It's Not Your Father's Credit Union Anymore; Credit Unions Are Offering More Services for Their Members, as the Banking Industry Casts a Wary Eye

Article excerpt

Byline: CHRISTOPHER CALNAN

Colorful balloons swayed in the wind outside the VyStar Credit Union branch on Forsyth Street last month as the usual group of business and chamber of commerce types came for its grand opening downtown.

The event had some of the markings of a bank opening: Conservatively dressed business people, a gleaming new branch, workers distributing money on the street to promote the opening, speeches by the company president and chairman of the board.

Even the location, the street level of the Atlantic National Bank building, gave the opening ceremony a banking flavor. To the casual observer, it's difficult to see much of a difference between VyStar and all of its banking neighbors.

But it goes beyond appearances. Jacksonville-based VyStar is following the national trend established by most banks -- growing.

Some credit unions remain modest, in-house providers of banking services for specific businesses and their workers. However, a new breed, a steroidal type of credit union, has emerged, mirroring the banking industry by merging and consolidating.

Some say the trend is giving consumers more choices while some question whether credit unions have gotten too big and too far from their intended purpose, serving a small group of workers in a related field or business.

"At some point in time, are you really a credit union anymore?" asked Alex Sanchez, president of the Florida Bankers Association. "You're really a tax-exempt bank masquerading as a credit union."

FERTILE GROUND

Nationally, the number of credit unions is half of what it was 20 years ago. However, the remaining credit unions continue to grow larger and larger.

In 1982, 19,897 credit unions operated in the United States; today, the figure stands at 9,298. Meanwhile, assets have grown from $82.7 billion to $669 billion, according to the Credit Union National Association.

Unlike banks, credit unions don't have shareholders. Credit union members are also the owners and share the profits. Since members are in control, they keep the fees lower than what they're typically at shareholder controlled, profit-driven banks, observers said.

Banks are generally open to anyone while credit union membership is usually limited to residents of a geographic area or workers in specific professions.

VyStar, established as the Jax Navy Federal Credit Union in 1952 with $60 and 12 members, now has nearly 332,000 members and assets approaching $3 billion. It's also the second largest credit union in Florida behind Tampa-based Suncoast Schools Federal Credit Union, which has more than $4 billion in assets. VyStar is the 12th largest in the United States.

In 2002, Jax Navy, with 278,419 members, changed its name to increase membership. Last month, Jacksonville's second-largest credit union, the former Educational Community Credit Union, followed suit.

The 70-year-old ECCU, which started as a teacher's credit union, took the name Community First Credit Union as part of a strategy to grow membership numbers. The growth would come a year after the ECCU acquired the 3,848 members and $14 million in assets of the St. Johns County Teachers Credit Union.

The CFCU now has assets of $855 million. And there's more to come.

CFCU President John Hirabayashi said he expects to reach $1 billion in assets and 100,000 members by the end of the year, placing the credit union in the nation's list of top 100 credit unions.

He also said CFCU plans to add seven branches within the next four years and merge with another Fernandina Beach credit union that he declined to name.

Larger credit unions generally save money when buying technology in large quantities and passing those savings on to members through better rate and fee structures, Hirabayashi said.

And in blue-collared-dominated Jacksonville, that's valued more than it is in other, more affluent, areas of the state because those services, especially consumer loans, are needed more by working-class consumers than the wealthy. …