Firstel FCU gets charter to woo potential new one million-member base

MAPLE GROVE, Minn. – With the ongoing layoffs in the telecom industries here, Firstel Federal Credit Union has taken a gigantic step in wooing a larger member base while still remaining loyal to its original founding groups. The credit union received NCUA approval in June to expand is current charter to include nearly one million residents in Hennepin County here. Firstel presently serves 30,000 members, has $214 million in assets with four branches situated in highly visible areas of the county. The task of reaching residents across a 611-mile radius begins with a direct mail marketing campaign that kicks off after Labor Day, said Harry Carter, Firstel’s president/CEO. “We’re looking at long-term growth,” Carter said. “If the application had not been approved, we would certainly look at others to fulfill that goal.” That growth springs mostly from Firstel’s member base, with 89% of it comprising employees or affiliates of telecom companies such as Qwest Communications, AT&T, Seagate Technology and ADC. This is not the first time Firstel has sought NCUA approval to revamp its charter. In 1996, the credit union converted to a federally-chartered one mainly because being state-regulated limited its options to add select employees groups, Carter said. Today, Firstel serves 302 SEGs. Firstel was originally chartered by seven employees of the Bell System in Minneapolis who pooled $35 and formed Minneapolis Telco Credit Union in 1935. Over the next few decades, Minneapolis Telco’s membership base expanded to include independent telephone companies throughout the state, members’ spouses and relatives. In 1986, the credit union began offering its products and services to employees of other business groups as part of their overall benefit package. More than 65 years since its launch, Firstel is poised to embark on a marketing campaign to include local newspaper advertisements, e-mail notices and a direct mail plan that Carter says is “state of the art” in hopes of introducing residents to the credit union. Firstel has seen tremendous growth by adding a number of services over the years including partnering with CU Realty for mortgages and CU-Save for pre-negotiated pricing on new and used vehicles at 80 car dealerships throughout the state. Firstel has also established its auto loan program to have credit union financing on site at those same dealerships. These beefed up auto services resulted in Firstel offering the lowest or second lowest auto loan rate in the Twin Cities area 50 out of 52 weeks in 2001. While the series of Federal Reserve interest cuts yielded wimpy savings rates, Firstel, like many credit unions, became the choice of wearied investors looking for safe alternatives through savings accounts and certificates of deposits, Carter said. “Lower rates for new loans and unprecedented payoffs of old loans due to the mortgage-refinancing boom led to lower than expected revenues,” Carter said. “This was offset by lower deposit interest costs which, along with “excellent operating cost management by the Firstel staff.” That offset helped maintain net earnings at a “strong” .92% ROA — Firstel’s highest level in four years and its capital ratio of 10.65% became the credit union’s highest year-end level in 10 years. Firstel also expanded its financial planning, brokerage and insurance services offered through Firstel Investment Services, LLC. Launched in 1997, the credit union service organization has $34 million in assets under management. While the application process took six months, beginning shortly after the 9/11 events when the federal government came to a crawl, Carter said NCUA officials were “extremely cooperative,” despite the rigors of the charter procedure. “NCUA kept the process moving and even though there was a lot of analysis to compile given the number of people we were looking to serve, everyone we worked with was extremely courteous,” Carter recalled. Meanwhile, Firstel joins 11% of the nation’s 10,000 credit unions that have community-based charters, according to CUNA. In Minnesota, 26 of the 183 credit unions here have community charters. -