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DALLAS – While the industry is still waiting to see what action, if any, the Texas CU League will take on Community CU’s proposed conversion to a bank, how the state’s shared branching network will handle Community CU’s membership in the shared network has already been decided. Community Credit Union members will not be able to continue using credit union shared branches should they vote to take their institution to a mutual bank charter. That’s the result of an agreement between the Texas Credit Union Service Centers, the statewide shared branching network that is owned by the Texas Credit Union League and the $1.4 billion credit union which has begun the charter conversion process. The relationship between Community and the shared branching system will officially end as of April 29, 2005, and the credit union began to tell its members about the change on March 1. There had been a question about what the Texas Shared Branching Network would do in the wake of Community’s declared intent to change its charter. The credit union has 31 branches that participate in the network and bring an estimated $170,000 in fees to the Network as well. Community was known to have wanted to stay in the network. TCUL spokeswoman Allison Griffin did not know how the TCUL Board had resolved to ask Community to leave if the credit union became a bank. With Community beginning to advertise the loss of the branches to its members as of March 1, the network urged member credit unions to begin to alert their own members to the change as well. “We are also working to add outlets to replace those lost by this change,” wrote Mark Chatfield, senior vice president with the League in a February 23 memo to participating credit unions. It’s unclear what impact the loss of shared branching might have on the overall charter change question as the notice of the shutdown will preceed the credit union’s official disclosure of why it’s seeking a charter change and what some of the impacts would be. The loss of access to a shared branching network would be a clear sign of what Community members could lose if the institution moves away from remaining a credit union. At press time, the credit union’s Web site was silent on the change and still listed its branches as participating in the network. No one from the credit union was available to comment on the shared branching change The possibility that Community might remain in the shared branch network raised a question which came up in previous conversions but was left generally low key. This is likely the first time a credit union which changed its charter to that of a mutual bank was asked to leave a credit union-owned network or cooperative. Other credit unions that converted to banks and which had been part of other shared branching networks, like the Financial Service Centers Cooperatives, headquartered in San Dimas, California, had been allowed to remain in the network. Community’s membership in a network which belonged to the League is what appears to have complicated its situation since the ownership raised questions about whether an organization owned by non-profit credit unions would be working to increase the benefits brought to a for-profit bank. At least one CEO of a network participating credit union threatened to pull out of the network if Community was allowed to remain a member as a bank. -

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