Credit unions face some tough issues that will require tough choices in the future. Management will need to focus on different forces at work in the market and different objectives in managing their balance sheets. They’ll need to weigh new opportunities against new challenges that sometimes will be directly opposed.

Credit unions, for example, now have the greatest opportunity to grow membership and assets. At the same time, they continue to experience losses on loans and investments, nearly invisible interest margins, and increased compliance burdens—all this, and a future where return on assets of 50 basis points (bp) to 60 bp may be considered a good year.

How can management take advantage of these growth opportunities without inflating assets to a point where the capital-to-asset ratio drops below the 7% “well-capitalized” level? King Solomon, where are you when we need you?

Grow your credit union membership, create new levels of revenue, and maintain needed capital levels by managing your balance sheet and adding members who use products and services that create revenue.

It has been said many times before (sometimes by this author), that credit unions have great opportunities to serve the young people in this country. The types of services they need and most often use are consumer loans, payment access, cards of all descriptions, and e-services. They generally don’t have large deposit balances, which increase assets, but they use the types of accounts and transactions that generate fee income and interest income. The loans they take have a considerably higher yield and spread than today’s options for investments.

It’s estimated that today’s 90 mil­lion members have 19 million children under 18 years old. Studies show the very best way to get loyal young members is through their parents’ memberships. Yet little progress is being made.

It’s hard work to get young people to join and the payback is small in the early years. Consider the following analogy: I can plant tomatoes in June, and enjoy them by late July. I receive some short-term payback (subject to the vagaries of weather, blight, and varmints) well worth my investment, but next year I start over.

An apple tree, on the other hand, costs much more than a tomato plant, and I get little or no payback the first two years. But year after year, the volume of fruit increases, and when it peaks I get bushels of great apples every year.

The evolution of a young member—with a small-balance checking account, a $300 credit card, and a student loan—into a loyal member—with a mortgage, one or more car loans, various cards and transaction accounts, and confidence in the credit union—is much like the apple tree. The relationship will produce great value for many years, and the investment in time to develop and nurture the member’s well-being through his or her evolution into responsible adulthood will be repaid many times over.

So go out there and get your share of those 19 million young people living in your members’ homes. Make it a primary objective, and challenge staff to make it happen. As with all things, you need a goal, a plan, clear-cut accountability, and real commitment. If you refuse to accept failure, you will succeed.

JOHN FRANKLIN is executive vice president and chief operating officer for the Credit Union National Association in Madison, Wis. Contact him at 608-231-4266.