The statute amending the Oregon Credit Union Act was signed by Democratic Gov. Ted Kulongoski June 4 and is being hailed by the industry as a step forward in field of membership growth.
The law, supported by the Credit Union Association of Oregon, deletes a clause in existing law requiring SEG-based CUs moving to a community charter to halt service to the former SEGs outside the new community. Some in the banking lobby had objected for a time but later agreed to the changes.
The law also makes many housekeeping changes on membership requirements, accounting rules, annual meeting policies and bonding requirements "to improve and streamline certain aspects of corporate governance, three technical changes dealing with accounting and operational issues," said the CUAO.
The bill was the product of two years' work by the state issues subcommittee of the CUAO's Governmental Affairs Committee headed by Scott Burgess, president/CEO of Rivermark Community CU of Beaverton.
Burgess said his CU, which previously was an occupational CU serving employees of the Safeway supermarket chain, found itself closing down its in-store operations and curtailing member service because of the old law's provisions. He said a small number of other occupational Oregon CUs also were in similar straits.
Separately, Burgess' $439 million CU announced it expects to complete a merger Aug. 1 of the $50 million Oregon Territory FCU of Salem. He called the consolidation of the smaller CU an example of what is to come for more small CU mergers across the U.S.
Both his CU and Oregon Territory are well-capitalized and in healthy condition, Burgess said, but the merger phenomenon "will become more prevalent, as smaller credit unions grapple with rising costs, increased competition and member service demands."
Burgess noted that Oregon Territory had selected Rivermark as the merger partner based on performance. In a statement, Oregon Territory President/CEO James Eberle said the merger with Rivermark would provide its 8,000 members "more branches, expanded hours and a wider range of financial products."
For its part, the 47,500-member Rivermark said the merger will allow field of membership expansion into 11 Oregon counties.
"And because Oregon Territory has been so well managed with a strong financial and capital position entering the merger, there really are no downsides," said Burgess. Oregon Territory had a $270,000 profit in 2008 but lost more than $400,000 in the first quarter of 2009, including the $296,000 corporate stabilization expense.