UMassFive College Federal Credit Union Remains Focused on Growth

Setting Its Sites

Rich Kump says UMassFive College Federal Credit Union is persevering through challenging times for this sector.

Rich Kump says UMassFive College Federal Credit Union is in a mood to “make up for some lost time.”

Elaborating, he flashed back more than two years, to when the institution was starting to move ahead with plans to move its flagship location in Hadley to a new location just down Route 9, while also advancing efforts to make a push into Hampden County with a location in or near Springfield and a smaller satellite office within Springfield that would serve one of the city’s many banking deserts.

Returning to today, he said the credit union — which he serves as president and CEO — has made very little, if any, progress on those fronts, due to issues with all three sites that we’ll get into later.

He summed it all up with some understatement, and a needed sense of humor, saying, “what I have surmised from all this is that we’re not very good at picking branch sites.”

Now, the institution is looking at 2026 for the Hampden County locations, and a longer timeline for the new Hadley location, which he admits is less of a priority now than it was back in late 2022, due primarily to remote-work options that have alleviated space concerns that were a prime motivator for relocating the flagship branch.

“Moving the Hadley branch does not generate a whole bunch of new loans and deposits and members.It provides some great visibility, but not many growth opportunities.”

These are all still priorities, but they have been supplanted by larger concerns and dramatically changing times — for all banks and credit unions, one in which the rising interest rates of 2023 and early 2024 tightened already-thin margins, reduced profits, and pushed many credit unions to the point where they needed to merge with another institution or close.

“It’s been a troubling time, with many credit unions posting losses,” Kump said, noting that there were 41 credit-union mergers nationwide in the fourth quarter of 2024 alone, some of them generated by a need for small credit unions to expand services, but many others prompted by poor financial condition.

UMassFive has been looking to move its flagship branch in Hadley (pictured) to a new location down Route 9, but other priorities are currently more important.

UMass Five, which has six branches across Western and Central Mass., including one at its namesake, UMass Amherst, is not so imperiled, but it has seen deposits tumble and overall performance slide due to these colliding factors.

“We had to increase our rates to keep the deposits we had, and, of course, that increased our cost of funds quite a bit. And while the cost of funds increased, we still have a loan portfolio, much of which was at much lower than market rates,” he said, explaining, in simple terms, the main challenge facing all institutions.

UMass Five, with roughly $570 million in deposits and around $700 million in total assets, didn’t load up its balance sheet with large numbers of low-interest borrowings, he went on, but it certainly felt the pinch.

“Our net interest margin did shrink a little — not as much as others, but overall, we saw our net income decline,” Kump said, adding that the bank grew at just 0.24% in 2024, what would normally be considered an off year, but, under these circumstances, acceptable.

Moving forward, the credit union, like many other financial institutions, must balance life in these more difficult times with the need to grow, attain more deposits, and create economies of scale, and thus become better able to handle the ongoing headwinds.

UMassFive is not in a position to be acquired, and it is not exactly looking for opportunities to acquire others, although it will certainly consider them as they emerge, said Kump, adding that, for now, the preferred method of growth is organic.

Which brings us back to those branches that have been in the planning stages. They are important parts of the credit union’s overall growth strategy, and while the institution will move forward, it is not going to rush anything.

Indeed, while he regrets losing time with these initiatives, as he said at the top, the process of selecting new branch locations — an art and science that involves everything from visibility to the volume of other traffic-generating businesses, to the number of competing banks and credit unions in the general vicinity — is necessarily slow and involved, and UMassFive will take its time and get it right.

“We’re back to square one,” he said of the Hampden County locations. “But it’s more important to do this well then do it quickly.”

For this issue and its focus on banking and financial services, we talked with Kump at length about what’s in the business plan for UMassFive, and just how the institution will make up for that lost time.

Points of Interest

Recapping what’s happened with those three planned branches, Kump said not much has gone right, and each story is different.

In Hadley, the property where the credit union intends to go is occupied by an auto-repair shop and a small single-family home being rented from the property owner. Long story short (we’ll do a lot of that), that tenant has not gone quietly — the matter has wound up in Housing Court in a protracted battle — and won’t be out for another six months or so.

