(Host) Some of Vermont’s largest credit unions have recently opened their doors to community membership. The change allows more Vermonters to join a credit union and provides the organization with new deposits and borrowers. It also may be seen as competition with local banks.
VPR’s John Van Hoesen reports.
(Van Hoesen) Credit unions got their start as a financial service for employees of a company. But regulations also allow the institutions to apply for community membership status.
There are the several dozen credit unions in Vermont. Five of the largest now offer membership to residents of their area who don’t belong to an employer group.
Of the federally chartered credit unions, three have received permission for community membership in the last year. They are New England Federal, Vermont Federal and North Country Federal.
Of the state chartered credit unions, two now have community membership status: National Life and Heritage Family. And the Vermont State Employees credit union also has applied for the status.
Thomas Candon is deputy commissioner in the state’s banking division. He says a variety of reasons account for the trend:
(Candon) “The employer may be going out of business or downsizing to the point that the credit unionÂ¿thatÂ¿supplied servicesÂ¿to the employees of that company have found itself in a bind.”
(Van Hoesen) Candon says that credit unions need to maintain a certain level of deposits and members to serve those who remain. He says credit unions are also finding that most of the employee groups that could join a cooperative are already spoken for. And he says some Vermonters are simply looking for alternative means of banking:
(Candon) “That’s what we are seeing in the last year or so – credit unions that are looking to expand the numbers of members to gain deposits or borrowers, and also to be larger to provide more services.”
(Van Hoesen) New England Federal is the state’s largest credit union with 56,000 members. It’s written almost $400 million in mortgages in recent years.
David Bard is the president. He says the credit union continues to serve its original sponsors well, but made the change to be less vulnerable:
(Bard) “We were concentrated in two major employers: IBM and Fletcher Allen. Our feeling was it gave us a little more clarity about who could join [and] gave us a little more growth potential, but it also gave us some diversification.”
(Van Hoesen) Bard says the focus is exclusively on member needs. He says, for example, that when ATM surcharges became popular, New England Federal decided not to put a surcharge on any of its machines.
But not everybody will be happy with the trend toward community membership. Candon, the deputy commissioner of banking, says two groups might be concerned. Small credit unions might see larger credit unions as coming into their areas and commercial banks might be concerned about competition.
For Vermont Public Radio, I’m John Van Hoesen