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<p>AUSTIN, Texas – Is it the state where they’re located or the credit unions involved in the discussion that’s the cause, or all or none of the above, but mention community field-of-membership expansion to some Texas credit union folks and the conversation is guaranteed to become less than casual cocktail talk. “Texas credit unions tend to be very vocal, and any discussion on community credit unions and field-of-membership expansion is no exception,” quipped Commissioner Harold Feeney of the Texas Credit Union Department. What is it about community FOM expansions that touch a nerve with some Texas credit unions? Feeney, for one offered that the answer is simple: “There’s a certain segment of the credit union population that doesn’t like any aggressive expansion of credit unions, it rubs them the wrong way philosophically. They see it as leading credit unions down the path to taxation.” Unlike the Federal Credit Union Act, Texas CU law does not distinguish between different types of charters – association, occupation or geographic. Neither does a state-chartered credit union in Texas have to surrender its charter for a new charter if, for example, it has served select employee groups and decides it wants to expand its FOM geographically. Feeney said a credit union is simply issued a charter when it’s formed, and it can decide whether it wants to expand its field-of-membership through occupational or associational groups or what the department refers to as a “community of interest,” meaning a geographic group. Community Credit Union in Plano, for example, has all three types of memberships. It was chartered in 1952 to serve occupational CU groups, and it still counts a few hundred select employee groups in its FOM. It also serves all of Dallas, Cullin, Rockwall and Grayson Counties, and has picked up some cities between Dallas and Fort Worth. “A lot of credit unions think they shouldn’t be competing with each other for members. They become almost proprietary about the members they serve and their fields-of-membership. They’d rather have their potential members get services from another type of financial than from another credit union,” said Feeney. According to Feeney, the Dallas/Fort Worth area is the most popular area credit unions want to get in to serve. There are three credit unions with more than $1 billion in assets that have community FOMs that include the Dallas area – Texans CU, Richardson; Community CU, Plano; and Credit Union of Texas, Dallas. The three largest credit unions that serve the Fort Worth area are OmniAmerican CU, Fort Worth Community CU, and Educational Employees CU. They’re all located in the city. As for the other two centers of credit union activity in the state, Feeney said Austin has always been a “very competitive area,” but the competition was kicked up a notch when Texans CU was approved to expand its FOM geographically, allowing TCU to open a new branch in Austin. San Antonio is home to three billion-dollar credit unions, but they’re all federally chartered – San Antonio FCU, Security Service FCU, and Randolph-Brooks FCU. “The community credit unions in Texas are all high-profiled credit unions because of their size and the fact that they’re clustered so close to each other. That makes them very visible and makes everything they do that much more noticeable,” said Feeney. In considering credit unions’ FOM expansion applications, Feeney considers how any resulting FOM overlaps will potentially affect the overlapped credit unions and their membership. He said there have been instances when a credit union applied for a geographic field-of-membership expansion, and it was determined the CU was too small to effectively serve the area it applied to serve. In cases such as these Feeney said a CU is usually granted a smaller FOM expansion instead of totally denying their application. Feeney also noted that only a few states’ credit union departments – the Texas Credit Union Department being one – actually publish notices of field-of-membership applications they receive and give state-chartered credit unions the opportunity to comment on the applications. Ironically, Feeney said whenever his department publishes the notices it only hears back from a few CUs. “However when I go on the road to meet with credit unions or have other opportunities to talk with them, they always bring up the issue of community field-of-membership expansion.” Feeney insists that he “tries to remain objective” whenever he receives an application for a geographic field-of-membership expansion, and he insisted that just because he’s approved so many, “it’s not a done deal” whenever he receives an application. That’s not how it seems to some credit unions in Texas. Whenever some of them hear about a large CU, such as Community CU applying for-and being approved-to add another community to its field-of-membership, they view the expansion as an example of large CUs muscling in on areas being served by smaller CUs. But Gary Base, president/CEO, Community CU argues that field-of-membership overlap is not the issue, and that Community CU’s FOM expansion is not as `exotic” as it used to be before other CUs began expanding their FOMs. “As time proceeds, our field-of-membership expansion is becoming less noteworthy and exotic,” he said. Base said Community CU’s FOM that includes the entire Dallas metroplex area is more accepted now “because it’s remained local and not expanded out of the area or as some CUs have done, out of state.” If FOM overlap isn’t the issue, as Base says, then what is it that gets Texas CUs’ goat whenever they hear about a CU applying for a community FOM expansion? “It has to do with products and services, that’s what is strategically important,” answered Base. He added that, “Just because a credit union is large and has millions or over a billion of dollars in assets doesn’t mean it will necessarily have more products and services to offer than a smaller one. Sometimes large CUs are slower to move because they’re bogged down in bureaucracy. Size doesn’t guarantee efficiency.” What is key, said Base, is creativity and the willingness of a credit union to take the risk of trying something new. On this point, said Base, a small size can be to a credit union’s disadvantage because it has less resources to take risk. “Growing is more than just about getting more land and expanding your field-of-membership,” said Base. “Some credit unions have had some products for many years and continue to offer them even if they don’t help their credit union to grow. Older, mature products are not the solution to growing a credit union. Credit unions need to look at what will be the products and services they’re members will want in the future, and they need to get into them now.” Base said Community CU has no plans to expand its FOM outside the Dallas metroplex area. “Our field-of-membership allows us to grow significantly,” he said. Instead he said the $1 billion CU is focusing on increasing its member penetration in cities it already serves: 42% of the households in the city of Allen and 29% of the households in Plano have at least one CCU member. Base would like to see those numbers go up. That doesn’t appease some credit unions officials like John Tippets, president/CEO of American Airlines FCU, a single-sponsor CU in Dallas. Tippets said community credit unions have his “full respect,” but “they have lost site of the narrowly defined community.” What is a narrowly defined community? Loosely speaking, says Tippets, “It’s when you can look north, south, east and west and see your community, know who they are and things about it like the school system.” Tony Budet, president/CEO, University FCU in Austin agrees with Base’s assessment. “Credit unions are mistaken if they think their world is their field-of-membership, and that if they serve that they’ll have it made,” Budet said. “If they don’t have the products to attract and hold their members, such as a strong product mix and a delivery system to deliver them, then having a community field-of-membership is going to be meaningless.” He also advised that credit unions are being distracted by community FOM expansions, instead of being aware and focused on who their real competitors are. “Credit unions are distracted by thinking other credit unions are their primary threat, they focus too much on each other. Credit unions’ real threats are the Charles Schwabs, Wells Fargos and Washington Mutuals of the world,” said Budet. Budet says he doesn’t “have anything against” community credit unions. University FCU counts 100 select employee groups in its field-of-membership which primarily includes the University of Texas, Austin. The $510 million UFCU has 90,000 members. “SEGs are our choice, they’re a good fit for us. For another credit union, their choice may be to go the community field-of-membership route, and that’s fine. I don’t feel threatened by that,” says Budet. “We have our hands filled enough just trying to remain viable to our members and grow.” -</p> <p>[email protected]</p>

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