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By Nathan Peck | MiBiz
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BATTLE CREEK — Amid the rough patches endured by many U.S. financial institutions, credit unions remain a bright spot.

Kellogg Community Federal Credit Union, for one, has experienced growth in the midst of financial uncertainty. The credit union experienced 7.65-percent growth in 2010, with $343 million in assets and $296 million of deposits. Founded in 1941, KCFCU now employs 92 employees at eight branches around Calhoun and Kalamazoo counties representing 29,500 members.

Amid uncertainty over financial reform, slow economic growth and financial distress for many Michigan residents, CEO Tracy Miller recently spoke with MiBiz to discuss the credit union’s position and prospects for continued growth.

MiBiz: We’re more than halfway through 2010, how is the year shaping up?
Miller: We are seeing membership growth come as members bring business relationships to us, both deposits and lending. They are being charged higher rates and fees at banks, and that is driving new member growth. Existing members continue to bring additional relationships to us. Our (National Credit Union Share Insurance Fund) protecting up to $1 million has been a factor as well. If you take into account the financial safety and security piece, people are starting to see the value of credit unions.

We are seeing more money moved to us, as members increase their number of relationships to us. The thinking used to be that you would be more secure by having your relationships spread around many financial institutions. Over the last couple of years, people are rethinking that after seeing the trouble that is out there. The credit union difference is that members are owners in a credit union, have a voice, can vote, and are nonprofit (organizations) — that is helping to drive that difference home in the minds of members and they see the value in that.

MiBiz: Where do you see challenges ahead?
Miller: We are closely watching financial reform and new regulations. We are starting to see that impact our members, as it is costing us money and time while not really protecting consumers. (On the lending side), collateral values have declined in homes and real estate. We are taking larger losses on real estate loans and are keeping an eye on that, as are all financial institutions. Delinquencies are high, but are trending downward, as the industry as a whole is seeing an increase. We are changing how we underwrite loans, while being reasonable. We want safe and secure loans and are making sure we’ve done our due diligence as much as possible while helping members reach their financial goals.

MiBiz: What advantages are there for community credit unions and Kellogg Community over larger, regional banks?
Miller: We haven’t been focused on strongly promoting our business lending during the first half of the year — we’ve been growing through word of mouth. We’ve had some significant growth over the last couple of years. We do our business lending in-house. We do have someone here underwriting. We service that business in house. The fact that we are local decision makers has been one of the things that has been a strong point for us. We can meet with the business owners firsthand. A lot of the other financial institutions have centralized those operations, which sometimes make that face-to-face contact difficult.

MiBiz: What are your strategies for growth moving forward?
Miller: For us, we are opening a branch in downtown Battle Creek. We’ve not yet announced it. We are working on having that branch open by the end of the year. I see it fitting along well with the downtown transformation currently underway, and with the community as a whole. We are looking to strengthen our branch and ATM presence. We are seeing more and more mergers and acquisitions in our industry, and are looking there. We are looking for all opportunities for growth, as long as they make sense to our membership.

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• battle creek
• finance
• kellogg community federal credit union
• money marshalls
• tracy miller