Yolo Federal Credit Union in Woodland, California, has received regulatory approval for an expansion into Sacramento, Placer and El Dorado counties.
The $414 million-asset credit union has been exclusively serving Yolo County, which has a population of 221,000, since 1954. The new regions approved by the National Credit Union Administration create a potential membership base of more than 2.2 million people.
"We have several members who currently reside in the greater Sacramento area and have expressed interest in us expanding our service to these communities," said Jenee Rawlings, Yolo's president and CEO, in an interview.
Yolo had 21,423 members at the end of 2022, roughly a 1% increase compared with a year earlier, according to NCUA call report data. But the huge expansion of its field of membership could soon result in those numbers skyrocketing.
Yolo County's population pales in comparison to Sacramento County's 1.6 million residents, according to U.S. Census Bureau data. The credit union can also attract members in Placer County, which has 422,000 residents, and El Dorado County, which has 194,000.
The credit union hired Dollar Associates to work through the field-of-membership expansion process.
The consultancy's partner and founder, Dennis Dollar, said the move was a natural expansion for a credit union that had solid growth but was looking for an expanded market footprint and more diversification in its membership base.
NCUA rules permit credit unions with community charters to expand into areas that have been validated as "interactive local communities" by federal agencies, Dollar said.
Yolo was "able to effectively demonstrate their ability to serve the expanded area based upon their record of service to their existing single-county field of membership," Dollar said. "It was a natural expansion for the credit union based upon their success over time in their previous smaller community."
But bankers in the state said the expansion is just another example of credit union overreach.
Ana Helman, director of membership communications for the California Bankers Association, said large credit unions are competing more and more with banks, especially community banks, and should be held to the same standards as other financial institutions that provide similar products and services.
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But Dollar, a former chairman of the NCUA board, said just as banks often make the strategic decision to expand their market footprint, so can credit unions.
"The difference is that a bank can do so without prior regulatory approval, whereas a credit union must get their regulator to approve any expansion in their field of membership," he said.
In the near term, Rawlings said Yolo's focus will be on serving the new communities through its digital services rather than building new branches.
"We are in the process of enhancing our mobile banking experience, including an update to our online loan application software," she said. "We are also one of the first in our area to implement video teller technology through interactive teller machines, and will plan to expand this service offering into our new market."
Yolo earned $1.1 million in 2022, a 5% decrease compared with a year earlier, according to call report data from the NCUA.
Field of membership is important because the ability to build scale to compete is critical. Credit unions are always looking for ways to make their membership base more viable and diversified within their ability to serve those markets, or at least they should, Dollar said.
"That will always be the case as long as field of membership is in play, and a requirement that credit unions must comply with from a regulatory perspective," Dollar said.
He said many credit unions today prefer to grow by adding more employer and associational groups, as well as by adding qualified underserved areas. Some, like Yolo, move into nearby markets.
According to Rawlings, Yolo "will continue to assess the geographical region and make strategic decisions that align with our mission."
