Changing Times, Changing FOMs, Changing Names, Same Philosophy

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BIRMINGHAM, Ala.-To grow, credit unions need to be able to expand their fields of membership, but then they face the added challenge of explaining who is eligible to join, making sure the name doesn't drive people away and that changing the name doesn't end up doing the exact same thing.

Those are exactly the challenges that have led Alabama Telco to broaden its FOM over the years-and to consider changing its name, as well, according to Linda Cencula, CEO.

Cencula, who has been with CUs for 30 years offered a brief history lesson, noting that in 1985, Alabama state regulations were relaxed to allow credit unions to expand beyond their single sponsor groups (in her CU's case the telephone company) and serve other SEGS, providing those companies served a certain number of employees that were not already served by another credit union.

"A lot of credit unions went out of business as their sponsor went out of business or downsized," she recalled. "Thankfully, our state administration had the foresight to realize that we need to have that capability" to serve members beyond the original sponsor group.

By the late 1990s, she explained, the state had allowed county eligibility, which gave Alabama Telco the opportunity to expand its FOM further. Today it serves 51,000 members in more than 15 counties in the state. But Cencula pointed out that even with county eligibility, a number of barriers still exist to growing membership at the $547-million institution.

For starters, she said, there's the barrier of knowing what a credit union is. But once that is explained, there's still the hurdle of making potential members understand that they are eligible to join the CU even if they have no affiliation with the telephone company.

"In our particular case, the word Telco conjures up the feeling that 'Oh, goodness, I've got to be part of the telephone company; I can't go in there and open an account,'" she said. "That's exactly not the message we want to convey; we want to convey that we're open to all and that we don't want to be exclusive to just telephone company employees."

As a way to remove that hurdle, Alabama Telco is in the midst of a rebranding process, and is conducting focus groups on a new name with both members and non-members. As to the bigger picture, however, "we've got to do so much more education for the general public on what is a credit union," said Cencula, adding that "people don't really know what that is and what it means in today's world, and that it's as progressive a financial institution as you'll find."

The CEO noted that "it's incumbent upon each credit union to do our share of educating the public; from the big picture perspective, I think our industry has to do that."

While she said that there is still a place for single-sponsor institutions, she observed that the current regulatory burden makes it difficult to imagine a long-term future for those FIs. The regulations, she said, "have become intense even for us, and I wonder how can a small, single-sponsor credit union keep up and have the resources to comply with everything we're supposed to comply with?"

Still, despite her CU's challenges as it continues to grow, she unequivocally called FOM evolution a good thing. "It's obviously made us grow," she said. "If we had stuck with single sponsors, our industry would have died. If you're tied to one single group and that group goes away, then obviously you're going to go away, and you've got to have something to make up for that natural attrition that occurs. [FOM expansion] has allowed us to endure and survive."

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