ST. JOSEPH, Mich. — The common bond requirements for credit unions, more commonly known as field of membership, used to create barriers to credit unions acquiring bank and non-related assets because affected customers would have to reside within an acquiring credit union's FOM.
But that isn't the case anymore.
Credit unions with broad community fields of membership are eyeing the assets of bank customers or even the banks themselves. In one recent deal, Michigan's United FCU acquired an Indiana savings bank and facilitated credit union membership by allowing existing customers to join the American Consumer Council, a San Diego-based consumer group with 100,000 members in 44 states, with 22 credit unions - including United FCU - offering free membership in the council as a select group.
In the latest deal, the purchase of a branch and its customer deposits by Honor CU, the credit union was able to get quick regulatory clearance because it serves more than a dozen surrounding counties, qualifying all of Edgewater Bank's branch customers for membership, according to Scott McFarland, president of the $470 million credit union. "We serve 14 counties and we'd like to serve more," McFarland told Credit Union Journal.
Honor CU, which is in the process of picking up three other branches by merging SIR FCU, bought Edgewater's Decatur, Mich., branch and agreed to take on the 850 customers and $14 million of their deposits, but none of their loans, according to McFarland. The undisclosed purchase price covered the physical plant and the customer accounts and deposits were thrown in for free, he said.
The credit union CEO said he made the deal with Edgewater Bank's CEO over lunch. "We've known each other for years," said McFarland. He said the bank is financially healthy but changing from a mutual to stock ownership and wanted to restructure some of its assets.
The growing number of credit union deals like these are being facilitated by broad FOMs, like the broad community FOMs being awarded Michigan credit unions in recent months, or the statewide charters granted Washington credit unions, or membership in unaffiliated groups, like ACC. Groups like these may charge a minimal membership fee, $5, making individuals anywhere in the country eligible for membership.
