LANSING, Mich. – Underscoring a trend among automotive creditunions to diversify, it hardly seemed surprising that three of thelargest auto CUs in the U.S. carried Web announcements aboutconverting to community charters. “We actually converted eightmonths ago but we made it official last week by changing our nameand letting our members know,” declared Werner Beck, president/CEOof the $142 million United Bay Community CU, formerly United BayCity CU. Meanwhile, the $420 million Lansing Automakers FederalCredit Union, while skipping the “community” name said it hasalready seen a healthy spurt in memberships since making theconversion May 15 after experiencing “stagnant” totals for months.LAFCU also carried an announcement on its Web page of “a majormilestone” for the CU as it now invites new members to join whiletaking advantage of “the tremendous opportunities” offered by acommunity charter. The $280 million Dort FCU in Flint, whichswitched to a community charter last December, still carries a Webmention that it “recently converted from a multi-occupationalcommon bond charter to a community based charter” providing membereligibility in four Michigan counties. The actions by United Bay,LAFCU and Dort underscore the continued shift by automotive CUs toseek new expansion avenues in the face of employee layoffs andplant closings by the Big Three automakers, particularly inhard-hit Michigan. “We've seen the GM Power Train plants hereshrink from 4,200 to 1,700 employees,” lamented Beck in reviewinghis 26,000 member CU's “need” to take action to counter thosenumbers and expand into four neighboring counties. Likewise, LAFCUsaid it is satisfied it made the right decision to switch to acommunity charter “after five years of asset growth” but none inmembership, commented Richard Gifford, president and CEO. “We'realready seeing success in the last few months considering that inApril we opened 17 new accounts, but in May after only half a monthafter making the announcement on the 15th we had opened 119 net newaccounts,” said Gifford. The account openings even improved overthe summer with 342 in June, 311 in July and August-Septembers inthe same range, said Gifford. To draw new members in three counties– Ingham, Eaton and Clinton County – LAFCU did extra marketing andpromotion and revamped an indirect auto dealer program giving extrareserve incentives to dealers and speeding up the approval process“so a member can get an answer in five minutes.” “We felt the LAFCUname was well known in the market and saw no need to addcommunity,” explained Gifford. Gifford was one of 400 automotiveCEOs and directors who traded ideas on community charterformations, lending, new product introductions, employee turnoverand other topics during three days of “roundtable” discussions andworkshops at the recently held 22nd annual Combined Council ofAutomotive Credit Unions in Scottsdale, Ariz. The CU auto execs, inmany of the sessions, were joined by100 firefighter CU CEOs whosimultaneously conducted their 2nd annual Firefighter CU Conferencein a “piggyback” operation arranged by meeting planners. Beck ofUnited Community in Bay City said the CCACU sessions wereparticularly productive in serving as a valuable education vehiclefor directors to make them directly aware of problems faced by CUs.James Carson, president and CEO of the $56 million ABD FCU inWarren, a Detroit suburb, said the employee cutbacks and recentwage reductions at automaker plants continue to play havoc withchargeoffs and bankruptcies. “Michigan leads the nation inbankruptcies right now,” said Carson noting that 75% of all chargeoffs are bankruptcy related. Carson is the current president of theDaimler Chrysler Council of CUs, a unit of the CCACU. In spite ofthese “challenging” conditions, said Carson, ABD and other MichiganCUs “remain healthy” with his Warren CU holding 12% reserves. Ofthe 31 CUs in the Chrysler Council, five have already gone tocommunity charter, “some are looking” with more conversions due tobe culminated in the next three to four years. He said the problemsat Chrysler “are not quite as bad” as the federal bailout of thecompany back in the early `80s but the company “is in difficultstraits.” Like other auto CU leaders, Carson acknowledged a pointraised by Pete Crear, CUNA executive vice president and a“roundtable” moderator/ speaker at the CCACU meeting, that mergersof very small auto CUs may be in the offing. In some communities,there remains overlap and competition among the small CUs seekingthe same member base, Crear said. Sue Madden, president and CEO ofthe $56 million Vantage FCU in Brook Park, a Cleveland suburb,acknowledged that the merger of small CUs does indeed remain a pathfor CU expansion as well as additional SEGs. “NCUA now has fastapproval on SEG applications and we can now get approval in sevento 10 days,” said Madden, whose CU currently has 48 SEGs andexpects to add five or six more in a year. Vantage has alsowitnessed over the years a sharp downsizing at GM's sprawlingChevrolet plant in Parma, dropping from 10,000 to 3,000 over 10years and Ford plants in Brook Park have sharply reduced overtime,she said. Shirley Meyer, president of Woodlawn Auto Workers CU inBlasdell, N.Y. said her $79 million CU “is not even thinking of acommunity charter,” but rather has found going after theunderserved highly productive in bringing a 10% increase inmembership over the last year to 17,000. “We've also been pushingfamily members and that has worked well, too,” said Meyer, who isalso president of the Ford Council of CUS. Woodlawn, located in aBuffalo suburb, “has a nice capital ratio” and believes it can“accomplish more by following the credit union philosophy ofreaching out to the underserved in our area rather than competingdirectly against the banks” with a community charter. In aconcluding comment, Leroy Nesbit Jr., president of the Council ofGeneral Motors Credit Unions and a director of Dort in Flint, saidthe overall Arizona meeting “was one of the most important we'veheld in years” considering the changes impacting the industry. “Andthe roundtables were very helpful for all of us in exchanging ourideas” on how auto CUs are coping with conditions, said Nesbitt. –[email protected]

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