“We’re still interested in that site … we’re putting together a new purchase agreement because we hadn’t anticipated such a lengthy delay,” Kump said. “But it’s still in our future, and we do want to move our flagship location to that more visible site on Route 9.”

Meanwhile, in Hampden County, at a location in East Longmeadow near the Springfield line, a site chosen after extensive research, a new branch has been scrapped due to issues with the sewer system. And that satellite location? After more than a year of deliberations, the owner of that property ultimately decided not to sell or lease it.

So UMassFive is now essentially where it was two and half years ago on all three projects — waiting to get started in Hadley and trying to find the right sites in Springfield, Kump noted, adding that, over that time, the landscape for credit unions and banks has changed when it comes to liquidity, profitability, and, in this specific case, priorities and growth strategies.

“As many other financial institutions are doing, we’re managing our growth,” he explained. “Your income fuels growth, and when your income is down, you can’t grow as much.”

Elaborating, he said the Hadley initiative is certainly still important, just less so in the larger scheme of things, adding that the relocation of that flagship branch is now targeted for completion in 2028 at the earliest, for a few reasons, starting with logistics.

A few years ago, the plan was to close an operations center in Hadley and move the employers there into space created by moving the headquarters branch to that aforementioned location at the Amherst/Hadley line. But with heavy use of telecommuting and hybrid schedules, the credit union has moved the last department from the operations center into the flagship site, with the branch still operating.

Meanwhile, with a focus on gaining new members and growing deposits, the credit union’s top priority now is expanding into Hampden County.

“Moving the Hadley branch does not generate a whole bunch of new loans and deposits and members,” Kump explained. “It provides some great visibility, but not many growth opportunities.”

He expects these to come in Hampden County, where the credit union has a small presence — a branch in Mercy Medical Center — with intentions to become a larger player in that region, through further use of what he called a “hub-and-spoke” operating philosophy.

Elaborating, he said this model calls for a main facility, such as the one in Hadley, with smaller, satellite facilities around it, including those at UMass Amherst, downtown Northampton, and the Veterans Administration facility in Leeds.

There were plans to create something similar in Hampden County, starting with the property at the East Longmeadow/Springfield line, as the hub. But, as we’ve seen, that site didn’t work out, a huge disappointment for the institution.

“We were very excited … we did an extensive branch study, used lots of data, socio-economic factors, traveling routes, destination points at this one location, and it came up roses for us,” he explained, adding that the roses soon wilted amid sewer-backup issues that could not be resolved, forcing the credit union to walk away from the deal four months ago.

Now, as he said, UMassFive is back to square one, and it will take its time putting a new plan together. With that, he gave some insight into the complicated nature of finding sites for branches, an undertaking many institutions are familiar with as they seek out growth opportunities in a no-growth area with many communities that could only be described as ‘overbanked.’

“There is a lot that goes into this … for bank branches, you have to be visible, you have to be in high-traffic areas, and there have to be destination points around you,” he said, adding that, to find such sites, institutions must invest time, money, and resources — and then hope things go right with the sites they choose.

But as difficult as finding good branch sites can be, securing them is critical, said Kump, adding that, in this environment, pursuing growth and achieving size are critical for all financial-services institutions.

“Eventually, you have to grow again, and we feel that will happen,” he said, adding, again, that, while the organic route is preferred, the credit union will certainly look at merger opportunities as they emerge.

“We’re not aggressively seeking mergers, but if there is a credit union that has interest in merging into us, we would definitely consider that, and that’s really who we’ve been throughout our existence,” he said, adding that the institution’s locations at Mercy and the VA facility came about through mergers.

Location, Location, Location

Looking ahead to the balance of 2025 and beyond, Kump said it’s difficult to project what will happen — with both the economy and financial-services institutions.

Indeed, only a few months ago, the Fed was projecting several interest rate cuts in 2025; by December, it was anticipating few, if any.

“All bets are off,” he said. “We see employment numbers coming down, inflation numbers seem to be going up, and if inflationary pressures continue to push, it wouldn’t surprise me if, in 2025, we saw some rate increases again.”

In this climate, UMassFive will continue to work to manage its growth and align its priorities to that end.

It will also endeavor to make up for some lost time and find some better luck and good fortune when it comes to picking branch sites and taking full advantage of those new locations.

It is certainly overdue.