By Ken Mammarella
Special to Delaware Business Times
North American credit unions have progressed mightily since 1900, when the first one was created in Quebec to provide affordable credit to working-class families largely ignored by banks.
“The reason credit unions started was to fill a need for individual consumers that banks did not serve a century ago,” said Pam Fleuette, CEO of Tidemark Federal Credit Union. “That need doesn’t exist anymore, so credit unions have evolved.”
Fast forward to 2017. Del-One Federal Credit Union will be Delaware’s first financial institution with a prize-linked savings program. DEXSTA Federal Credit Union allows members to get credit-union car loans right at 17 car dealerships, said CEO Jerry King. Dover Federal Credit Union offers Card Valet, an app that allows members to limit when and where their cards are used, set spending limits and get real-time purchase alerts, said Deb Jewell, Dover’s director of marketing.
Potential customers, Jewell said, most frequently ask, “What is a credit union?” Her answer: a “full-service financial institution, which returns their earnings back to their member-owners in the forms of typically higher dividends, lower loan rates [and] membership rewards programs.”
At DEXSTA, the most common introductory questions involve insurance ($250,000 from the National Credit Union Administration and $250,000 more from DEXSTA) and fees. “Virtually none for checking,” King said, noting it does charge a $5 membership fee.
Credit unions emphasize a friendly atmosphere where staffers know their members, and good financial advice is as important as low-cost services. The mission and vision are clear — they’re posted in every DEXSTA branch — and that the members are the owners, and they’re nonprofits led by a volunteer board of directors.
“Decisions are made by local people, who live, work and worship in the same towns where we’re serving our members,” Jewell said about Dover.
The NCUA, the federal agency that regulates credit unions, even runs a locator to help you find credit unions that you can join at MyCreditUnion.gov. Many credit unions limit membership to people who work together, but a dozen in Delaware offer wider membership, commonly to people who live, work, worship or study in a particular geography.
As of June 2016, there were 5,887 federally insured credit unions, with $1.3 trillion in assets and 105 million members, the National Association of Federal Credit Unions counted. The number today is lower: industry consolidation means losing about one credit union a day, according to the association.
Fleuette felt this is a natural evolution for strategic and stronger operations. Tidewater began in 1959 with eight members who worked at the DuPont Co. nylon plant. Today it has 15,000 members in Sussex County and three Maryland counties. It’s full-service, she said, with a niche in mortgages and construction loans for new homes. Membership has been static of late, but she hopes it increases when it finishes two more branches to add to the existing four.
Dover started in 1958 to serve Dover Air Force Base. Today is has 46,200 members, from more than 400 groups eligible for membership, and $460 million in assets. It’s adding two branches this summer.
Del-One, the only credit union with branches statewide, has 57,500 members and $440 million in assets, and it has posted 10 percent-plus membership growth each year for more than three years. It could grow even faster, thanks to a deal announced in April opening up membership to the 93,000 members (aka customers) of Delaware Electric Co-op.
DEXSTA, which began in 1937 for workers at the DuPont Experimental Station, today has 38,000 members and $277 million in assets. It’s growing by 125 members a month, King said, as people become more comfortable with credit unions (about 20 percent use it as their main bank) and more concerned about scandals at big banks.
“There is not a product offering our members would find at a bank that we don’t offer, and vice versa,” said Paul Steelman, Del-One’s chief operating officer. (Credit unions are limited on business lending concentrations and 18 percent interest, he noted for the record.) “Products are commodities though, and we are in the service industry and that is truly where the difference lies. … Del-One wants to make a financial difference in our members’ lives and foster a long-lasting relationship.”
That helpfulness is even stronger at Stepping Stones Community Federal Credit Union. It focuses on a lower-income community and invites members “working to alleviate poverty” in Wilmington. Rashmi Rangan, its executive director, said about 200 of its 550 members have joined in support of improving the plight of the poor.
“We provide solutions and not just products,” Jewell said. “If someone needs to consolidate debt, we help them evaluate what may be impacting that debt, and provide proposals not only on how they can consolidate that debt, but improve their credit score and improve future financial opportunities.”
While they’re offering a personal touch with one hand, credit unions with the other are continually adding technology to allow people to bank 24/7, on their phone or wherever they are.
A personal finance site called MagnifyMoney recently praised credit unions for their competitive products and their mobile apps but faulted them for limited ATM networks and limited service hours.
Members of the Co-Op Shared Branch network beg to differ. Members can use credit unions nationwide as if they were at their home branch, at 5,000 branches, 2,000 self-service locations and 30,000 ATMs. Delaware members include Del-One and DEXSTA, among others.
“Del-One is committed to offering leading-edge technology, as it is available for us to do so,” Steelman said, referring to new services like mobile payments, mobile deposit and instant-issue debit cards and upcoming ones, like a suite of student life products for high school and college students (built on lessons from its Dover High School branch) and remote tellers, also called interactive teller machines. “Del-One is committed to supporting every channel our membership wants to interact with us on, as such, you won’t see a teller line inside our branch replaced by a machine. However, you may find a remote teller at a drive-up location or inside a lobby if you prefer self-service.”
No matter how the transactions occur, “our sole purpose is to make a positive difference in a member’s financial life,” Dover says on its site.