Unprecedented: Credit union takes first step to merge with bank

MCMINNVILLE, Tenn. - If Caney Fork Cooperative Credit Union's plans continue as planned, this small city-population approximately 10,600-in the central part of the state will be known as the headquarters of the first credit union to merge with a bank. On June 6, NCUA approved a set of merger procedures for Caney Fork Cooperative to merge with Beacon Federal Mutual Savings Association, a former credit union based in East Syracuse, N.Y. that converted to a thrift last July. Chartered in the early sixties to serve employees and their families of Caney Fork Electric Cooperative, the $300,000 credit union has watched its membership continue to dwindle, said Steven Johnson, vice president. At press time, the credit union served 199 members in a four county area including Warren, White, Dekalb and Van Buren counties. Johnson explained that the credit union's concerns about it shrinking deposit base were confirmed by a state auditor who advised the credit union "to either expand its services if it wanted to continue operating as a credit union or consider merging." Caney Fork Cooperative looked for another credit union that had a presence in the four-county area Caney Fork served, said Johnson, but there weren't any. Beacon Federal Mutual Savings Association though already has a branch in Warren County. It also has an ATM installed across the street from Caney Fork's facility on Smithville Highway and has a courier service it uses for other businesses in the counties. "Our decision to merge with Beacon Federal was strictly a business decision," said Johnson. "We had no choice. If we didn't merge, we would have to fold." How will Caney Fork's members react to news about the credit union's merger plans with a bank? Johnson admits some of the old-timers will hate seeing the credit union go away. "But after we explain the reasons for our decision and the new services that will be available to them, I don't anticipate a problem." At press time, Johnson said no date had been set for members to vote on the merger. Although no credit union prior to Caney Fork Cooperative has merged with a thrift, 11 CUs have converted to thrift charters in the last five years. They include: Lusitania Savings, Newark, N.J. (converted 1995); AWANE Bank, Peterborough, N.J. (converted 1996); BUCS Federal, Owings, Md. (converted 1998); Synergy Federal, Cranford, N.J. (converted 1998); Affiliated Bank, Hurst, Texas (converted 1998); Ohio Central, Dublin, Ohio (converted 1998); IGA Federal, Feasterville, Pa. (converted 1998); Beacon Federal, East Syracuse, N.Y. (converted 1999); Carolina Federal, Charleston, S.C. (converted 1999); Kaiser Federal, Pasadena, Calif. (converted 1999); Pacific Trust, Chula Vista, Calif. (converted 2000). -ekingoff@cutimes.com