ARLINGTON, Va. – Shared branching leaders say the shared branching concept can stand up to mega FOMs created by new community charters like the one NCUA will consider for Bethpage FCU in Long Island at the agency's rescheduled board meeting on Sept. 24. As more credit unions move to ever-larger community fields of membership, the trend has raised questions about what impact the bigger FOMs might have on established relationships between credit unions. Will smaller credit unions feel threatened by their newly enlarged neighbors? Could smaller CU apprehensions disrupt growing cooperative efforts between credit unions, such as shared branching? The pending NCUA Board's decision to approve Bethpage Community FCU's charter application to add roughly 2.7 million potential members from Suffolk and Nassau counties to its field of membership is a perfect example of one CU potentially having a major impact on shared branching in its area. Located in Bethpage, New York, the $1.6-billion community credit union rests in the heart of Long Island, an area that has become a shared branching showcase, and outsiders might wonder whether giving one credit union a field of membership that runs almost the length and breadth of Long Island might disrupt what has been, so far, a highly successful cooperative effort. But executives for national shared branching networks expect that the opposite is the case. Mark Inger, vice president with the New York State Shared Service Center network, a for-profit CUSO affiliated with the New York State Credit Union League, says shared branching is all about access and Bethpage will only help that. Twenty-six of the 27 shared branching centers in the state are on Long Island, and Inger said NYSSSC has mounted an effort to use the Long Island experience of shared branching as an example that other credit unions in other parts of the state might emulate. He said that effort will hopefully build upon the additional success that Bethpage's expansion will bring. Bethpage, which is already an NYSSC participant, has eight branches in its service area and plans to add two more per year for a number of years, explained Debra Servinskas, marketing spokeswoman for the credit union. Bethpage did not draw upon its participation in shared branching in its application for the increased field of membership, but Servinskas added that the credit union was counting on its many partnerships, including those with shared branching partners, to help it serve the new potential members. Attitudes like Inger's and Servinskas' on the part of shared branching credit unions are a big part of why executives with the national shared branching networks say the question of large fields of membership are more or less irrelevant to shared branching. “We really view it in terms of increased fields of membership and increased numbers of branches being better for all the credit unions,” said Craig Beach, vice president for marketing for the Atlanta-based Credit Union Service Center network. CUSC is the national network with which NYSSSC is affiliated. Beach reported that CUSC primarily viewed increased fields of membership and branches as an opportunity more than as a challenge. “If we look back at the shared branching phenomenon, we see it as a means for credit unions to remedy a perceived weakness, which is a perceived lack of convenience,” Beach said. Credit unions have long been criticized for not being as convenient or having as many branches, he added. “Shared branching is an approach to that challenge by increasing the numbers of branches available, so more branches is better for everybody,” he said. Big FOMs Equal Big Advantages The way a large field of membership may impact a shared branching network, or the members of a shared branching network, can differ, but they should still be considered positive overall, argued Dan Balagna, CEO of the Michigan-based Shared Service Centers. SCC is a subsidiary of California-based CO-OP Network and is the oldest of the three nationwide shared branching networks. Every credit union is different, he pointed out, and each is going to have a different way of serving its field of membership. As a safeguard to reassure nervous credit unions, Balagna and other national shared branch executives pointed out that the rules of shared branching expressly forbid a credit union from intentionally cross-selling products or soliciting membership among another shared branch credit union's members and added that the addition of a large field of membership can spur more participation in shared branching. “In some cases the addition of a large field of membership with more branches can make participating in a shared branch network more profitable from the point of view of a nearby non-participating credit union,” Balagna said. “They want to take advantage of the chance to serve more of their members.” The flip side of that coin might be that a credit union starts shared branching in order to keep up with the larger credit union that has added a larger field of membership and more branches, he explained. But the possibility exists that a member of a small credit union might be so impressed by a larger CU's facilities or rates that they join the larger credit union. The larger credit union of course did not intentionally seek out the smaller credit union's member, but the end result is the same. Can that be combated? Balagna admitted that was a possibility and that there is nothing in the shared branching agreements to stop it. But he also pointed out that while this sort of CU jumping has been a concern ever since credit unions began using the outlet model of shared branching, nothing has ever come of it. The outlet model of shared branching is where the members of one credit union use the branch of another, as opposed to the stand-alone model of shared branches where separate brick and mortar structures seek to serve members from all a network's member credit unions. “We have never found this to be a problem,” Balagna said, “certainly as an impediment to the growth of shared branching it's been negligible.” He explained that if a credit union member were pleased with their credit union the addition of additional, nicer branches would just bring the member another resource they can use. He also pointed out that adding membership in one credit union, in order to take advantage of some product that the other credit union might not offer, would not necessarily mean the member leaves their old credit union for the bigger one. “People have long had memberships in more than one credit union,” he observed. Balagna agrees, stating that the goal of shared branching is to build convenience for all credit union members and added, “There are plenty of potential credit unions members out there. Our goal is to help bring credit union services within easy reach of every American.” Sarah Canepa Bang, CEO of the Financial Service Centers Corporation, the national shared branch network headquartered in California, said that shared branching can actually help a credit union serve a geographically far-flung field of membership. Many West Coast credit unions which use shared branching have a large degree of overlap among their fields of membership, Bang explained, and that has meant that some FSCC credit unions have started shared branching specifically to gain access to parts of the field of membership without having to build a branch themselves. “What we have found that they have used shared branching for is as a way to help pay for their own proprietary branches they are seeking to establish,” Bang said. “The community chartered credit unions in our network have used the additional income from shared branching to plot and place branches around the areas where they are trying to grow.” [email protected]