HOBOKEN, N.J. -- Lake Michigan Credit Union grabbed headlines four years ago, in the Feb. 18, 2004 issue of the CU Times, with the beginning of its attempted mutual savings bank conversion.
Lake Michigan Credit Union was just taking its first steps in a mutual bank conversion. Although the attempt ultimately failed, the conversion of the then $964 million Lake Michigan CU to a mutual bank would have been the largest of its kind. The CU cited rapid growth and capital limitations as motivating factors in its consideration of the conversion. One of the reasons behind the CU's rapid growth at the time was the location of its new branches. Several of the branches being opened up were placed near large schools taking advantage of the fact that the credit union had "a lot of pull" with teachers since it was founded by a group of teachers.
Two top credit union CU CEO's John Tippets of American Airlines Federal Credit Union and the then-CEO of Navy Federal Credit Union, Brian McDonnell, voiced their concerns over secondary capital among credit unions. Both CEO's agreed a crucial point was to maintain the characteristics that distinguish credit unions from banks, and one of the strongest differentiators was that credit unions do not have access to capital markets. Both agreed that risk-based capital was the better way to go over secondary capital.
Four years ago, managed accounts started making headway among credit unions. While the minimum investment for managed accounts among large wirehouses and banks was $100,000, at the time, credit unions were cutting that down to $25,000 and $30,000 to allow more members to participate. The financial services manager for Security Service Investment Group--the CUSO for SSFCU-- said in the article that managed accounts help build a fee-based service and help recruit members.
The acquisition of Aurum Technology by Fidelity National was one of many deals going on among data processing vendors at the time. Fidelity paid $305 million in cash and stock to acquire Aurum. Aurum was folded into Fidelity's Integrated Financial Solutions division. Less than a year before, Aurum had acquired the credit union processor Computer Consultants Corp. Even with that major acquisition, Aurum President Paul Burke had said that the company needed more money to grow the way it wanted, and that was the motivation behind the deal.
