In a recognition of the difficulties faced by small credit unions, one ailing community development credit union has restructured its charter and moved here as part of a plan to merge with several small CDCUs in the region.
Under the emerging plan, Gateway Community Development CU has expanded its field of membership (FOM) to what amounts to a statewide FOM, changed its name to Generations Community CU, and is moving its headquarters from nearby Henderson to a former bank building here in what is fast becoming "credit union row." The next step is to conglomerate into a bigger institution with other CDCUs to create economies of scale, according to Harvey Heartley, Jr., president of Generations and of nearby College Heights CU, one of the credit unions tentatively slated to merge into the restructured institution.
"When you look at community development credit unions; liquidity, net worth and accounting have always been our main concerns. Putting it all under one roof kind of remedies that," said Heartley.
"Basically, what we've come up with is a full-service, statewide credit union trying to establish value for other credit unions," he said.
The new institution will offer a broader array of products and services than did Gateway Community or any of the other targeted institutions, which will include savings and checking accounts, ATMs, mortgage and consumer and business loans.
So far, six small CDCUs have expressed interest in the conglomeration with others being eyed for the plan, according to Heartley. The plan calls for the merging credit unions to retain their existing offices as branches of the new credit union. "This will allow them to still serve the needs of their communities without having to open new a new credit union," said Heartley, who noted the two or three-year period it generally takes to charter a new credit union.
The plan is being engineered by the North Carolina Minority Support Center, a 12-year-old group representing 16 North Carolina CDCUs that has raised $1.3-million to help finance the project. Among the donors are: Self-Help CU ($500,000); the Ford Foundation ($250,000); the Z. Smith Reynolds Foundation ($225,000); the National Federation of CDCUs ($115,00), and Wachovia Corp. ($100,000).
The new credit union is moving next week into a former NationsBank building in Durham, down the block from a former First Union Bank office now occupied by Self-Help CU, and across the street from Latino Community Development CU, which is located in an old Wachovia Bank building.
Despite the growing number of credit unions on the former bankers' block, organizers don't see a problem with competition, according to Dan Broun, development director of the Minority Center. That's because neither Self-Help CU or Latino Community Development CU will offer the same array of products and services and cater to other membership bases. Latino Community, for example, focuses on services to the growing Hispanic population in the region, he noted.
Under the credit union's new FOM, North Carolina residents will be able to qualify by joining the Minority Center, which has opened its membership to individuals for the first time, said Broun.