Credit Unions Dump Federal Charter
The New Year will bring charter changes for two large credit unions in Oregon.
The $914 million Rogue Credit Union in Medford and the $885 million Oregon State Credit Union in Corvallis will convert from federal to state charters on Jan. 1 to positon their cooperatives for long-term growth.
“Over the last several years, Rogue Credit Union has strategically evaluated our field of membership and future growth opportunities,” President/CEO Gene Pelham said. “This analysis showed that with our considerable deposit and loan market share in the communities that we currently serve we needed to identify long-term future market expansion opportunities. Our sincere desire was to remain a federally chartered credit union, but we found that the existing NCUA field of membership rules provided no opportunity for Rogue Credit Union to expand.”
To make sure the credit union wasn’t misinterpreting federal FOM rules, it paid for an independent professional analysis to see if there was another option to keep its federal charter. In addition, the NCUA also conducted research but found the only option for expansion was through an emergency merger of a purchase and assumption.
“Even more troubling was the inability to complete a standard merger with another credit union as the surviving credit union if the other credit union served any communities outside of our existing field of membership,” he said.
Although the acquisition of the $259 million Chetco Credit Union in 2012 expanded Rogue credit union community charter to five Oregon counties and one California county, the three new counties only added 112,000 potential members.
“While we successfully leveraged this purchase and assumption, we did not see the acquisition of troubled credit unions as a preferred long-term strategy for market expansion,” Pelham said. “So, after operating as a federally chartered credit union since 1956 the board of directors decided to pursue a conversion to a state charter.”
Eighty percent of the 4,000 members who voted favored the charter conversion in October. The credit union also secured both state and federal approvals. Rogue CU serves 83,577 members.
“As a state chartered credit union Rogue Credit Union will now serve 24 Oregon counties and one California county,” Pelham said. “We have members throughout Oregon that regularly refer their friends and neighbors to Rogue and this charter expansion now provides us the opportunity to say yes to those Oregon residents that want to do business with us.”
Similar to Rogue, Oregon State Credit Union had been a federally chartered cooperative since 1954, and determined it needed to switch to a state charter for future growth.
Though the charter change will enable Oregon State to expand its FOM from five counties to 24 of the state’s 36 counties, it has no current plans to move into any new counties.
“What we are looking for is to have the ability to have long-term growth,” Assistant Vice President of Public Relations and Business Development Mike Corwin said.
In the near term, the state charter will allow the credit union to continue serving members who have moved to other counties and provide indirect auto loans to consumers throughout much of Oregon.
Eighty-seven percent of the 8,000 members who voted approved the charter conversion in November. Approvals from the state and NCUA were also secured.
OSCU serves 80,711 members.