Dollar: Conversions of CU-to-Mutual Charter Not a Danger of Becoming a Major Trend

CHICAGO – Having worked as the president of a credit union and served as the chairman of NCUA, Dennis Dollar has seen the number of credit unions steadily decline. Now as the principal partner of credit union consulting firm Dollar Associates LLC, he offered his observations of this trend to attendees of NASCUS’ 40th Annual Conference & Symposium. Speaking on “An Outsider’s View of the Inside: A Former Chairman Looks Ahead At the Credit Union Future,” Dollar predicted that the number of credit unions in the U.S. will shrink to 6,000 by the year 2010, and most of the decline will be due to the increase in voluntary mergers between credit unions. But as for the loss of credit unions resulting from conversions to a mutual savings bank charter, Dollar said he does not see that becoming a major trend. “Even with Community CU and OmniAmerican CU in Texas, only 27 credit unions have converted to a mutual savings bank charter in the last 10 years. The trend though is that three-quarters of them do convert to stock-owned financial institutions afterwards,” said Dollar who now heads his credit union consulting firm Dollar & Associates. As for mergers between credit unions, Dollar said these will not be limited to small credit unions. Watch for an increase in the merger of credit unions of all sizes, he said, including moderate and larger credit unions, mostly driven by marketplace considerations, economies of scale, member service opportunities and the longterm financial viabilities of the credit unions. “I stand before you as the author of Reg Flex and a proponent of things like the expansion of incidental powers. But we all know that for every regulation we removed, we got three more,” said Dollar. Despite greater regulatory flexibility being allowed for well-managed credit unions at the state and federal levels, Dollar advised credit unions that they’ll see more laws, regulations and compliance costs associated with things like privacy, the Patriot Act and Bank Secrecy Act, FACT Act, Check 21, identity theft and money laundering. “Credit unions are more respected on the national scene, and that’s a sign of credit unions coming of age,” said Dollar, cautioning though that credit unions should not rest on their laurels. “The credit union challenge in the marketplace will grow, not subside,” he stressed. -