Closed Credit Union Memberships Dwindle
KENTWOOD — In light of recent events, West Michigan offers no better argument for open membership than Community West Credit Union, formerly Steelcase Employees Credit Union.
"Frankly, if you live in this area, you're aware of the problems Steelcase has faced," said CEO Charles Rea. "Steelcase is still a very important part of our membership and it always will be. But we needed to open up our membership. If not, it would have become increasingly difficult to serve our members."
Although Community West completed its conversion and name change in January 2004, it still lost 1,500 members last year. Since 2001, it has lost nearly 12 percent of its membership.
Only recently has it started to turn that tide.
It has attracted new partners like X-Rite and Ramblewood Apartments. Although essentially landlocked in
A special emphasis on technology has aided those efforts, Rea said. By making more services available through the Internet, it has lowered geographical barriers for its technology savvy members.
Further spreading its penetration, the credit union for the first time has established finance partnerships with automobile dealerships.
Last year, the Credit Union Modernization Act provided
Under the old state credit union act, credit unions that wanted to adopt a community charter had to demonstrate a common bond between the members it currently served and the members in the new community it wanted to begin serving.
The old law did not permit the mixing of membership fields. In other words, if an employer-based credit union wished to serve a community, if approved, it could no longer serve new members from its previous field of membership unless they had a sufficient connection with the approved community.
Twenty credit unions made the change after the new law took affect, including Meijer Credit Union, Bell Com Credit Union, and Multi Product Credit Union in
A great many more predate the law, some by only a few days, including Community West, Family Financial (formerly Sealed Power, SPX), FEDCom (formerly Grand Rapids Federal Employees), Howmet and Kent County Employees.
Federally chartered credit unions have followed suit; Stampers Federal Credit Union recently became Rivertown Federal Credit Union.
Like Community West, Family Financial adopted a community charter months before the deployment of the new guidelines.
"We needed to grow," said CEO Christine Val Aelst. "In order to offer our members the products they expect and the rates they deserve, we had to expand our membership."
Previously defining its membership by a long list of employee groups, Family Financial now draws from the five Lakeshore counties.
"The opening of membership has been going on for quite some time," said Michigan Credit Union League President and CEO Dave Adams. "There are certain economies of scale that any financial institution can benefit from."
"Of course, it's rare to have a sponsor of that size,"
The only state-chartered community credit union among such company is
The rewritten law has led to just as many mergers and consolidations as charter changes. LSI Credit Union merged with Capital Community Credit Union last year, taking advantage of the law's new permission to market under two separate brands but function as a single entity. The merger created a credit union with a territory spanning the
Earlier this year, one-branch Family Financial acquired neighboring Oceana School Employees Credit Union. Spartan Stores Credit Union acquired K-V Credit Union last month. Federally chartered Credit Union One has swallowed half a dozen small credit unions across the state in the past year.
In the past three months, the number of state-chartered credit unions has shrunk from 260 to 257, according to OFIS.
In the face of such a trend, Lake Michigan Credit Union presents an interesting case. Last year, its attempt to restructure itself as a bank failed. As credit unions begin acting more and more like banks, can they still function as credit unions?
"If by behaving like a bank, you mean providing competitive services and products to its members, I can't imagine how that would be a negative,"
LSI CEO Kurt Thelen agreed with
"There is still a difference in the way decisions are made," he said. "Credit unions aren't burdened with having to keep stockholders happy every quarter. They can make decisions based on what is right for their members."
After the merger, LSI Financial now has well over $200 million in assets.
"As we grow, however, it takes a certain degree of discipline to keep that mentality," he said. "It's tempting to look at assets and the bottom line, but you have to make sure everything you do has a benefit to members."
"Banks are run by people with an equity stake in stock but not necessarily membership," he said. "You don't have to put your money in a bank to own stock in it."