Considering the poor economy, Pennsylvania’s Belco Community Credit Union is moving ahead with its first merger of a small ailing credit union in years, but it warns that CUs looking to expand had better be cautious.
"Spreads for all of us are simply too narrow," to contemplate wholesale branch or merger growth, warned Lonny Maurer, president/CEO of the $366 million Belco Community of Harrisburg.
The central Pennsylvania CU figured in a landmark Pennsylvania Supreme Court decision two years ago upholding community charter and field of membership powers in the face of a vigorous challenge from the banking lobby.
"Ever since the ruling, we’ve worked hard at expanding our branch network, but in this kind of environment you have to be extremely cautious," said Maurer, commenting on the June 30 merger of the $6 million LEBCO Educators FCU of Lebanon whose board last year solicited merger bids from several large Pennsylvania CUs.
The Lebanon CU which lost $144,000 last year with 5.63% net worth had determined that given the compliance burdens it could no longer provide affordable tech services to its 1,300 members and began seeking out merger partners.
Both the NCUA and Pennsylvania regulators have approved the Belco merger.
Like any number of small CUs in Pennsylvania and elsewhere, the job of keeping up with tech innovations and compliance costs can be overwhelming triggering a number to seek out merger partners.
"There were too many negative factors impacting LEBCO," said Maurer in pointing to the board’s decision to pursue a merger. Belco, meanwhile, does remain open to further merger opportunities, said Maurer.
The Harrisburg CU, he said, expects to eventually resume adding more branches following the Pennsylvania court ruling with two new facilities operating in Lancaster and Hanover.
On another topic, he said Belco, with heavy debit card penetration in its seven county market, expects to lose $700,000 a year if the interchange provisions are not delayed in Congress. "I can guarantee we will find a way to make up that kind of loss but right now it is the retailers who are about to gain a windfall."