GREENSBURG, Kan. -- When tornado - ravaged Greensburg residents finally rebuild their small community, it will likely lack a credit union.
Prior to the monster tornado, which essentially wiped the town off the map on May 4 2007, Greensburg had three bank branches and a start up branch of the $121 million Mid American Credit Union, headquartered in Wichita. The credit union branch had been located in the same space as an H&R Block and accounting office and had been designed to serve as a start up branch, the credit union said in the wake of the storm.
But even though the town has begun fulfilling its vow to rebuild from the foundations up, the CEO of Mid American explained that a combination of field of membership restrictions and changes in some of the relationships that helped support the CU in Greensburg have conspired against the CU reopening its branch there.
Even though two of the banks brought mobile offices in after the storm, the CU didn't take that step because it determined that many of its members in the community were no longer there.
"Even though Greensburg was still there on the map, there just weren't many people there. I think at one point we calculated we might have 80 people in the community full-time in the weeks after the storm," explained Mid American CEO Jim Holt.
Holt added that while this alone might not have been enough to discourage Mid American from beginning again in the town since the office had only been a start up office in the first place, the CU had also lost relationships with some of its key business partners in the area.
For example, the H&R Block and accounting practice that had previously provided the CU with space had relocated to a neighboring community after the storm and did not seem inclined to return, Holt reported.
But the final straw in the decision-making may have been the new field of membership restrictions that Kansas bankers pushed through the state's legislature. Holt explained that the restrictions effectively prevent his credit union from having more than a million potential members, statewide, at any one time. That has meant the CU has had to consider its branching decisions carefully, even though the start up branch in Greensburg would have been grandfathered in under the new law's potential member limit.
"No one's resources are unlimited," Holt said. "And the new law has made the decision very complicated because we have had to try to find ways to establish branches where they are going to have the greatest potential to serve new members under the limitation."
Another factor influencing Mid American's decision was the apparent ease with which many of the CU's members have taken to the CU's Web site and telephone banking services.
"Ten years ago it was more of a given that you had to have a branch to serve your members, but that is not as obvious anymore," he said.
Holt indicated that Mid American had not finalized the decision and said the CU was still evaluating the situation, but he added that Mid American faced real challenges in the community which it had not before. He also reported that the CU had not forsaken members' loan needs in the area, financing a number of the efforts to rebuild homes in the community. "But mortgage loans are a once in 30 years thing, not like car loans," he emphasized. "We have a relationship with the local dealer in the area who sends us our members to finance their autos, but again you don't really need a branch for that," he added.