GROTON, Conn. – After a nearly eight-year hiatus, shared branching is making a comeback in Connecticut with Charter Oak Federal Credit Union here leading the way in linking up its seven branches with Atlanta-based Credit Union Service Corp. Citing what it says is a vastly improved climate for shared facilities, the $420-million Charter Oak, the second largest CU in the state, said it hopes to interest other Connecticut CUs into the CUSC network. "CUSC's model fits our objective by allowing local cooperation among credit unions," declared Larry Hertell, president/CEO of the 70,000-member Charter Oak. "Through CUSC, credit unions in Connecticut will have the ability to form our own network – establishing our own local pricing, services and operating procedures." Charter Oak said it formed a CUSO in February to handle the sharing operation, and it is receiving positive feedback from more than a dozen other Connecticut CUs interested in joining up, possibly later this year. What is different this time around, said Hertell, as compared to 1995 when a sharing corporation put together by the Credit Union Association of Connecticut disbanded are two things: the removal of the "fear" factor that competitors will steal members, and the emphasis on existing brick and mortar rather than "stand alone" units. Those shared "stand alone" units have worked satisfactorily in some states, like Colorado and Indiana, but they proved a dismal failure in Connecticut when the one service center in Wallingford was shut down because of high costs and few CU participants. Wallingford, a community of 17,000, is 15 miles north of New Haven. To get the shared branches up and running in the new operation, Charter Oak said it will be using a new CUSC teller platform called TellerPLUS. The platform, CUSC said, allows a CU "to add teller stations without adding communication lines" as the system links to a CU's existing Internet connection. Charter Oak expects its first branch linkup to begin operation in Niantic in July with its six other branches to follow during 2003. Despite Charter Oak's optimism about the future of shared branching, there was lingering skepticism in among some CUs in Connecticut that the concept can still be economical since, as one CU executive argued, "conditions haven't really changed." In addition, whereas some state Leagues and their service corporations have taken an active and leading role in pushing shared branching, the Connecticut Credit Union Association has steered clear of the concept after the unhappy experience of 1995-96. "It simply wasn't practical at the time," recalls Kevin Stewart, CCUA president and CEO, who said $1 million in seed money was to be raised "with plans to buy land and hire employees to operate the Wallingford center." At the time, said Stewart, there was a fundamental change in the leadership and direction of the association with decisions made to "keep the league focused as a trade organization" and curtail many league service ventures common in many states. He said the shared branch corporation was shut down along with insurance, credit card, leasing and ATM subsidiaries. Loren Dickinson, president and CEO of the $277 million Nutmeg State Credit Union in Rocky Hill and one voicing doubts about the 2003 CUSC shared venture, said he saw no current need for making an investment in shared facilities "since we're doing just fine right where we are considering what's being done on the internet." Dickinson, who once held association leadership jobs overseeing the dissolved sharing corporation in 1995-96, said he has been receiving "e-mails and lots of information" about the sharing proposal, but "there may not be enough broad support from all credit unions" in the state including the largest to make the system economical. "We have only six or seven credit unions with $200 million or more in assets," he noted. But Hertell and CUSC argue the system can work now given the public's interest in convenience and the national scope of the network and what they say are very positive results in other parts of the country including the Northeast where CUSC has a strong presence. CUSC bills itself as the industry's "largest shared branching network representing 55% of all national locations and 68% of credit unions participating in shared branching." CUSC "is the only shared branching network representing credit unions, leagues, CUSOs, CUNA and CUNA Mutual," noted a news release announcing the Connecticut contract with Charter Oak. For its part, Charter Oak said the agreement with CUSC provides "extraordinary advantages" to the CU's members "who relocate or travel on business by retaining their relationship" with the Groton-based CU "even if they move to California." Through its regional networks, CUSC said it "has the majority of active shared branching participants in the Northeastern states – including New York, New Jersey, and Pennsylvania." "The nearly 12 million credit union members represented by the 550 credit unions that participate in CUSC's network will now be able to receive service in Connecticut," said Carroll Beach, president/CEO of CUSC. Hertell said the 1995-96 dissolution was a case "of an idea coming before its time," whereas now "it is timely and there is member interest." He said shared branching has application in many parts of the state where employees of large Connecticut corporations like Electric Boat-General Dynamics, Charter Oak's former sponsor, can use the system. And then "there are the military bases and the casinos," he said. The "Colorado format" as well as those in Louisiana and Texas represent good examples of what can occur in Connecticut, said Hertell. For one, the Colorado Credit Union League runs a shared service center CUSO which handles CUs in Wyoming, Colorado and recently took on New Mexico. Hertell said one lesson learned in these states is that the concerns of CUs worried over losing members to sharing participants has never materialized. "Attitudes have changed," he said as CUs are now more interested in the efficiencies of a shared network. Ray Dowling, president and CEO of the $50-million Stamford Credit Union, applauded Charter Oak for assuming "leadership" on shared branching since "eight years ago there simply was not a lot of interest." For his CU, which services municipal employees and teachers and has one office, the idea of shared branching "makes sense" since it will give the CU more locations without the cost of building. One major expense, of course, for Stamford CU will be the interface with the processor "and that will cost us," but still the idea "remains attractive," concluded Dowling. -

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