The Great Credit Union Deposit Swap

In search of a new strategy to raise deposits, Credit Human partners with University FCU in a one-of-a-kind member-sharing arrangement.

Top-Level Takeaways

  • University FCU members join Credit Human to access competitive rates on share certificates.
  • The deposit product accounts for nearly 4% of Credit Human’s share certificates.

Two Texas credit unions are $26 million and 600 members into a product partnership that combines a central cooperative principle with a critical business need.

The product, a bundle of share certificates, allows University Federal Credit Union ($2.2B, Austin, TX) to offer favorable savings rates to members and supplies Credit Human Federal Credit Union ($2.9B, San Antonio, TX) with new cash for lending.

The two credit unions have been working on the Cooperative CD since 2013, when UFCU was awash in deposits and Credit Human needed fuel for its lending pipeline.

Click the tabs below to view graphs.


Deposit growth rose sharply at University Federal Credit Union as the recession took hold.


For the past 10 years, the loan-to-share ratio at Credit Human has exceeded 100%.

And whereas credit unions have a long history of sharing resources loan participations are a good example the rules for loans and deposits are different.

So, why not share members? But Credit Human and UFCU found that was easier said than done.ContentMiddleAd

It took three years to get to the point where we could take this live, says Eric Malagamba, CFO at Credit Human. The biggest part was negotiations with the NCUA.


Credit Human FCU
Data as of 09.30.17

HQ: San Antonio, TX
MEMBERS: 236,531
ROA: 0.04%

The regulator liked the idea of sharing members, according to Malagamba, but the common bond was an issue. The credit unions worked around that through the Longhorn Foundation, an organization that can accommodate members from both credit unions.

Technology was another issue.

The credit unions use MeridianLink software to open the CD accounts, but integration issues required the two organizations to work even more closely together than they originally anticipated. Malagamba and Yung Tran, an executive vice president at UFCU, credit two employees UFCU retail deposit product manager Emmy Hill and Credit Human member operations manager Laurie Thomas with leading the day-to-day machinations that make the arrangement work.


University FCU
Data as of 09.30.17

HQ: Austin, TX
MEMBERS: 230,484
12-MO LOAN GROWTH: 10.3%
ROA: 0.58%

Then there’s the matter of trust.

The 600 members of UFCU who have joined Credit Human since the CD went live in January 2016 could easily just join Credit Human. But, just as the deal was first struck with a handshake between CEOs, there’s the understanding that there’ll be no cross-selling. And UFCU makes nothing but member happiness on the deal.

This is about working together to give our members what they need instead of sending them down the street to a bank, Yung says.

The CD has been available for a couple of years, but it didn’t gain the name Cooperative CD until January 2017. That’s when it really gained traction. As of third quarter 2017, it accounted for approximately $26 million of Credit Human’s $694.2 million in share certificates.

According to Hill, UFCU markets the CD via drive-thru banners, digital ads, and targeted emails with open rates of 45%. Targeted members also hear about the Cooperative CD at the teller line and by phone.

A UFCU web page that promotes the Cooperative CD explains the partnership with Credit Human. UFCU also sent a Cooperative CD marketing email in April 2016 that targeted 15,614 members with total deposits of more than $2,500 each, excluding IRA and checking balances. Click here to view the email.

The success is more from our front-line staff and outbound sales team assessing our members’ needs, Hill says, We don’t lose our members to Credit Human; rather, our members appreciate UFCU giving them choices.

The CD rates currently range from 1.59% for 12 to 17 months to 2.81% for 84 to 120 months.

That’s good news to a major member segment that Tran says UFCU is targeting: people on fixed incomes.

Malagamba says approximately 45% of the money is in one-year CDs, 18% is in 24-month notes, 12% is in 36-month notes, 14% is in 60-month notes, and 6% is committed for 10 years. And, according to Malagamba, half of the one-year notes already are being renewed.

Malagamba and Tran agree that the Cooperative CD exemplifies Cooperation Among Cooperatives, the sixth of the Seven Cooperative Principles.

We’re proud of what we’ve done here, Tran says.


May 30, 2019

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