Indiana Credit Unions Planning Shared Branching Push as More CUs Come to Rely on It

INDIANAPOLIS – Less than a year after going through a shared branching merger, the Credit Union Centers Of Indiana are poised to start a major expansion. The 50-member credit union organization plans to open three new stand alone service centers in the next year in the Indianapolis, South Bend and Portage areas and is currently evaluating different possible properties. Individual credit union members of CUCI also plan to open branches which, in turn, will be shared branching outlets. A shared branch outlet is a credit union branch where members of other networked credit unions can make transactions. CUCI is a member of Credit Union Service Centers, a national shared branch network. Although CUCI acknowledges the merger, the credit union network members are more likely to view the expansion as a move forward in the effort they have already started than anything particularly new, according to Kay Niedlinger, Vice President of Communications for the Indiana Credit Union League. In many ways the state is already a shared branching showcase. Shared branching celebrated its tenth year in Indiana this year, and according to CUCI, almost 50% of the state’s credit union members have access to a shared branch. Credit union members conduct more than 500,000 transactions per month at CUCI’s 23 outlets and 12 service centers. With so much already achieved it might seem like most of the goals had been met. But Chuck Barr, Senior Director of Shared Branching for the Indiana League, said that much of the expansion will be into new territory. Because of the way shared branching developed in Indiana, Barr explained, it became established first in the northern part of the state. A lot of this expansion has to do with opening up the southern part of the state, which Barr defined as the parts of Indiana south of Indianapolis, to shared branching. “Teachers Credit Union in South Bend has agreed to include eight of its branches as outlets for shared branching,” he said. “That should really help us open the southern part of the state.” Teachers Credit Union is a large CU with some $1.4 billion in assets. While the nationwide impact of shared branching has long been documented, its impact on local credit union markets has been more difficult to quantify. But Niedlinger and Barr said that Indiana has some very good examples of how shared branching has helped credit unions serve their local communities and sometimes geographically disparate field of membership. Indiana Carpenters FCU is headquartered in Hobart, Indiana. The $52 million CU was originally chartered for a local chapter of a carpenters union in the state. It eventually changed its name to Indiana Carpenters after additional union locals began to come into its field of membership. Now, members who visit its Web site can find more than 35 locations around the state, even though the credit union technically only has its headquarters building and could not have hoped to open so many other offices without shared branching. Another credit union, the $24 million Link Federal Credit Union, based in Indianapolis, found out the hard way just how big a local impact shared branching could have. When seven inches of rain in 24 hours overwhelmed Indianapolis’ storm drains on September 1, the credit union found itself with eight inches of water in its main offices, 11 ruined personal computers, one ruined computer server and a number of damaged key documents. But with its backup systems in place, the credit union was able to direct its members to a shared branch facility about two miles away. “Shared branching wasn’t really part of our disaster recovery plan, but it will likely be in the future,” said William Kirby, CEO of the credit union. The credit union, after some insurance claims, will probably face between $70,000 and $80,000 in losses from the flooding, but thanks to shared branches its members have been inconvenienced as little as possible, he said. Kirby reported that about 5,500 of the credit union headquarters’ monthly 8,000 transactions went to the shared branch facility; while 2,500 transactions were performed at one of the credit union’s other branches in nearby communities. The relatively low cost of gearing up for shared branching in Indiana has been one of the things that has helped drive the growth, Barr and Niedlinger said. While they stressed the amount of the cost to join the shared branch network can vary sharply among different processors, the processor that many Indiana credit unions use charges $5,000 for a credit union to bring a branch into the shared branching network. The credit union will also have to make an investment, calculated on a sliding scale, in the CUSO that underpins CUCI. That fee can range from a few hundred dollars to thousands, Barr said. [email protected]