STRATFORD, Conn. - He expected it to happen, and now that Tom Williams, president/CEO, Sikorsky FCU is hearing the rancor building among small area credit unions triggered by Sikorsky's filing with the state Department of Banking to become the first FCU in Connecticut to convert to a state charter (CU Times, May 3,) he is neither surprised nor daunted. It comes down to competition, Williams says. "I understand where they're (small credit unions) coming from," he told Credit Union Times, "but things change. If the small credit unions are concerned they can't compete with a larger state-chartered credit union, they should think about merging." Sikorsky FCU applied to the Connecticut Office of the Banking Commissioner and to NCUA for the charter conversion in late April. When the charter conversion is completed, the credit union will be known as Sikorsky Financial Credit Union. Its field-of-membership will include "persons who live, work, worship, volunteer, or businesses, partnerships, corporations or organizations located within the state of Connecticut with the specific exclusion of the existing fields of membership of: Amphenol RF Operation Employees CU, Inc.; The B.M.G. Credit Union Inc.; Bethel Stamford CU Inc.; Brand-Rex Employees CU Inc.; The Coca-Cola of Hartford Employees CU Inc.; The East Haven Municipal Employees CU Inc.; Enbic Company Employees CU Inc.; The Harborview CU Inc.; Heim Employees CU Inc.; Taylor & Fenn Co. Employees CU Inc.; and U.S. Baird Employees CU Inc." Of the 11 credit unions listed above in the FOM exclusionary clause, the largest-East Haven Municipal-is about $1.5 million in assets; the smallest Taylor & Fenn is $111,000 in assets. Kevin Stewart, president, Connecticut Credit Union League said the relative small size of credit unions in the state does not reflect CUs' lack of interest in growing, but rather the economic recession in the late 80's and early 90's which Stewart said changed the dynamics of the state from a manufacturing to a technology-based economy. "We're still seeing some of the effects of the recession," he said, noting that only last year the population in the state stopped declining and stabilized. The closing of many of the manufacturing plants in the state meant the loss of many credit unions' primary sponsor and the subsequent closing of many credit unions in Connecticut. In the five years Stewart has been with the league, he said the state has lost 33 credit unions. "A state without a growing population is limited in the number of potential small businesses out there for credit unions to take in as SEGs," Stewart commented. Stewart withheld comment on whether the league was for or against Sikorsky's conversion application because, he said, the league's position is any issue concerning field of membership is between the credit union and the state regulator. But he conceded that given the federal-to-state charter conversion activity around the country, "it is unreasonable to think Connecticut would be immune from it." Reactions to Sikorsky's plan were not only directed at the credit union. State Banking Commis-sioner John Burke was also the target of accusations such as he is more interested in attracting federal chartered CUs into the "state-charter fold," than in the effect the conversion will have on small state-chartered credit unions. Other credit unions wanted to know what kind of protection the commissioner intends to give other small credit unions besides the 11 included in the exclusionary clause. At press time, DFI Communications Officer Dave Tedeschi said Burke would not comment on the situation while the conversion application was out for the the 10-day comment period. It expires May 5. Williams said he thought it ironic that the small credit unions in Connecticut should be reacting the way they are to the news about Sikorsky's conversion plans. He explained that a few years ago, First Connecticut CU-the third largest state-chartered CU in the state with approximately $40 million in assets-merged with a smaller community charter CU which included five towns in its field-of-membership. "First Connecticut sent out postcards and went on cable television advertising the credit union's expanded service reach and residents' eligibility to join First Connecticut. We didn't complain to them or say what they were doing was unfair." First Connecticut's strategy though did help move along Sikorsky Board's decision to apply for the charter conversion, Williams admits. "We were late getting started taking in select employee groups," he said. "By the time we took in our first SEG in 1995, the small credit unions were eating us up. So when Sikorsky Aircraft began downsizing about two years ago, all the potential SEGs were already taken. All we're trying to do by converting our charter is survive and grow." Williams is sure if any other credit union in the state wanted to merge or convert their charter, state Banking Commissioner Burke would encourage them to apply because "he believes in open competition. He'll be as fair in making a decision for them as he has been for us." Marjorie Mitchell, manager, East Haven Municipal Employees CU said the 575-member CU has no interest in merging or expanding from being a plain vanilla CU. The credit union serves all employees and their families of the town of East Haven and offers besides savings accounts, limitted personal and car loans, vacation and Christmas clubs. It doesn't offer share draft accounts. Mitchell said the credit union considered merging with another credit union a few years ago, but the board decided against it because East Haven Municipal Employees was in good financial shape and saw no reason to change things. As for Sikorsky's conversion plans, Michell said she is neither concerned nor upset with them. "We're so confined here that we'd be almost isolated from any competition from them." In Williams' book, that shouldn't stop a credit union from expanding its product offering. "There's no such thing as loyal members in our industry, they go where they can get the best products and services, even if it means to a bank," he said. "If credit unions remain small for the sake of remaining small but don't offer competitive products and services, they're not helping their members. They're doing them a disservice." -
ekingoff@cutimes.com
