Credit unions work to maintain that community bond

By Dave DeWitte

Building customer loyalty has become essential in the world of credit unions, many of which no longer have the natural affinity as a lender to employee groups.

The area's largest credit unions have transitioned from employer credit unions that served the borrowing and saving needs of particular employee group to community credit unions that sell services to residents living or working in a geographic region. Many have merged with other credit unions that served other employee groups.

• Among the biggest community credit unions in the area, Collins Community was once limited to employees and family members of Collins Radio (now Rockwell Collins).
• Linn Area Credit Union was once restricted to Cedar Rapids school teachers.
• Dupaco was once solely for employees of Dubuque Packing Co.
• The University of Iowa Community Credit Union was once for UI employees, faculty and staff.

Veridian Credit Union, the state's largest, once served only employees of Deere & Co. and their families.

But as they've become more like mainstream financial institutions, that special affinity with members has been threatened.

So credit unions have tried other approaches to win and retain the hearts and financial resources of their customers.

“When we went to a community (charter), I promised the post office I would not forget where we came from,” said Tim Byers, president of the 7,000-member First Federal Community Credit Union, which has assets of more than $140 million.

First Federal provides its members many of the same kinds of activities other financial institutions offer. But Beyers said the credit union still distributes doughnuts to all the post offices in Linn County and donates to postal employee fundraisers, among other initiatives.

Byers describes the challenge for credit union management today. When credit unions were created, he said, working people often couldn't get banks to loan to them because credit standards were too high.

“Nowadays, who can't get a credit card?” he said. “Who can't get an auto loan?”

As a result, with so many other lending sources, credit unions have had to find other ways to differentiate themselves and stay close to members.

Financial education is an important part of the way many credit unions approach the challenge.

University of Iowa Community Credit Union began offering seminars called Learn at Work several years ago, and recently launched an online application called Finance Works that enable members to visually chart where their expenditures are going. A monthly newsletter includes articles explaining how members can do more with their money.

“The best thing we can do for our members is to put money back in their pockets,” said Jim Kelly, vice president of marketing for the University of Iowa Community Credit Union. “It's more valuable than a hot dog in a parking lot on a Saturday afternoon.”

Kelly said education also provides direct paybacks to the credit union, by reducing the number of loan defaults, overdrafts and other financial wrinkles caused by bad financial choices.

An educational program for teenagers is called the CU 4 Reality Fair, which helps eighth-graders within its markets learn how to build a budget and plan for financial contingencies.

For its part, Collins Community Credit Union offers seminars on issues such as financial planning, wills and trusts. It donates over $65,000 a year to community causes and sponsors a variety of volunteer activities, fundraisers and events, noted Marketing Manager Maria Johnson.

Recent events included a Kids Safety Day at the North Liberty Branch, a pool party at Ellis Park Swimming Pool, and a Halloween trick-or-treat event.

The credit union even publishes 13,000 copies of an in-house advertising sheet, The Buy & Sell, to help members sell items. It donated more than $65,000 last year to community groups.

Linn Area Credit Union, which began in 1935 as the Cedar Rapids Teachers Credit Union, now has 24,000 members.

Even after it became a community credit union, Linn Area worked with the Cedar Rapids Area Education Association to open the Teacher Store, 606 Fifth Ave. SE. The not-for-profit organization provides free classroom materials and supplies to area educators and their students.

Participating teachers earn “teacher bucks” for volunteering and working at the store, and redeem them for school supplies, according to Alice Hagerman, Linn Area's vice president of marketing. Linn Area also offers free online financial education for young adults.

The credit union offers financial education seminars at the work places of members, sponsors the annual Freedom Festival Balloon Glow and donates to dozens of charities, not-for-profits and school groups.

Tim Byers, the president of First Federal Community, wore flip-flops and surfer shorts on a recent morning as First Federal Community gave away pizza slices and orange juice to members at the credit union's Hiawatha branch. Rock and roll blared over the sound system, and Byers's Labrador retriever chased tennis balls as he greeted customers.

Byers gladly shares plenty of concerns about the credit union movement with anyone who'll listen. He is particularly concerned that credit unions lack the financial discipline of mainstream lenders because management lacks the same financial incentives, and because credit unions are blessed with tax advantages over regular lenders.

Even so, Beyers stands by programs such as free doughnuts and even an occasional cash giveaway to keep that feeling of a credit union community.

“The loyalty comes down to how you treat people,” Beyers said. “The loyalty comes in that we get a shot to keep your business.”