The pending arrival of $3.9 billion-asset United Federal Credit Union into the Pennsylvania market could cause disruption to member acquisition, lending opportunities and talent procurement efforts for the state's banks and credit unions.
Last month, St. Joseph, Michigan-based United announced plans to merge with Allentown, Pennsylvania-based Gold Credit Union in a deal expected to be finalized in the spring of 2024.
Cheryl Bartholomew, president and CEO of $147 million-asset Gold, said the deal will give the credit union's 9,300 members access to products they have been requesting including business and commercial accounts.
At the same time, it will give United access to a larger potential membership base, which could be problematic for Pennsylvania banks and credit unions that are already struggling to find new members.
Credit unions in New Jersey (-1.2%) and Pennsylvania (-0.9%) reported the
"Community banks should be concerned because it brings a larger competitor into their markets with more products, technology, and marketing might to compete for retail deposits," Marsico said. "They already have to contend with very large banks, other large credit unions such as PSECU and fintech firms for retail deposits. Turning a relatively small competitor (Gold) into a large one adds to that pressure."
Harrisburg-based PSECU has $8.1 billion of assets and a membership of 587,000 across the state.
John Murga, CEO of Hidden River Credit Union in Pottsville, said the statewide decline in membership is a demographic issue as the state continues to lose population overall.
"Our county has seen population declines for each census period since the 2000 census. Coupled with the high number of seniors in the state, I could see this affecting the data eventually," Murga said.
The $215 million-asset credit union is competing for a bigger slice of the shrinking demographic pie by expanding its branch network and providing products and services in markets not currently served by other credit unions.
Murga anticipates "average growth" in net memberships for 2024, which would equate to between 2% to 4%, he said.
He said United FCU sees "tremendous growth potential" in the Lehigh Valley, which is the No. 3 metropolitan area in Pennsylvania and the fastest-growing region in the state for the 18-34 age group.
"In addition, the Lehigh Valley ranked number two in the country among mid-sized markets for new and expanding business projects and has a higher median household income than both Pennsylvania and the United States overall," he said in an interview.
The $4.7 billion-asset American Heritage Credit Union in Philadelphia saw membership reach nearly 305,000 in the third quarter, a 12% increase compared to a year earlier — but it's not immune to the trends affecting its peers.
President and CEO
"Various factors, including economic uncertainties, shifting demographics and the ongoing impacts of the pandemic have played a significant role in this trend. These challenges have not spared the credit union industry in the state," Foulke said.
And while United FCU will certainly poach some potential members, Foulke said American Heritage is working to ensure its brand reputation on public review sites such as Google are mirroring its service. He said potential members utilize sites like those before committing to financial relationships, so having the brand position in a positive perspective is important.
"The positive trajectory of our credit union is expected to continue, and we anticipate further growth in the coming year," Foulke said.
Only five Pennsylvania-based credit unions have more assets than United FCU. One of those is American Heritage and another is the $5.8 billion-asset
Citadel has a focus on commercial lending and had $377.6 million in member business loans on the books at the end of the third quarter. By comparison, United FCU had $427.3 million in member business loans.
Phil Sutliff,
While United FCU's entrance in the market is "significant", Citadel primarily competes with more traditional banks in the commercial banking sector, he said.
"Our approach is rooted in personalized service, agility and a deep understanding of our business members' needs," Sutliff said.
A large player such as United could also impact the ability of smaller Pennsylvania credit unions to hire top talent.
Justin Howard, president and CEO of $134 million-asset Horizon Federal Credit Union in Williamsport, said it is a challenge for a small institution to find new avenues and strategies to recruit.
United has 694 full-time employees compared to 54 for Horizon, according to NCUA call reports.
Horizon has been creating partnerships with colleges and attending job fairs on campuses, Howard said. Many graduating college students don't plan to stay in the area or even the state, so Horizon is looking at other strategies to attract talent.
"We are excited about 2024 as we look to explore some items we have outlined in our strategic plan and finally execute on them," Howard said.
