Every credit union has them. Single service members who are a member in name only, with an auto loan or certificate that they picked up because of the rate or the convenience. If the member is paying fees or interest on a loan, then that member is likely profitable – so that’s an easy call.

But what do you do with single service members who only have $25K+ tucked away in a deposit product that is causing the credit union to lose money? Nevada Federal is not only setting them free, they are paying them to take their money somewhere else.

The credit union is well-capitalized, with good net income and record new member numbers in 2009 – even though they, like most CUs in Nevada, California and Florida, are fighting the mortgage meltdown. However, around 1600 members (out of 85,000) had only a money market or savings account, with no other services or accounts at the credit union.

With investment options so limited in this economy (investing in short term Treasurys earns about .25 percent), the credit union was losing money on these accounts paying interest at .40 percent. Plus, when you add an additional 15 basis points (to maybe 40 later this year) to the expected increase in premiums to NCUA, it adds to the loss.

So Nevada Federal slashed the interest paid to single service deposits over $25K to zero, nada, zilch, and is paying $25-$75 bonuses (and waiving any penalties) for amounts that are withdrawn and moved somewhere else. CU employees help the “newly freed” members find other places to park their money. Approximately $10 million has been moved with this program so far, saving Nevada Federal $15,000 to $40,000 in just the expected increase in NCUA premiums.

Once it is explained, “99 percent” of their members are “mostly okay with it,” according to Greg Barnes, SVP Marketing, “although one member thought we were un-American for not wanting his money.”

Barnes claims it has seemed to be a bigger deal in the CU trade publications than it has locally. Although after the Las Vegas paper broke the story, he also said that local banks were calling and asking for referrals, and one even offered to put a sign up in their lobbies.

Still, the net effect has been positive, according to Barnes. Lower deposits help the credit union’s net worth ratio go up, and lower overhead costs enable them to concentrate on the members that use the credit union for the majority of their financial needs. And isn’t that the goal of every credit union?

Your credit union cannot be everything to everybody and do it all at a high level. If your credit union is underperforming for the majority of your members, then maybe you need to make some tough choices. Lose those non-profitable products and services, even if you have to free a few members in order to do that. Then pick out what you do best and become known for that. Make it the central part of your marketing, your identity, your brand – even after you get bored with it. Your credit union will begin to thrive, and your active members will thank you.