From 4Q 2006 to 4Q 2007, credit unions that opened branches in 2007 grew from $452.0 million in assets to $494.4 million, according to Callahan's, compared to non-branching credit unions, which grew from $452.5 million to $474.4 million in that same time frame. (I also find it interesting to note that the non-branching credit unions also started out with higher assets, so to what degree does asset size really affect branching ability?) I'm no math whiz like the folks at Callahan's, but that's nearly a 50% greater increase in asssets for those adding branches than those without. The difference is really staggering but, of course, asset growth alone is not the only factor.

The credit union that added branches started ahead of the others in the 4Q of 2006 with 3.0% membership growth versus 2.3% for those who did not branch in 2007. And while those non-branching credit unions' membership growth declined to 0.9% by 4Q 2007, the 193 who added branches experienced membership growth of 5.5%! While I'm certain this is not the only factor for the sharp increase in membership growth for credit unions adding branches, it certainly speaks volumes to me about, not only the value of a branch, but that these credit unions must know what they're doing to thrive and branching is a part of that.

In an era when credit unions are concerned about their graying membership and slow membership growth, these figures cannot be ignored! The branching credit unions netted 271 new members per branch at year-end 2007 as opposed to 53 for the non-branching credit unions. And the branching credit unions had more branches to begin with, a mathematical factor likely to drive the average down, not up.

These credit unions also experienced share growth well above their non-branching peers, moving from 6% growth to 9% growth between year-end 2006 to 2007 compared to a decline from 4.3% to 4.2% for the others.

Admittedly, the operating expenses at the branching credit unions jumped from 8.0% to 12% versus a drop from 8.0% to 5.8% for the rest. However, the operating expenses-to-average asset ratio at the credit unions adding branches was only slightly above the non-branching credit unions, 3.7% and 3.4%, respectively.

And the average share and loan balances for the branching credit unions were below their peers, which is to be expected when adding substantially more members after the branch opens. Consider, though, the cross selling opportunities those new branches are going to provide. 'Oh, you want a car loan? How about GAP insurance?' 'You're opening checking and savings accounts? Here are our overdraft program and CD rates.'

I spoke with a number of industry experts regarding Gen Y during CUNA's Governmental Affairs Conference. For all the talk about expanding online banking and technology, particularly to attract Gen Y, the branch is still an important venue for them and others. The thing about Gen Y, an executive from a core processor pointed out, is they want everything; they've been brought up in schools and sports where everyone gets a medal so no one feels like a 'loser.'

So yes, Gen Y--a large potential pool of membership credit unions can draw from--wants mobile banking and online banking and branches. An executive from a branch consulting firm explained they want branches, but not their parents' branch. Gen Yers are looking for self-service kiosks and cozy, open waiting areas with coffee and someone to ask about car loans after they've done some of their own research. Additionally, greening up credit union branches and services appeals to the socially conscious generation.

Gen Y wants the same good experience across the board--whether it is online or in the branch.

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