Seattle credit union to convert to thrift; cites business, economic reasons

SEATTLE, Wash. – Citing economic and business considerations, the 53-year-old Credit Union of the Pacific has applied for conversion to a federally chartered thrift institution. “In order to survive and prosper, we need to take this next step,” said Laurie Stewart, president and chief executive officer of the $125 million, 17,000-member credit union. Stewart said the conversion was prompted by both competitive pressures and a desire to “expand our product line particularly in the area of real estate, which is an area where we feel we have a core competency but are limited somewhat by being a credit union.” Stewart noted Credit Union of the Pacific has been a mortgage lender for years and is a Fannie Mae seller-servicer with a $52 million servicing portfolio. “Our balance sheet looks a lot like a thrift organization,” she said. She added that the credit union felt hampered under federal regulations. “Commercial real estate lending is an example where we have a small portfolio, and it’s not large enough to get an exemption from member business lending rules, but an area where we can certainly do more business,” she said. If approved, plans call for changing the name of the institution to Sound Community Bank, a mutual savings bank. The conversion is not expected to be completed until the fourth quarter of this year or the first quarter of 2003. Notification and polling of the credit union membership began in mid-July and a special meeting is scheduled for October. “Assuming all of that is positive and we move along with the regulatory process I can’t imagine that it (approval) would be sooner than the first of next year,” she predicted. Stewart said she expected the conversion would have little effect on current membership. “Certainly the experience of other credit unions that have converted is that the membership has stayed and prospered as a result of that conversion, and we certainly would have that expectation of our members,” she said. She said the initial reaction from members to whom she has spoken has been “very favorable” to the conversion plan. “Clearly there’s an expanded potential for membership base on the deposit end, loan side,” she said. “That was a secondary reason we considered the conversion.” “The primary reason (for converting) was to really enhance products and services, to do expanded real estate lending and to do some diversification in terms of other products and services we might be able to offer through a subsidiary company,” she said. Stewart, who has headed the financial institution for nearly 12 years, said she had mixed feelings about the conversion. While she said the credit union charter “served us well over the years,” the switch to a thrift would make the institution an “economically viable financial services organization that can offer competitive products to the people that do business.” “I look back with pride on having been affiliated with the credit union movement and anticipation of continuing to be able to do good things for the member owners of the mutual savings bank,” she said. The CU-to-thrift conversion would be the second in the last two years in Washington state. -