The opening of a new branch in Wyoming and construction of another office in Walker are part of a broader regional growth plan for Consumers Credit Union.
In addition to the new Grand Rapids-area locations, the Kalamazoo-based credit union has acquired property along U.S. 31 for a branch in Grand Haven and expects to buy sites in Muskegon and Lansing within 12 months for future offices.
Each of the areas are in new markets for Consumers Credit Union, which looks to grow from 22 branches to 30 locations by the end of 2023, President and CEO Kit Snyder told MiBiz.
“We want to continue to grow,” Snyder said. “We’ll continue to grow in West Michigan. We decided that we’re not going to go to the east side of Michigan in the near future, so the other option is to continue that circle around Kalamazoo and Grand Rapids.”
Consumers Credit Union targets the new Walker location to open in early 2021, with the Grand Haven branch to follow later in the year. The credit union also intends to open a second Grand Haven office at a leased location, according to Snyder.
Consumers Credit Union also may consider growing through a merger or acquisition “if it benefited our members,” Snyder said. Although he prefers to have Consumers grow organically and through new office development, Snyder would consider a deal if the right opportunity arises with a credit union that’s financially fit, has the right geographic mix of locations, and has a membership that needs additional services.
“We would absolutely take a look,” Snyder said. “If it’s a good fit I’ll do it, but I like organic growth.”
Leveraging technology
Over 35 years, Consumers Credit Union has averaged annual growth of 18 percent.
In the 12 months from June 2019 to June 2020, the credit union grew total assets by more than 25 percent to $1.45 billion, according to a quarterly financial statement filed with the National Credit Union Administration.
Total deposits during the same 12-month period grew nearly 27 percent to $1.15 billion, and total loans increased 18.3 percent to $1.18 billion as of June 30. Commercial loans alone grew even faster at 20.3 percent to $146.3 million, according to the NCUA filing.
Consumers Credit Union had $6.8 million in net income at midyear, down from the $7.1 million through the first six months of 2019, which Snyder attributes to lower fee income from debit and credit card transactions as consumers shopped less during the pandemic and stay-at-home order. Historically low interest rates also resulted in lower yields on loans, he said.
The credit union’s membership as of June 30 stood at 104,111.
The credit union’s expansion comes as customers today use digital options far more often, yet still prefer to open an account in person to handle complex transactions, Snyder said. That keeps the branch network an integral part of driving membership growth and entering new markets, even as digital banking continues to grow rapidly, he said.
“They want to open an account with a human, they want to see you, they want to touch you. Then they’ll bank with me virtually, so I have to continue to offer that face time for that person who has a complex transaction and wants that hand-holding,” Snyder said.
All of the new branches, including a 54th Street office in Wyoming that opened in July and the planned Walker location on Wilson Avenue that opens in January, will use interactive teller machines in which customers conduct their transactions with a teller via videoconferencing, a format many banks and credits unions have been deploying. About half of the Consumers’ offices now use interactive teller machines.
The interactive tellers enable Consumers Credit Union to develop new offices and extend its footprint further at an affordable cost, Snyder said.
Investing in greater Grand Rapids
As Consumers Credit Union plans for growth across the region, a local community bank also has extended deeper into the Grand Rapids-area market and looks to do more in the year ahead.
A new location that opened this month on Cascade Road in Grand Rapids Charter Township marks Hudsonville-based West Michigan Community Bank’s newest retail banking office. The office, which also offers commercial lending and wealth management services, sits along a high-traffic corridor with high visibility as the bank continues to grow in the greater Grand Rapids market.
“It’s a statement for us in Grand Rapids,” said bank President Phil Koning. “It’s a big investment in that community.”
West Michigan Community Bank, with $702.9 million in total assets as of June 30, now has seven offices in Ottawa and Kent counties: two in Holland and one each in Zeeland, Hudsonville, Jenison and downtown Grand Rapids, in addition to the newest location.
The bank first entered the Grand Rapids market with the opening of a downtown branch office in early 2012. A “good share” of the bank’s growth today comes from the Grand Rapids market, Koning said. It’s considering additional locations in Kent County, particularly the Byron Center/Wyoming area, although any additional office is at least two years away, he added.
“That’s in our sights, and then we would look at other locations as well on a longer term basis,” Koning said.
While the company has no immediate plans for further expansion in the Grand Rapids area, the bank recently paid $2.7 million for a building on Ionia Avenue SW, according to city property records. The facility, which is adjacent to Van Andel Arena, currently houses an office of TCF Bank, formerly Chemical Bank and the Bank of Holland, which Chemical acquired in 2015.
West Michigan Community Bank could open an office at the location in 2022, Koning said.
Digital tools speed consolidation
The footprint expansions contrast with the approach of some financial institutions that have moved lately to reduce branch networks by consolidating nearby locations as consumers in the digital age increasingly adopt mobile apps and online banking.
Grand Rapids-based Independent Bank Corp. (Nasdaq: IBCP) closed two offices in late June and six more on July 31 as part of an “ongoing branch optimization and a digital transformation,” CEO Brad Kessel said in a recent conference call to discuss quarterly results. The accounts at those branches were consolidated into nearby Independent Bank offices.
The closings reduced Independent Bank’s branch network to 60 offices in the Lower Peninsula.
Mercantile Bank (Nasdaq: MBWM), also based in Grand Rapids, closed three offices in the second quarter and consolidated them into nearby locations.
“Since the beginning of 2016, with the ongoing deployment of technology as an alternative delivery channel, Mercantile has been able to reduce its number of locations from 53 to what will be 37, once these locations are closed later this year,” Mercantile President and CEO Robert Kaminski said in the bank’s July conference call to discuss quarterly results. “We continue to engage our customers so we can fully understand their needs, and how patterns and preferences of interaction with us are evolving, especially in view of the challenges brought up by COVID-19.”
