ATLANTA (4/7/09)--Shared branching positively impacts credit unions' profitability, according to research findings from Raddon Financial Group released at CO-OP Financial Services' THINK 09 conference. Fifteen credit unions from various regions, asset sizes and peer groups participated in the study, conducted by Raddon in conjunction with CO-OP Shared Branching. The study found that retaining and gaining members via shared branching increases the profitability of surveyed credit unions through their own cross-sales channels. Other key findings:
* Shared-branch users represent 23% of surveyed credit unions' overall profitability. While statistics range by individual credit union, one participant noted 13% of members using shared branching at the credit union represented 65% of its overall profitability. * The "middle market" segment accounts for 28% of shared-branch user households. The market is comprised of young to middle-aged members with incomes ranging from $30,000 to $100,000 and who have built up enough in household balances to offer good profit potential in both savings and borrowing. * Shared-branch households generated an average profit of $119.10 among those credit unions surveyed, while non-user households averaged $28.47. Factor in the costs of shared branching, and user households still average a significantly higher profit of $73.17. * While 30% of overall households are profitable, 38% of shared-branch households are profitable. * Shared branching can be considered a profit center for acquiring institutions (those that welcome guest members into their own branches). Based on study findings, shared branch net income totals nearly $23,000 per credit union annually. * Deposits are the most common shared-branching transaction type, with an average of $784 per transaction. * Transfers and loan payments are significant in shared branching--line of credit advances or loan disbursements on average are $2,454 per transaction among the credit unions surveyed. * With 13% of transactions occurring after 5 p.m., extended hours continue to be important to shared-branch users. * Members of credit unions in the study used 428 different locations.
"Many credit unions are already aware of the benefits of shared branching. But as organizations look to cut costs during these tough times, this study shows that shared branching has never been more important," said Carroll Beach, president/chief operating officer of CO-OP Shared Branching.