Credit Unions Large and Small Trying to Take Advantage of TIP

WASHINGTON-Single sponsor credit unions of all shapes and sizes are lining up to take a TIP from NCUA-Trade, Industry, Profession charter that is. So far, 10 federal credit unions have applied for TIP charters. On March 27, 2003, the NCUA Board made its latest updates to the Field of Member and Chartering Manual, which included among other changes, the ability for single sponsor credit unions to add groups pertaining to a particular trade, industry or profession in order to diversify its membership without abandoning their roots. These credit unions range from $3 million C.A.W.A. Federal Credit Union of Severna Park Md. to $238 million FAA First Federal Credit Union to $4 billion American Airlines Federal Credit Union (see related story on this page), according to a Freedom of Information Act request from Credit Union Times. Other credit unions that have applied for TIPs include Central Florida Health Care, Schumpert, Southeast Michigan State Employees, Idaho State University, and NW Preferred. NCUA has not approved any yet and Carilion Health System Federal Credit Union and Operating Engineers Local Union #3 have withdrawn their applications. For C.A.W.A., CEO Virginia Eckardt the main goal is to bring more automotive aftermarket employees into the financial services mainstream. The tiny credit union is sponsored by the Chesapeake Automotive Business Association (formerly the Chesapeake Automotive Wholesalers Association) and counts people who sell aftermarket car parts and change tires among its members. “A lot of out people are not being served by banks. They don’t want our folks,” Eckardt said. Many do not speak English as their first language and have no banking background. However, because the credit union also serves the corporate employees, it does not qualify for a low-income designation, according to Eckardt. Because the credit union wanted to continue to know its members and stay in the industry, the TIP was the only solution for C.A.W.A., which is seeking a national field of membership serving the aftermarket automotive industry. The small credit union has only one full-time employee and four part-timers who are shared with the C.A.W.A. The credit union serves its current 1,200 members stretching from Maryland to North Carolina by remote via debit cards, electronic bill payment and a fully transaction Web site. Eckardt explained that the credit union is cashless and they want to keep it that way. If the application is approved, C.A.W.A. plans to continue serving its members electronically and hire staff as needed, she said. C.A.W.A. plans to take advantage of its sister organizations, The Alliance of State Automotive Aftermarket Associations and TIA Industry Association, to get the word out about the credit union if NCUA approves the application. The credit union initially contacted NCUA April 9. The agency asked that the credit union clean up some housekeeping issues, which it has done, and then it would consider the TIP application. “I hope that they realize that a lot of us, particularly with association charters, don’t have a lot of other ways to grow and stay true to our industry,” Eckardt said. With the airline industry in dire straits and the Federal Aviation Administration downsizing, FAA First Federal Credit Union CEO Eileen Rivera is looking beyond just serving the regulators. The credit union is looking to serve all persons employed in the transportation industry in passenger, freight, and regulations sectors nationwide. If that sounds expansive, that is because it is. Though the credit union would not disclose the exact figure of the estimated potential membership for that FOM, Rivera said it would increase the potential members more than ten fold. A Nationwide TIP On the Table “We’re a little bit different from some credit unions in that we’re able to request a nationwide TIP because we are already serving members nationwide,” she said. For FAA First the application is partially about growth and partially about survival. With talks in the industry about privatizing air traffic controllers, the need to expand became evident. “The FAA is changing. We need to be proactive and change before they do,” Rivera commented. FAA First currently serves its 22,362 members through eight branches in major cities across the country. Rivera said the business plan does not include adding branches but it does account for additional ATMs and focuses on remote access. The application was submitted August 1 and Rivera said she expects to hear something in the next 90 days. If approved, it will significantly increase the credit union’s operating expenses, she admitted, but those should be offset by the economies of scale. FAA First also has a burning ambition. “We have a long term vision to be $1 billion in assets. It’s kind of an aggressive goal,” Rivera said. Schumpert Federal Credit Union is also facing survival issues, CEO Faye Moore said. Schumpert Hospital, which continues to shrink its staff, is the credit union’s sponsor. After cut backs at the hospital, she explained, “We have a lot of healthcare people going to other places like nursing homes.” So, the $25 million credit union is looking to add 34,000 to its potential field of membership in healthcare employees in Shreveport and Bossier Parishes and the outlying areas. “Our main goal is for growth in the future. If our Schumpert Hospital continues to shrink we have nowhere else to go,” Moore said. NCUA has recently asked the credit union for what Moore characterized as “extensive” additional information, including a map of the areas to be served, the number of financial services providers in the area, and three-year projections for budget, marketing, growth, and a business plan. Operating Engineers Local Union #3 submitted a TIP application in June but has since withdrawn it. Vice President of Business Development Ron Poff said the board of the $668 million credit union, of which 90% of the membership consists of construction union groups, “wanted to make sure we stayed in that little niche.” While these applications began rolling in to NCUA in May, none have received the green-or red-light yet. “Because we’re in the early stages, we’re examining them closely,” NCUA Writer/Editor Molly Schar explained. “This is going to set a precedent, so we want to get this right.” However, so far, she indicated, “I think it’s going smoothly. It’s not unlike other types of charters.” [email protected]