While some are content with the status quo, 17% of federally-insured credit unions indicated on their September 30th Call reports that they intend to add at least one more branch location in the next twelve months.
One of these credit unions is the nations largest: Navy FCU, which, in addition to being more than 3 times larger than the second largest credit union, is larger than all except the largest 25 U.S. banks. We expect large institutions to continue their growth.
However, fifty 5-Star credit unions with assets less than $13 billion, but that are "on the Grow" can be found on page 5 of this week's issue of Jumbo Rate News.
To Branch or Not to Branch
That has been the question, particularly since COVID. And for the nation’s credit unions, the answer more often than not is: To Branch.
Of course, not every credit union feels that way. 5-Star Alliant Credit Union, headquartered in Chicago, for example, has no physical branches. Nor does it have any ATMs of its own. Its corporate office is not even open to the public. All business is conducted online or over the phone, and it has no intention of changing.
That’s one. There are over 4,600 other federally-insured credit unions in the U.S., and most of them seem to feel differently.
On their September 30, 2023 Call Reports, 789 C.U.s indicated they had plans to open at least one new branch in the next twelve months; two-thirds of them are rated 5-Stars.
On page 5 we listed 50 such 5-Star credit unions that have assets of less than $13 billion, and both a) increased their branch size in the 12 month period ending September 30, 2023 and b) expect to add one (or more) branch offices in the next 12 month period. While we always expect the biggest to continue to get bigger, some of the larger credit unions that we omitted from the list due to size, are worthy of mention.
In particular, 5-Star Navy FCU, Vienna, VA, our nation’s largest credit union, by far. With $168 billion in assets, it is more than three times larger than the number 2: 5-Star State Employees' C.U., Raleigh, NC, (assets of $50.676 billion). Navy FCU added 19 new offices during the specified 12-month time-frame, while State Employees’ CU added two. Both expect to add more this year.
Established by seven Navy Department employees in 1933, Navy FCU now has more than 13 million members and operates though over 350 branches worldwide. In spite of what its name may suggest, Navy FCU caters to all military branches, Department of Defense personnel, veterans and their respective families.
However, Navy FCU has been making headlines for the past few months, and it’s not because of new branch openings or its size, but a CNN report published in December.
According to that report, and a lawsuit filed shortly thereafter, in 2022, over 75% of Navy FCU’s mortgage applications made by white applicants were approved while only 56% of Latino applicants and 48% of black applicants – with similar income and debt-to-income ratios—were approved.
More damning still it reported: “Notably Navy Federal approved a slightly higher percentage of applications from white borrowers making less than $62,000 a year than it did of Black borrowers making $140,000 or more.”
Navy FCU is now under the microscope. And rightly so. An opinion piece by Kenneth H. Thomas in the American Banker (February 12, 2024), sheds additional light on the subject.
Navy FCU is not like any other credit union. In fact, it has more assets than all except the largest 25 U.S. banks (i.e. it’s huge!).
We know Ken Thomas. As the president of Community Development Fund Advisor and the nation’s foremost expert on the Community Reinvestment Act (CRA), we listen to him. In his opinion, if Navy FCU had been subject to CRA rules, this disparity would have been caught and halted long ago.
Mr. Thomas believes that CRA should at a minimum, apply to the largest credit unions as well as to credit unions wishing to acquire a bank. Considering that the CRA record is a major issue when banks seek to acquire other banks, it makes sense that credit unions seeking to do the same should be subject to similar scrutiny. This probably makes sense for the 710 so-called “Complex” credit unions (a designation used by the NCUA for those with assets exceeding $500 million) as well.
However, imposing CRA requirements on smaller credit unions that have homogenous common bonds, (like the seven original members of Navy FCU) would be overkill.
Two other credit unions would also have appeared on page 5 were it not for their size:
5-Star Boeing Employees Credit Union, Tukwila, WA (BECU), is the nation’s 4th largest credit union with nearly $30 billion in assets. Two new offices last year brought its branch total to 62. In addition to those affiliated with Boeing, BECU membership is open all of Washington state as well as parts of Idaho and Oregon. While BECU has no branch presence of its own in either Idaho or Oregon, it is a member of the Co-Op nationwide shared branch network. Perhaps these states are where it plans new locations.
5-Star Mountain America Federal Credit Union, Sandy, UT is #9 by asset size and missed the list with an assets $5 billion over our $13 billion asset cutoff. Its membership consists of several employer groups in and along the Rocky Mountains. Its branch offices naturally run up and down that same stretch, with two glaring exceptions. None of Mountain America FCU’s 106 offices are located in Colorado or Wyoming. Mountain America added three new offices last year and expects to add more this year as well. Colorado, here we come? Time will tell.
