YOUNGSTOWN, Ohio – As interest rates rise, consolidations occur and those at the top retire, credit unions are expanding, seeking new leadership and adopting technology to meet the needs of their customers.
To raise awareness of credit unions here and across the world, Oct. 19 was set aside as the 75th anniversary of International Credit Union Day.
The Business Journal checked in with three local credit unions: 717 Credit Union, Associated School Employees Credit Union and Mercer County Community Federal Credit Union.
ASECU is a midsize credit union, while 717, headquartered in Warren, is one of the largest. At the end of the second quarter, 717 had nearly $1.59 billion in assets and ranked fifth in Ohio. ASECU reported $185 million in assets as of June 30. The Mercer credit union had $106.5 million in assets.
Expanding Membership
At Mercer County Community Federal Credit Union, a 2021 charter change that allowed it to serve three counties in Pennsylvania and three counties in Ohio has led to a building project. The credit union’s potential customer base jumped to 1 million from 110,000.
At the same time, the staff grew to 30 from 14 eight years ago, according to its CEO, Sandi Carangi, prompting the construction of a new building.
The old building in Hermitage, Pa., had not been renovated in 30 years, she says, and its electrical wiring, data lines, communications lines and square footage were no longer adequate.
So the Mercer credit union obtained the property next to its office in Hermitage, consolidated the lots and embarked on a building project that continues this fall. When complete, it will expand the office to just over 10,000 square feet from 2,400.
“It will be able to accommodate more people. But more importantly, it will be able to accommodate the infrastructure and technology that we need and that we have started using so we can grow within it hopefully for another 30 years,” Carangi says.
The project is slated to be completed in the spring.
When Michael Kurish, CEO of the Associated School Employees Credit Union, looks out the window of his Austintown office, he sees a landscape that could change – but not under his control.
The headquarters of the credit union in Austintown is at the corner of state Route 46 and New Road, an intersection being studied by the Ohio Department of Transportation for a traffic roundabout.
Kurish says he is not against the roundabout. He wants the Ohio Department of Transportation to be more transparent about its plans and how the project, slated for seven years hence, will work. He is concerned that both entrances to the credit union parking lot could be affected by the project.
“There is a huge difference in putting a roundabout in an intersection and the community building up around it, as opposed to having [things] built up already there and then forcing [in] a roundabout,” Kurish says.
“Of all the concerns that you have in running a business, you don’t need more excitement.”
Gary Soukenik, CEO of 717 Credit Union, is in the home stretch heading into retirement after more than four decades in charge. His successor, John Demmler, was chosen after a nationwide search that garnered 1,100 applicants.
“717 Credit Union is not going to skip a beat,” Soukenik says. “We don’t see major changes. The organization is rock solid financially. We have a new core system in place. … Our mission, our values all remain the same and that was one of the things we liked about John. We felt he had very similar values,” Soukenik says.
Although Demmler is relocating from Austin, Texas, Soukenik points out that he is originally from Ohio, which means he is coming home. He takes the reins Nov. 1.
Understanding Members
The leadership of all three credit unions will tell you that what makes a credit union different from a bank is its membership. They are customers and owners. The same people depositing their money at the credit union are the same ones borrowing it, they say.
“What’s different about the credit union is everything is staying local,” says Mercer’s Carangi. “You are literally depositing your money in a savings and loan and borrowing here. And it is all staying local. It’s all being done for your neighbors and for the community.”
In addition, she says, with volunteer board members and nonprofit status, all the money the credit union makes goes back to the membership.
Kurish would agree that nobody knows the members and what is happening in the community like a local credit union. Through the years, ASECU has merged with other like-minded credit unions.
ASECU started in the school treasurer’s basement. Today the credit union has offices in Austintown, Boardman, Lordstown and Newton Falls and, Kurish says, each of those communities has distinct needs.
“If you’re running an institution from 1,000 miles away, how are you going to understand those minute differences that exist in a two-county area?” he asks.
Technology
Kurish believes it is important to know that some customers may want all the bells and whistles technology can bring, while others want to come in and sit at the table to discuss their needs.
“At the end of the day, what makes us unique is the relationship that we have with the members,” he says. “There may be some who enjoy the technology but if they have a problem … they want to be able to pick up the phone and they want to be able to talk to someone. And there is a great deal of satisfaction if you can talk to the same person.”
For a midsize credit union like the ASECU, the challenge becomes determining what technology will be a good long-term investment and what is a fad.
Technology does not come cheap, and Kurish says bricks-and-mortar credit unions have to compete with other financial institutions online.
Plus, cybersecurity threats now mean credit unions must protect their customers from hackers who could be anywhere in the world, he says.
Carangi says mature members of her credit union are relying on technology more in recent years. They use debit and credit cards, set up automatic payments, get Social Security checks directly deposited and check their balances online.
At 717, some new things coming include video banking for all members – not just the business owners. Through video banking, a member can get answers from an expert regardless of where that expert works, Soukenik says.
Instability, Interest Rates
While instability at banks elsewhere made headlines, deposits are secure at local credit unions, the local executives say.
“We need to let consumers know their deposits are safe here,” Soukenik says. “We have federal insurance. Just like banks have FDIC, we have the National Credit Union Administration.”
The current high interest rates are making it a “war for deposits,” he says. Soukenik explains that credit unions are financial cooperatives; they pool members’ deposits and use them to issue loans. However, with deposits decreasing, it can be harder to get the money to lend – which means financial institutions must go through the Federal Reserve to get money to lend, which can be expensive.
Still, Dan Harp, senior vice president of lending at 717, continues to see people seeking loans, even with rates as high as 8% as opposed to the 3% to 4% just 18 months ago.
One thing that concerns Harp is the 10-year Treasury note, which he says has not been this high since 2006 and will affect mortgage rates down the road.
Soukenik says 2024 should be a decent year with 3.8% unemployment and 1.5 jobs for every person who wants one.
“We don’t do any risky investments,” says Mercer Carangi. “We are very conservative and we’re very diligent about making sure we are financially safe and strong. When people say, ‘How can you build a building?’ it is because we are so financially strong and because we have the capital to invest back into the credit union.”
Pictured at top: Michael Kurish, CEO of Associated School Employees Credit Union, at the Austintown office.