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Why credit union branches keep opening in the Treasure Valley while bank branches close

Senior Vice President of Marketing Todd Christensen, right, talks with project manager Rob Blackmore about construction at a new CapEd Credit Union branch on South Meridian Road.
Senior Vice President of Marketing Todd Christensen, right, talks with project manager Rob Blackmore about construction at a new CapEd Credit Union branch on South Meridian Road. doswald@idahostatesman.com

Jessie Sherburne knew it was time to end the relationship. Her partner had become downright “nefarious,” she says, and she couldn’t take it anymore.

That partner, Wells Fargo, had pushed its employees to open millions of fake accounts without customers’ knowledge. If that wasn’t bad enough, she said, the banking giant had helped fund the controversial Dakota Access Pipeline across sacred Native American land.

So the biology lecturer at Boise State University bolted. After six years with Wells Fargo, she moved her money to an Idaho credit union in January.

“I thought, I don’t know if I really want to support this bank,” she says. “With the election in November, I put my money where my mouth is. I support businesses that are behaving in ways that I believe businesses should behave.”

The Treasure Valley has seen a shift in banking practices in recent years. Even as the region’s population has risen dramatically, bank branches have closed. At the same time, the number of credit union branches has risen.

What’s happening in Idaho is part of a national trend, as large banks merge, consolidate assets and leave customers feeling marginalized. As of August of this year national credit union membership is at an all-time high (112.7 million), according to the Credit Union National Association.

Electronic banking, mergers curb bank branches

Credit unions are nonprofit institutions, which means they can offer lower fees, because they do not have to pay shareholders and they are tax-exempt. Although big banks boast that they do business over vaster terrain, many credit unions have banded together in so-called shared branching, which allows members to access services at any participating branch.

The number of bank branches in the Treasure Valley dropped 10 percent between 2011 and 2017, to 175 from 195, according to Mary Hughes, financial institutions bureau chief for the Idaho Department of Finance. The number of credit union branches rose 14 percent, to 77 from 66.

Hughes attributes the drop in bank branches to the rise in consumer use of electronic banking and a wave of mergers and acquisitions. Those changes have occurred nationally, she said, as well as in the Boise metropolitan statistical area, which includes Ada, Boise, Gem, Canyon and Owyhee counties.

“That largest decrease in bank branches in the Boise MSA occurred in 2014, when Home Federal Bank merged with Bank of the Cascades,” Hughes said. “This resulted in eight fewer branches in the MSA. In the same year, Bank of America closed five branches in the MSA.”

Nationally, from 2010 to 2016, 1,449 commercial banks merged and 212 savings institutions merged, Hughes said, citing Federal Deposit Insurance Corp. statistics.

Bank branch closures will continue

Although the number of branches operated by the Treasure Valley’s three biggest banks — Wells Fargo, U.S. Bank and KeyBank — has been relatively consistent since 2000, changes could be in the works. More and more bank customers are taking care of their needs online or through mobile banking phone applications, banking officials say, and fewer step inside a local branch.

Darren Schuldheiss, president of KeyBank’s Idaho operations, says the number of branches his bank operates is likely to decrease.

“We’re not going to have as many brick-and-mortar locations,” he said. “We’ll still have the local banks, but they’re going to be able to do a lot more for our clients.”

Tracey Miller, vice president of branch operations at Pioneer Federal Credit Union, said she doesn’t think credit unions are taking up the slack left by disappearing bank branches. Rather, she says, institutions like hers are doing “a very good job of analyzing where our membership base is.”

“We’re starting to see more credit union branches in the Treasure Valley and Twin Falls and in other areas,” Miller says. “I wouldn’t say they’re doubling their numbers, but they’re putting more branches in since the economy has come back.”

Pioneer was chartered as the Civilian Employees Federal Credit Union in 1954. In the last decade, it has built two branches, one in Boise and one in Middleton and gained a third in Caldwell, through a 2016 merger with Cornerstone Credit Union. Today, Pioneer has 14 branches from Caldwell to Twin Falls.

While Miller sees no cause-and-effect relationship between bank branches’ decline and the spreading footprint of credit unions, Pioneer’s newest customers have said that they balk at many traditional banks’ practices.

