In Unforeseen Move, Montana Guard CU Cites Call-Up, Applies for Merger; Small CU `Strains' Eyed

HELENA, Mont. – In a move both unexpected and reflective of the nation’s war footing, the $7.5 million Montana Armed Forces Credit Union of Fort Harrison is anxiously looking to merge into the $81 million Helena Community CU. The merger petition, which has been quietly in the works for months and is slated to become effective July 31, also underscores heightened interest in small CU mergers in a state which has only 72 CUs remaining, of which 13 are state-chartered. “I suppose there could be more mergers ahead,” forecast Chris Olson, Montana deputy commissioner of banks and financial institutions, commenting on recent merger talk triggered by various factors including the inability of small CUs to keep up-to-date with new member services as well as “strains” on CU boards. At Montana Armed Forces CU, however, the problem has centered on fears of future financial hardship as National Guard members and reservists get called up for duty and remain “out of the country” for long periods, explained Becky Adams, manager of the CU chartered in 1957 with a membership base drawn from the Montana Guard and reservists. “Yes, we chose a pro-active approach and initiated this merger because we’ve seen our members activated, our loan volume dropping, and so we have to look to the future,” explained Adams. Apparently because of specialized fighting skills, Montana along with neighboring Idaho, according to media reports, have the highest ratio of Guard and Reserve deployments in the nation. Adams stressed that her CU is well capitalized, with “a risk-to-asset ratio of 9%” and no problems on past dues over 60 days, but the CU does anticipate an income decline in consumer loans since it would be bound by the 6% rate under the Soldiers and Sailors Relief Act for Guard members called up for active duty. And by law there are restrictions on pursuing collections of those members, she said. “We make our money on loans,” Adams maintained, arguing the current scenario is unfavorable to future growth. The CU, she noted, is currently 61% loaned out, but in the past “we usually had 85-90%.” The loan numbers, she said started dropping little more than a year ago. The president of Helena Community, Gene Bowen, said his CU, which had been approached by MAMCU about the merger, welcomes the acquisition and is prepared for the risks though conceding “there could be a few rough spots down the road,” he conceded. Nonetheless, “we have complete confidence in those folks,” said Bowen, commenting on the blending of a community-based membership at Helena Community and one made up of reservists, Guardsman and retired personnel. “The Guard in Montana is highly regarded,” said Bowen noting, however, that many have had to leave full-time jobs to perform their military duty. Helena Community has 12,500 members while MAMCU has 1,075. Steven Grooms, president of the $100 million 1st Liberty FCU, another Montana military CU in Great Falls serving Malmstrom Air Base, said his CU has so far not felt the strain like MAFCU has. “There’s no doubt the call-ups are impacting employers,” said Grooms, adding that his CU “is very supportive” of Helena Community and if asked, would do what it can to help that CU as it “takes on the risk.” Regarding other potential mergers in the state, Olson said the motivation emanates not only from “stressful conditions” in some rural areas caused by the prolonged drought and declines in the timber industry, but also from difficulties in finding “interested” and qualified CU board members. “There are a limited number of volunteers,” who want to serve as CU directors and there is a problem with those “who have the knowledge they need to become effective,” said Olson. “We’re running out of people” to manage and serve, he concluded. -