-county market. WPCU also does well among its billion-dollar peers and all credit unions nationally in member growth. According to Callahan & Associates data, the Ohio credit union has seen member growth of 10.51% at the end of the third quarter compared to 3Q 2013. That’s compared with 5.87% for all 225 billion-dollar credit unions and 3.54% for all credit unions in the country in the same time period.

In Dayton’s Montgomery County, the credit union ranks No. 4 in total deposits with a 9.22% market share that trails only three large banks. Wright-Patt also boasts an average of $86.9 million in deposits per branch, by far the most of all 42 credit unions and banks reporting from that county, according to CU Analyzer.

“We’ve had 10% growth or more in the Dayton market every year for the past 10 years,” says Darrick Weeks, chief operating officer at the 290,000-member institution. “We have more than our fair share in that market, so we had to make some strategic assessments.”

“We don’t shoot for growth for growth’s sake, but we have to grow revenue to provide value and service to our members,” he continues. “There are a number of ways to do it. Expansion is one of those ways, and we decided Columbus was the ideal market to do it in.”

Deciding Where

Home to state government, major insurance and retail employers, and one of the nation’s largest university campuses, Columbus has a relatively stable economy. WPCU, in fact, picked up branches there via mergers in the 1990s but closed them in 2000.Now, approximately 4,000 of the credit union’s 290,000 members live in Columbus.

“Columbus is the most-requested area by our members,” WPCU president and CEO Doug Fecher said last year when the credit union announced its expansion plans. “Folks will see a much different and much stronger credit union from the one that left nearly 15 years ago.”

According to Weeks, WPCU worked with a bank/credit union consultancy to crunch the numbers on all the major markets in the Buckeye State after all, Cincinnati is closer to Dayton than Columbus before deciding the demographics were right. WPCU already has a membership that skews young, an average age of 41, and Columbus has neighborhoods that cater to younger professional and moderate incomes like in Dayton.

The two cities will serve as hubs with spoke branches including two of the three new Columbus branches located inside facilities such as restaurants, fitness centers, and condo complex retail centers. Video tellers add to the efficiency of the branches, which will be relational rather than transactional centers, according to Weeks.

Leading With Lending

After Fecher and his team won the right to move into Columbus and Franklin County, with its 475,000 or so households, they got on the phone.

“We led into the market with indirect lending,” Weeks says. “We began outbound calling at least six months before we had boots on the ground.”

WPCU already reports sharply higher auto lending growth than its peers 25.37% year-to-year in 3Q 2014 compared with 18.55% in its peer group and the new operations are beginning to add to those numbers. Weeks says the first member center has generated approximately $3.8 million in loans and $2 million in deposits since it opened last December.

Staffing Up

Enthusiastic, committed staff is another key to expansion success, Weeks says, and hiring continues as the Columbus operation ramps up. WPCU hired Tammy Jones as market leader in March 2013. She had been with Credit Union of Ohio ($130M, Hilliard, OH) for more than 20 years, most recently as vice president of operations and chief operating officer. Other new positions for the Columbus market will include a financial planner, mortgage planner, and business services specialist who can meet members at any of the offices.

Meanwhile, approximately 30 WPCU staffers asked to transfer from Dayton to Columbus, Weeks says.

Risks And Returns

Weeks says WPCU expects to break even in three to four years on its investment in the Columbus market, with a return on investment of approximately 7% to 10% depending on location.

“That’s probably conservative,” the credit union COO says.

As for risk, according to Weeks, the credit union views it as inherent in the business, and the biggest risk comes from not executing on what it’s trying to do.

Having the right staff in place is key, Weeks says. So is understanding the competition.

For example, Huntington Bank is a major hometown financial institution and employer that has the Ohio State University business. However, WPCU’s market surveys discovered people view it as a regional rather than local bank.

And although banks have 94% of the Columbus market share, WPCU is cognizant of fellow credit unions.

“We don’t see them as competitors,” Weeks says. “We want to partner with them and take share from banks.”

He adds that some credit unions are excited WPCU is coming into the market, others not so much. “You can’t please everyone,” Weeks says.

4 Tips For Market Expansion

Dayton, OH-based Wright-Patt Credit Union is focused on an expansion that has taken it into the Columbus market. But rather than swing for the fences, it is hitting a lot of singles, says COO Darrick Weeks. He offers these tips for credit unions considering such expansions.

• Do your homework: Know the market and know how you can differentiate yourself. Do that in advance.
• Prepare for surprises: We found out the permitting process for construction in Columbus was different than in Dayton. That affected schedules.
• Prepare your staff and prepare your board: It won’t be profitable right away. You can’t assume that because you’re big in one market, you can walk in and be big in another.
• Let your talent shine: Hire, train, and retain the best people you can. Clear their way of obstacles and get out of their way.