Employees at a recent focus group said they regularly hear from new members who are “leaving banks, who are tired of fees, of getting pushed products they don’t necessarily need or want,” says Elizabeth Thomas, Pioneer’s vice president of marketing and development.

“People are understanding credit unions more than they did 10 or 15 years ago,” Thomas said. “We have some great credit unions in the Treasure Valley and state, and people are starting to see their value.”

Top 5 credit unions

Officials at CapEd Credit Union, which was founded in 1936 as the Boise Teachers Federal Credit Union, draw a much stronger correlation between bank debacles and branch closures and their own growth.

The institution has 10 branches in the Treasure Valley. An 11th branch is scheduled to open in December in Twin Falls. And the branch now located at CapEd’s Meridian headquarters will move into a new building on Nov. 13. The administrative offices will then expand into the vacated space.

Some customers feel disenfranchised

The new Meridian branch is located at South Meridian and Overland roads. The busy corner is a more convenient location for members than the headquarters is, says Todd Christensen, senior vice president of marketing and business development.

“Our continued growth means we need additional administration space,” Christensen said at the construction site, as workers raced to finish the branch, landscapers delivered a truckload of trees and traffic whizzed past.

Christensen said many new members have told bank officials that “they have intentionally left another financial institution where they have felt disenfranchised, and they’ve also associated with CapEd because of our cause and our purpose.” The institution gives grants to teachers and schools in the region through its Idaho CapEd Foundation.

Sue Ellen Montgomery and her husband, Rick, are two such members. The couple opened Diamond Heating and Cooling in Garden City in 1999. Their company has 30 employees and is growing fast.

After nearly two decades with U.S. Bank, Montgomery said, she and her husband applied for a small vehicle loan. Although their accounts were larger than the loan amount, she said, U.S. Bank turned them down.

“They wouldn’t even look at us,” Montgomery said. “It felt like we were just a number to them.”

So they moved their business to CapEd early this year. They’re now in the market for a new building and have been approved for a loan much larger than U.S. Bank denied them.

“With the growth of our company, we needed some place that looked at us as people,” Montgomery said. “The individuals at U.S. Bank were always great, but it was such a large corporation that they didn’t see us.

“When you’re growing a business, you need someone to move fast,” she said. “It’s been a lot easier working with CapEd and meeting with them face to face. It’s been a great experience.”

Business reporter John Sowell contributed. @marialaganga

The statewide trends

As bank branches fall, credit union branches resurge.

Year

Bank branches

Credit union branches

2010

541

159

2011

537

216

2012

536

172

2013

531

178

2014

520

191

2015

517

195

2016

502

198

2017

496

NA

Sources: FDIC, National Association of Federally Insured Credit Unions

Credit unions in the Valley

The numbers of branches as of June each year. ​

2011

66

2012

67

2013

67

2014

66

2015

75

2016

77

2017

77

Source: Idaho Department of Finance

The Valley’s top 10 banks

Measured by deposits, as of June 30.

Bank

Offices

Deposits

Market share

Wells Fargo

24

$2.89 billion

26.7%

U.S. Bank

38

$2.34 billion

21.7%

KeyBank

14

$1.24 billion

11.5%

Bank of the Cascades

13

$594 million

5.5%

JP Morgan Chase

13

$557 million

5.2%

Washington Federal

10

$488 million

4.5%

D.L. Evans

12

$399 million

3.7%

Zions

6

$353 million

3.3%

Idaho Independent Bank

7

$348 million

3.2%

Washington Trust

8

$327 million

3.0%

Source: FDIC

Idaho’s top 5 credit unions

Measured by assets, as of June 30, 2016.

Credit union

Assets

% of total Idaho CU assets

Average loan balance

Average share balance

Idaho Central

$2.63 billion

35.9%

$15,786

$9,111

Potlatch No. 1

$859 million

11.7%

$13,588

$9,562

Westmark

$632 million

8.6%

$15,543

$10,808

CapEd

$537 million

7.3%

$14,458

$7,073

Pioneer

$424 million

5.8%

$11,459

$6,824

Source: Callahan Credit Union Directory via Pioneer Federal Credit Union

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