Increase Wallet Share In A Competitive Market

Sunset Science Park FCU’s average member relationship is double, even triple, that of peer credit unions.

This article originally appeared on on Nov. 26, 2012. The data below has been updated to reflect year-end 2013 data.

Sunset Science Park Federal Credit Union ($37.3M, Portland, OR) might be a smaller credit union, but it achieves impressive financial success by sticking to the core values of cooperative financial services. In doing so, it has established a valuable role in not only its core SEG membership but also in the greater community in which it operates.

We started small 52 years ago and steadily grew through word-of-mouth of our sponsor company, co-workers, and families, Rhonda Baggarley, CEO of the $37 million institution told in 2012. We’ve never had the philosophy to grow for growth’s sake. We grow so we don’t remain stagnant.

The credit union ranked No. 11 at year-end 2013 in Callahan’s Return of the Member [ROM] Index. The ROM index provides a comprehensive scoring system of member value that looks beyond the traditional safety and soundness issues covered by NCUA’s CAMEL scoring and other regulator examinations. ROM calculation uses 5300 Call Report data to capture a holistic view of a member’s relationship with the credit union and focuses on three core functions: savings, lending, and product usage. ROM ranks credit union performance according to asset-sized peer groups.

Data as of Dec 30, 2013, for credit unions with $20-50 million in assets
Callahan Associates |


Generated by Search Analyze

Its 12-month member growth of 2.02% bested the -0.80% of other credit unions in its $20-50 million asset base but fell short of the 3.92% posted by its state peers. Although that growth might appear low at first glance, the credit union pulls from a small Portland suburb with a population of less than 15,000. During fourth quarter 2013, the credit union captured 29.0% of its potential member market share. Comparatively, credit unions in Oregon captured 3.01% of their potential member market share while credit unions in Sunset Science’s asset-based peer group captured 4.47%.

Credit unions’ rosters have grown at a phenomenal rate the past few years. Now, the industry must consider a larger issue: How to capture greater wallet share. In this regard, Sunset Science’s 12-month member growth belies its success at creating holistic, dedicated members. Such success is evident, however, in share and loan growth, accounts per member, and average member relationship.

The credit union’s average share balance topped $15,000; that’s 50% higher than the average share balance of credit unions in Oregon and more than two times the average share balance of credit unions of a similar asset size.

Sunset Science tilts heavily toward mortgages nearly 80% of its loan portfolio is concentrated in first mortgages, which the credit union holds in-house. But members look to the credit union for more than solely mortgages. At year-end 2013, members at Sunset Science not only held more loan accounts per member 0.70 than the credit union’s state or asset-based peers 0.59 and 0.44, respectively but also held a higher average loan balance $16,759 versus state and asset-based peers $12,098 and $8,539.

Although, like any credit union, Sunset Science strives for a growing, diverse loan portfolio, it also understands the important role sticky deposit offerings such as direct deposit, automatic withdrawals, home banking, and PFM play in retaining members and building a loyal base. For that reason, Sunset Science educates new members about its breadth of services and clarifies questions during the onboarding process.

The credit union’s average member relationship at year-end 2013 hit $26,936 versus $7,103 for state credit unions, $6,700 for all credit unions in the United States, and $3,7235 for credit unions of a similar asset size. As of third quarter, 66.1% of members had a share draft account with the credit union, 13.5% had an auto loan, 22.7% had a credit card, and 7.4% had a first mortgage. Its loan-to-share ratio of 77.92% stacked up well against its asset-based peers’ ratio of 56.97%, and its 0.08% delinquency was significantly lower than that of its asset-based peers’ 1.39%.

At year-end 2013, Sunset Science employed eight FTEs and posted a 69.16% efficiency ratio compared to 14 FTEs and 80.58% efficiency ratio for credit unions in Oregon and six FTEs and a 94.13% efficiency ratio for its asset-based peer group (note: the efficiency ratio quantifies how well a credit union is using its expenses by measuring how much the credit union has to spend in order to generate $1 of revenue;alower value isbetter).

We’ve been adding new technology, products, and services as they come instead of pulling back and playing catch-up later, Baggarley says.

The credit union also cross-trains employees so they are comfortable talking across product lines. It is tried-and-true techniques such as this that have helped Sunset Science engage its members and establish a solid foundation that a credit union of any size could build upon.

What’s Your ROM Score?

Callahan’s Return of the Member (ROM) index is a great way
to judge your cooperative return. Want to see your ROM Score?
Callahan publishes it in three places: Search Analyze,
CUAnalyzer, and Peer-to-Peer.

May 26, 2014

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