Credit Unions Take Wal-Mart 'Money Centers' in Stride
MIAMI -- The credit union buzz over Wal-Mart's new "Money Centers" was a collective shrug last week.
"Wal-Mart expansion into financial services is a reality of life," opined Gregory Blount, president/CEO of the $750 million Tropical Financial Federal Credit Union of Miramar, which has six in-store branches in south Florida.
And in the Cincinnati area, James Schultheiss, president/CEO of the $140 million Chaco Credit Union of Hamilton, said he was unworried about interference with his three retailer branches, all opened two years ago and one of which debuted "in Oxford, a new area for us and which is doing quite well in drawing new members."
Chaco "always anticipated" Wal-Mart would do more in offering financial products in its stores, said Schultheiss.
Blount of Tropical added, "though we hope that's not the case, you know there's nothing stopping Wal-Mart from signing up with third parties like Countrywide for mortgages or someone else for auto loans."
"Sometimes you have to dance with the devil," quipped Blount commenting on Wal-Mart's announcement that it plans 1,000 of the "Money Center" check cashing/money order outlets by the end of 2008.
Tropical, which has been running successful Wal-Mart branches for five years, opened its sixth facility in Lake Park in March and so far "our branches have performed very well producing $100 million for us," said Blount.
Blount said for the moment he sees no major threat from the "Money Centers" though conditions could change quickly if the retailer started offering auto loans "which would be our bread and butter."
Right now at Tropical, "we're very happy and we're getting new members," he said.
But in Georgia, the $75 million United First Federal Credit Union, St. Mary's, is considering closing its lone Wal-Mart branch in light of the "Money Center" launch.
"I've sent my marketing head out to check with the store manager here to see what they know since Wal-Mart never told us a thing," said Pat Conn, head of United First, located in far southeast Georgia.
Wal-Mart officials said the state, particularly the Atlanta area, would be an initial testing ground for the Money Center facilities with 15 new ones opened by yearend.
Conn said the original concept was for his CU retailer branch to become a "billboard" for the CU following a name change attracting many new members. But the reality has been the facility has been a heavy-duty transaction center "and no loan volume," he said.
The Georgia CEO also observed a subtle change in how the Bentonville, Ark. retailer manages its leasing business with his CU. Where once "there was a full blown leasing department but that seems to have been done away with" and now United First is handled on a direct basis and on that "perhaps we've fallen under the radar," he said.
In Phoenix, the $3 billion Desert Schools FCU, another major CU player in Wal-Mart in-store branches, said it was business as usual.
"We continue to lease space and operate in 21 Wal-Mart locations," said a spokesman. "Our focus remains on our existing 350,000 members. Desert Schools currently has a total of 59 branch locations and we'll be opening four additional in-store Wal-Mart locations this year."
For now, the spokesman concluded, "we're in the same boat as everyone else. We're watching and waiting to see what happens."