Published in Finance
Illustration by Rachel Harper Illustration by Rachel Harper

Credit unions continue growth streak in Michigan

BY Sunday, April 16, 2017 12:50pm

GRAND RAPIDS — Michigan State University Federal Credit Union’s plan for a downtown office brings another player into the market as Michigan credit unions enjoy a period of strong growth.

The East Lansing-based MSU Federal Credit Union wants to open a downtown Grand Rapids branch in September on Monroe Center Avenue in space previously occupied by Independent Bank. The office is part of the credit union’s long-term growth strategy to serve members in the Grand Rapids-area market. 

MSU Federal has 8,000 members who live within 5 miles of the planned branch location. It has more than 30,000 members in the broader Grand Rapids area, where the university has a growing presence with the College of Human Medicine and a new biomedical research center under development in the downtown area.

“We have a fair number of members in the Grand Rapids community, so this is a good opportunity for us to deepen relationships with those members,” said President and CEO April Clobes.

MSU Federal Credit Union, with 13 offices in the Lansing area and four in Oakland County in suburban Detroit, is the third-largest credit union in the state, behind Grand Rapids-based Lake Michigan Credit Union and DFCU Financial in Dearborn.

A single office in the market “is probably not enough long-term” for MSU Federal, Clobes said. The credit union could have three to five branches in the Grand Rapids area within a decade, “as long as the market responds well to us being there,” she said.

“The way that we like to grow is to start with one location near where a core of our members would be working or living so we have a reasonable amount of members within a small distance,” Clobes said. “As the branch grows and it becomes busy, then we will add additional locations in the greater Grand Rapids community.”

MSU Federal had $3.41 billion in assets as of Dec. 31, 2016, up 12.5 percent from a year earlier. It had 230,851 members, a year-to-year increase of 10.6 percent.

The credit union grew total loans in 2016 by 19.3 percent to $2.47 billion, according to a quarterly financial report filed with the National Credit Union Administration. Its member business loans grew 13 percent to $128.2 million. 

Deposits increased 13 percent to $2.95 billion, and the credit union reported higher 2016 net income of $31.5 million.

MSU Federal Credit Union’s growth comes amid the industry’s continued gains in Michigan over the last several years.

Statewide, credit union membership grew 3.6 percent to 5.05 million people in 2016. That was the best growth rate since 1987 and well exceeded Michigan’s population growth of 0.1 percent last year. Membership in the Grand Rapids-area market increased a state-best 7 percent in 2016, according to a quarterly industry profile from the Michigan Credit Union League.

“With memberships growing faster than the state population, it’s obvious that Michigan has a serious need for credit unions,” MCUL President and CEO Dave Adams said in a statement.

The growth and market demand pushed credit union loans up 11.5 percent on the year to $35.69 billion. That’s the best growth rate since 15.9 percent in 1994, according to the MCUL.

The biggest gain in lending came in residential mortgages. Credit unions in Michigan originated $6.5 billion in mortgages in 2016, versus $3.9 billion in 2015, a 66-percent increase.

Member business loans increased 21.9 percent to nearly $2.1 billion at year’s end.

A quarterly report from the MCUL attributes the strong year to job and income growth statewide and projected “more of the same” for credit unions in 2017.

“Despite expectations of higher market interest rates, consumers will remain engaged — spending and borrowing and helping to increase credit union membership growth, boost lending, fortify earnings, and reinforce capital buffers,” according to the MCUL report.

Amid the strong volume growth, the number of credit unions in Michigan shrunk again in 2016 as industry consolidation continued.

The 246 state and federal chartered credit unions operating in the state at the end of the year compares to 254 at the end of 2015. A decade earlier, 376 credit unions operated in Michigan.

Among the most recent deals were the merger of Shoreline Federal Credit Union in Muskegon into Community Choice Credit Union in Farmington Hills, Battle Creek Area Community Federal Credit Union’s merger into Berrien Springs-based Honor Credit Union, and Comstock Park-based Tradewinds Credit Union’s proposed deal with Community West Credit Union in Kentwood. 

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