Taking FCUs' Lead, Two State-Chartered CUs First to Apply for TIP Charter

MINNEAPOLIS – In the almost year and a half since NCUA established the TIP (trade, industry, profession) charter for federal credit unions, 10 FCUs have been approved for the charter option. Now two state-chartered credit unions leveraging a provision in their state’s credit union statute that gives state-chartered credit unions field-of-membership parity with federal credit unions, have become the first state-chartered CUs to take advantage of the TIP charter. In Minnesota, Star Tribune Employees CU, a $38 million, 6,000 member SCCU filed its application Sept. 21 to expand its field-of-membership to include the information media industry. For more than 70 years since it was chartered in 1931, the single-sponsor CU’s FOM has included the employees and their families of the Star Tribune newspaper. That same month, Graphic Arts CU in Southborough, Mass. filed an application for a TIP charter with the Massachusetts Division of Banks. The 2,200 member, $4 million credit union currently serves employees of companies that belong to the Printing Industries of New England (PINE) association. GACU President Michael Houle said a TIP charter would allow the credit union to include employers of the printing companies as well. Houle said GACU plans to expand its product offerings to include business products such as business checking, to generate revenue. “By developing closer relationships with the employers and offering these types of products, we hope we’ll be more attractive to the companies and they’ll want to join us,” Houle said. The comment period on GACU’s application ends Oct. 25. Houle said the TIP charter would be effective “shortly afterward,” adding that the state regulator didn’t specify an exact date. In Minnesota, STECU President/CEO Dan Christianson said the credit union’s decision to file for a TIP charter was a matter of the continued viability of the credit union. The CU’s sponsor – the Star Tribune- a Minneapolis metro daily newspaper, has experienced a declining employee base. That factor coupled with an aging membership – the average age of STECU’s members is 50 – “doesn’t bold well for us,” said Christianson. “Our members are savers, not borrowers. We need to make loans to maintain our spreads and viability, and we felt we needed to do something to expand our opportunities to maintain our viability.” STECU has lost about 500 members over the last two years due to death or members leaving the Star Tribune. Without branches close to where members live – the CU’s office is on site at the Star Tribune – Christianson said members who leave the newspaper become virtually inactive with the CU. Christianson said the credit union wasn’t comfortable with the idea of converting to a community charter for several reasons. For one thing, STECU only has one branch in the central area of the city and doesn’t have branches in other communities. In addition, he opined, “some credit unions haven’t had a lot of success with community charters. ” In deciding to apply for a TIP charter, Christianson said the CU’s idea is to contact print and broadcast media employers in the city and convince them to allow STECU to become an endorsed employee benefit for suburban media. He explained that STECU is in the process of evaluating which employers would be best to contact and formulating a marketing plan to determine what is the best way to approach the various companies. “ It’s sort of similar to contacting select employee groups, except with a TIP charter we’ll have gotten several hundred SEGs in one swoop,” said Christianson. Christianson said STECU is currently in a 45-day waiting period, and he said the credit union had received preliminary approval from the state regulator. Assuming is application is approved, the TIP charter would be effective Nov. 5. Deputy Commissioner Kevin Murphy said his office will rule on the application “when we’re comfortable, not before,” adding that, “we won’t just sit on the application either.” In evaluating STECU’s application or that of any other credit union to expand their field-of-membership, he explained that his office’s main concern is making sure that the credit union has the infrastructure and wherewithal to serve all the people who can potentially become members. As to whether STECU’s TIP charter application will spur other Minnesota state-chartered credit unions to also apply for a TIP charter, Murphy said “it remains to be seen if it will work and if it is a good idea.” Commissioner Murphy said the Minnesota credit union statute also includes a wildcard provision that allows SCCUs to provide the same products and services to their members, if approved by the Department of Commerce, as federal credit unions. He explained that his office “relies heavily on NCUA materials and guidelines. We try not to reinvent the wheel” Christianson said STECU plans to remain in its current office even after it gets a TIP charter because “we don’t know if there will be a concentration of members in the metropolitan area to warrant another branch.” He said the credit union is anticipating making a name change and it has some ideas “but nothing firm yet.” While it waits to hear from the Department of Commerce on its final decision, STECU has contracted with a marketing firm to help it with the renaming process. -