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California CUs Both Win From Shared-Branch Arrangement

In a recently published article, featured Carol Hauck, CEO of First U.S. Community CU (headquartered in Sacramento, CA), and California Community CU (headquartered in Sacramento, CA): While shared branching and cooperation among credit unions is nothing new to the industry, a recent partnership between two neighboring California credit unions showcases a relatively rare sort of collaboration.

The two credit unions are sharing a single branch, with separate teller windows and separate employees, serving a single community.

“It’s usually the bigger credit unions helping out the little guy, but in our case it’s the other way around,” says Carol Hauck, CEO of First U.S. Community CU ($535 million in assets and based in Sacramento, CA). First U.S. Community has five locations, but Hauck had seen member surveys in recent years requesting a branch in the nearby suburb of Roseville.

Unsure that building a new facility in a new community would be fiscally wise, Hauck reached out to the smaller California Community CU ($82 million in assets and based in Sacramento, CA), which also has a small branch network in and around the capital city.

Hauck called California Community’s then-CEO Elena de Anda, who agreed to open the doors of their Roseville branch to members of First U.S. But there was a catch. During the initial conversation, de Anda revealed she would soon be retiring and wasn’t sure how the new CEO would feel about the partnership.

However, when new CEO Marcy Cole-King took the helm at the start of this year, it became immediately clear she was on board, ensuring that the launch happened on May 1 as planned.

California Community’s Roseville location was built with four teller stations, but staff were no longer using all four simultaneously. That’s in line with industrywide slowdowns in branch utilization and teller-transaction trends over the last decade.

The deal required little due diligence early in the process. As the two sides worked out details, it became apparent the partnership would be a win-win for both institutions. First U.S. gained a low-risk new branch in a key location that members have been requesting for several years. And not only is California Community getting additional branch traffic, but the agreement between the two parties gives the smaller institution an additional non-interest income stream, since First U.S. Community pays a monthly fee for rent, utilities, and office supplies.

“We’re always looking for ways to do things affordably and ways to better serve our members,” says Hauck, “so this was a great way for us to expand.”

As of May 1, both credit unions were operating two separate teller counters, along with a member service representative desk for lending and account opening. Similar to rules in traditional shared-branch networks, both have agreed to not try to poach the other’s members. Signage outside the building directs members to the relevant branch.

“Inside, we both have signage at each window that helps each member know where to go,” adds Hauck. “It’s working very well.”

With separate tellers, First U.S. Community had to run wiring and servers to connect to its core system. Management also had to adjust operating hours for the new location, conforming to California Community’s 10 a.m. – 5 p.m. schedule.

The deal has also been a boon for community members who do their banking at other credit unions. While California Community doesn’t participate in a shared branching network, First U.S. Community does, meaning the joint Roseville branch provides an additional access point for members of other credit unions.

Quick Facts: First U.S. Community CU
First U.S. Community CU (as of June 30, 2022):

  • Headquarters: Sacramento, CA
  • Assets: $535 million
  • Members: 27,100
  • 12-month share/deposit growth: 8 percent
  • 12-month loan growth: 9 percent
  • Return on assets (ROA): 0.73 percent

Quick Facts: California Community CU
California Community CU (as of June 30, 2022):

  • Headquarters: Sacramento, CA
  • Assets: $82 million
  • Members: 4,400
  • 12-month share/deposit growth: 7 percent
  • 12-month loan growth: -10 percent
  • Return on assets (ROA): 0.07 percent

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