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ST. PETERSBURG, Fla. – If the $161 million Sunshine State and $1 billion Lake Michigan Credit Union succeed in their attempts to change their charters they will be the second and third members of PSCU Financial Services members to do so and may force a change in the membership of the St. Petersburg, Florida-based cooperative. PSCU services the card accounts of over 500 credit unions that process their transactions with First Data Corporation and has occasionally been the subject of interest from community banks who have considered seeking membership, the cooperative has said in the past. However PSCU’s focus on being owned, directed and run to help credit unions grow and succeed with their card portfolios has meant that the organization has never had a significant bank membership. But that might be changing. PSCU said that the first of its members to become a bank was the Credit Union of the Pacific, a Seattle-based credit union that became Sound Community Bank in December of 2002 and began business as a bank in June 2003. “That one was emotionally difficult for us since its CEO, Laura Stewart, was on our board of directors,” explained Brian Crawford, chief marketing officer for the cooperative, “and of course she had to step down.” She had to step down because while the former credit union could remain a PSCU member and keep all of its pricing and dividend arrangements intact, its CEO could not remain on the board of directors. “According to our bylaws, the board of directors can only consist of the CEOs of member credit unions,” Crawford explained, “and through all the subsequent board discussions on the matter I have never heard anything that would lead me to expect a change in our policy. PSCU will still be owned and directed by credit unions and for credit unions.” But Crawford also acknowledged that the addition of two more members seeking to become banks, particularly one as big as Lake Michigan CU, meant that the cooperative may actually start attracting bank members, a development to which the board has instructed the staff remain open. “Our board has been very clear,” Crawford explained. “They don’t want us to go out and hunt for bank business, but neither are we to turn it away if it walks in the door. If we can enter into a relationship which helps builds the cooperative’s business and helps our member credit unions, then we are to consider it.” And the chance that a bank might walk in the door offering exactly that sort of business only seems likely to increase with time should Lake Michigan, in particular, become a bank. The $1 billion credit union received patronage of more than $600,000 from its PSCU card services in 2003, according to the credit union’s charter change application with the Office of Thrift Supervision. While the credit union didn’t indicate how much of that came in cash, Crawford said that the cooperative pays out 25% of its patronage in cash in the one year and the rest later. More banks may become interested in PSCU if it becomes better known how much of a good deal the cooperative provides its members. “We have long stressed high quality service, aggressive pricing and the dividend advantage,” Crawford said. “We don’t plan to stop doing that.” And he acknowledged those elements might lead other banks in Lake Michigan’s market to seek the same deal should Lake Michigan start to compete as a bank. At the same time Crawford acknowledged what a sensitive issue it was for the cooperative. “We have people who want us to remain with only credit union members and to serve nothing but credit unions,” he said, “and we have people who don’t particularly care what sorts of institutions we serve. But no matter who we serve, we remain credit union owned, directed and committed to helping credit unions grow and succeed,” Crawford added -

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