With the long (but too short) holiday season over, there has been a lot to catch up on in the credit union world. Here's a look around the industry:
o Every vote counts. Talk about close. The conversion of Lafayette FCU to a bank passed by the slimmest of margins–2,555 to 2,537. It is a shame that this credit union's charter was changed over a measly 18 votes, especially given some of the foul play allegations made by some members (see related story, page 1). Interestingly, with just approximately 16,000 members this credit union would have met the 20% participation requirement that the credit union trades are seeking in the Credit Union Regulatory Improvements Act. Insiders say the credit union lobbied hard and quietly with its smaller SEGs because it was fighting a losing battle with bigger SEGs like the SBA and USAID.
NCUA is in a tough spot. How deeply does it look into member allegations of voting discrepancies such as when exactly ballots were due and the fact that voting at branches was a fact not known to all members? Given it was only 18 votes, NCUA is obligated to take a long hard look at this conversion. Unfortunately, the federal regulator is under the microscope for some of its passed conversion dealings, notably Community CU, but it needs to do its due diligence here. Can you say make good? NCUA dropped the ball by not enforcing DFCU Financial's bylaws on the special meeting issue–it can make up for that here.
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o Who's the cheerleader now? Bankers have long criticized NCUA of being a cheerleader regulator. I think they are right because regulators that aren't advocates of the charters they regulate aren't doing a good job. Cheerleader is too strong a word, but advocate, yes. Anyone who believes regulators just regulate is dreaming. What's wrong with NCUA touting, in the appropriate venues and context, the value of the credit union charter? The need for more flexibility? Nothing. It doesn't hurt safety and soundness. And to those banker complaints of NCUA cheerleading, get a load of John Reich, director of the Office of Thrift Supervision. Reich is openly campaigning for the thrift charter. The OTS is actually exhibiting at trade shows! It is trying to open eyes about the value of the thrift charter. I don't begrudge Reich or the OTS. Let him advocate and let NCUA advocate. In the end the institutions make the choice anyway. But as far as those banker attacks on NCUA cheerleading, give me a break, the biggest cheerleader (good for him) is coming from the OTS.
o Credit unions must rule on corporates. I have been receiving a number of inquiries lately on the WesCorp/VolCorp merger. It is a $27 billion corporate merging with a $1 billion corporate. I don't have many thoughts on that merger because it is just one of many mergers to hit the corporate network. Yes it's unique in that capital is being returned over a 20-year period, but at the end of the day it's another corporate credit union merger where both corporates believe the credit unions will ultimately benefit. If credit unions are benefiting from any corporate CU merger, I am all for it. Hawaiian credit unions seem plenty pleased with WesCorp since it merged with Hawaii's PacCorp a few years ago.
What I am pondering is where corporates in general are going? We have seen two very large corporates merge in Mid-States and Empire and some other smaller corporates merged into bigger corporates. When will it stop? Will it stop? Should it stop? Credit unions must and should decide the fate of the corporate system. The time may be right to take a look and see if regionalized approach like the 12-bank Federal Home Loan Bank system makes sense for the corporate network. If that will deliver more return to credit unions, it should be examined. But it doesn't have to be the catastrophic event corporate leaders think. Do it right. Give each state a voice in their regional corporates through a loral presence and board seats.
The reason this argument is so much more palatable these days is because virtually every corporate now has a national field of membership, allowing them to market to credit unions anywhere. More and more credit unions are belonging to multiple corporates. Second, with the image exchange of checks, the need to be close to your corporate for item processing is disappearing. Third, credit unions are so concerned about spreads these days that they want every last percent they can get and are open to moves that boost investment yield.
o At your convenience. Wescom Credit Union recently announced that it is expanding its branch service to include Sunday hours. With the busy work week, more and more consumers are looking for weekend service from their financial institution, yet it's still not a widespread trend. Take the mega Bank of America. Sure it has weekend hours, but most of its branches are only open for just a few hours on Saturday morning and offer no Sunday hours.
Does it help boost business? I am not sure, but the darling of the banking industry in recent years, Commerce Bank, is open seven days a week. Commerce takes a fast food approach to banking. Almost all of its branches look the same. Its rates aren't great, but where it has a presence you can find a lot of its branches and its hours make it one of the most accessible institutions around. Growth? It has been off the charts. –Comments? E-mail [email protected]
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