Just Add Coffee: How 2 Credit Unions Are Rethinking Branching

The CEOs of Canopy Credit Union and Med5 FCU offer insights into sharing branch space with unlikely partners.

Top-Level Takeaways

  • Co-locations diversify branch networks and can attract community members to a branch for reasons completely unrelated to banking.
  • The collaborations provide opportunities for credit unions to align themselves with unlikely partners, and some arrangements provide non-interest income streams.

Co-location strategies in which credit unions share space with another business often completely unrelated to financial services have become more popular in recent years. As credit unions continue to rethink their brick-and-mortar networks, two institutions share how their partnerships with local coffee shops have helped perk up their branching models.

Bean Counters

Pam Brown-Graff, CEO of Med5 Federal Credit Union ($110.3M, Rapid City, SD), had long planned a co-location strategy, so when she brought the business case for branch expansion to the credit union’s board, she offered a vision that had been percolating for many years.

I always knew our next branch would involve a coffee shop under a co-location and co-branding arrangement, she says. You can’t be a financial institution with your finger on the pulse of your membership without seeing how much your members spend in the coffee industry alone.

Brown-Graff dug in with her research on coffee, looking into everything from sourcing and roasting beans to the operating model needed to run a coffee shop. Her plan was to build a coffee shop from the ground up rather than partner with an established shop or major national coffee retailer. Her board unanimously approved her concept and authorized the funding to get the new enterprise off the ground. In her final comments to the board, she said, We’ll call it The Bean Counter, a playful nod to a stereotype associated with financial institutions.

The Bean Counter, a coffee shop located inside a Med5 FCU branch.

From the beginning, Med5 designed the new branch with the intention of benefiting the Rapid City community throughout the process as well as in the final product. Local contractors many of whom were Med5 members built the branch, and Brown-Graff collaborated with an architect on the building’s design, features, and flow. She met with local business leaders, nonprofit charitable foundations, and regulatory officials to promote the concept and gain the required permits. She sourced the coffee beans and found a local roaster before hiring a general manager who she sent to barista school to better learn the coffee trade.


Med5 FCU
Data as of 12.31.21

HQ: Rapid City, SD
ASSETS: $110.3M
MEMBERS: 6,723

The facility opened in 2019, and one of the most popular features has been a lower-level conference room used by local groups for everything from business networking to book and sewing clubs, training for nurses, meeting places for teachers and retiree groups, and more. The room is nearly always in use, and there is no charge to use it, although groups must make bookings in advance.

We became friends of the community before we moved a shovelful of dirt, Brown-Graff says.

Today, a credit union committee redistributes the Bean Counter’s profits to deserving nonprofits in the area. And a Med5 debit rewards program gives members a 10% discount, along with rewards points that are trackable and redeemable through an app. Thanks to drive-thru windows, members can do their banking and get their java without leaving the car.

Since the new branch opened, Med5’s assets have grown from $70 million to $100 million, much of which Brown-Graff attributes to heightened awareness of Med5’s mission in Rapid City. Not even the pandemic slowed its growth. Drive-thru service enabled the credit union to continue serving members without missing a beat even during the worst months of the pandemic.

Perfect Timing

When Canopy Credit Union ($202.7M, Spokane, WA) wanted to expand, it had already decided to lease about half of the new branch to a co-location partner. Charlotte Nemec, Canopy’s president and CEO since 2018, knew she wanted to increase the efficiency of the branches as well as attract younger members. The credit union acquired a building in an ideal location but scrapped its initial renovation plans in favor of a complete rebuild that leveraged the original foundation. During construction, the credit union signed a coffee partner to a lease, but the selected partner determined later it was not yet ready to expand.

Ladder Coffee Roasters, another established Spokane coffee shop, noticed Canopy’s social media posts about seeking a coffee partner. Ladder’s owner, Aaron Rivkin, reached out, andby the time the two connected, Ladder had opened a bustling retail location and was looking for a second.

Aaron and Ladder were precisely what we were looking for, Nemec says. I loved their story. It fit who Canopy was all about and the timing was perfect.

The view from inside Canopy Credit Union looking toward Ladder Coffee, in a building the two businesses share.

Canopy moved into the new building in September 2019, with Ladder following three months later. Along with the coffee shop inside, Canopy brought in ITMs to provide a high level of service within a small branch. High-top tables give members a place to sit or stand while they wait to meet with credit union staffers, two or three of which are on-site to help with account and lending needs.

With the pandemic beginning just six months after the new location opened, the decision to outfit the branch with ITMs proved particularly well-timed as many institutions moved to limit branch access.

When COVID hit we were able to continue serving via our drive-thru at all branches and keep our tellers socially distanced, Nemec says. We did close the lobbies for a bit but were also able to re-open our lobbies sooner than we would have if we hadn’t had the ITM model. Ladder closed for a short time but reopened with limited hours at Canopy locations, equipped with drive-thru service.


Canopy Credit Union
Data as of 12.31.21

HQ: Spokane, WA
ASSETS: $202.7M
MEMBERS: 12,805
12-MO LOAN GROWTH: 11.2%

Ladder has a lease with the credit union for space at two different branches and pays rent to use the facility, generating non-interest income for Canopy. The credit union did not provide details of that arrangement.

Although Canopy was looking to differentiate itself within its market, it never lost sight of the industry’s people-helping-people ethos.

We well understood our coffee competition was fierce, Nemec says. We wanted to focus on and reinforce why credit unions were created in the first place, which was to serve people of modest means.

As part of that mission, Canopy became the Spokane region’s only CDFI-designated credit union.

The formula has proven a success. Since the branch opened, membership, lending, and checking account penetration are all on the rise. More importantly, says Nemec, there is a heightened awareness in Spokane about what credit unions stand for and how they contribute to the fabric of a community.

Nemec says the partnership between Canopy and Ladder shows bigger isn’t always better, and even the smallest credit unions can still make a major impact in the communities they serve.

We punch above our weight class, she says, noting that Canopy is helping local nonprofits improve how they serve the community as well as offering its own employees paid time off to give back to the community.

When people in the communities of Spokane and Pend Oreille need a loan, the CEO says, they are more likely now to remember the credit union with the coffee shop.


May 2, 2022

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