Since 2007, as fee income per member went up 64%, it should come as no surprise that members declined by 39%. Did management salaries go down in proportion to the poor performance or did President Ronald Westad get a raise and bonus? The biggest changes happened in 2013, as AZ FCU added $36 in annual fees, over 27,000 members left that year.
Running off members, intentionally, is a bad strategy because there are fewer members supporting the overhead, and a loss of economies of scale. That is a key reason why smaller credit unions are merging out of existence. In addition, fewer members means you will have fewer future borrowers, which leads to a smaller loan portfolio, which leads to lower profitability.
Kicking poorer, younger members to the curb is a short-sighted strategy, akin to getting rid of all your baby chickens because they are not producing eggs. What happens in the future is obvious. Baby chickens grow into big chickens and begin laying eggs, at which point they are more productive. AZ FCU management, with their unavoidable $3 monthly fees, has sent thousands of future borrowers to other credit unions. Those members won’t forget what Arizona Federal did to them.
Smart members go where they are not hit with excessive fees. Only the less informed members stay at AZ FCU, or those too lazy to switch to a more caring credit union.
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