Filene FCU, one of the first credit unions in the United States, was approved by NCUA last week to convert from a multiple group credit union serving employees of the various Federated Department Stores, to a community charter serving half the city of Boston.
The $24-million credit union was founded in October 1921 by William Filene, who owned the famous department store chain with his brother and credit union forefather, Edward Filene. The Filenes came to America from Germany after which, their father, also William Filene, changed the family name from "Katz" to what he thought was the English equivalent (feline), according to Edward Mann, CEO of the 85-year-old credit union.
Originally formed as part of an employees benefits package for workers at the Filene's Boston department store, the credit union continued to extend its field of membership as the hallmark department store was bought by one retail giant after another. With the most recent acquisition by Federated Department Stores, the credit union now serves employees at various divisions of the nationwide chain. They include Filene's, Robinson-May, Hecht's, Macy's, Lazarus, Rich's, Bon Marche, Burdines, Kaufmann's and Lord and Taylor. Most of the stores, considered venerable landmarks in hundreds of cities and towns, including Filene's, are being phased out.
At its inception, the savings cooperative was first known as Filene Cooperative Association Credit Union, then in July 1939-five years after Filene's better-known brother, Edward Filene, convinced Congress to pass the Federal CU Act-it became Filene Credit Union. In 1994 it became Filene FCU.
Despite the broad FOM-or maybe because of it-Filene FCU has never been very successful in penetrating the expanding market, according to Mann, who said the credit union still only counts 2,500 active members.
Mann said the credit union resolved to abandon its various select groups, which served disparate pockets across the country, in exchange for a more cohesive membership base. "Basically, you have membership potential all over the country," he said. "We're trying something else now."
The Filene saga is another one in the evolution of the credit union movement, where long-time corporate sponsors have cut back on or eliminated support for their credit unions. In recent years, NWA FCU was sued by its sponsor, Northwest Airlines, over the use of the corporate name and forced to move out of airline-owned properties. The Los Angeles Times retracted its subsidies for its CU, adding hundreds of thousands of dollars a year to operating costs. More recently, Nationwide Financial Services, which owns its CU's three offices, engineered the conversion of the $530-million CU into the insurance company's savings bank.
The community charter is the second major change for Filene FCU in the past two years. Last year, the credit union was forced to move out of its headquarters of the last 85 years, in the Filene headquarters at Boston's Downtown Crossing, into new offices across the street, when the corporate parent sold the building.
The new charter will encompass about 250,000 people living in the neighborhoods surrounding the downtown headquarters. The neighborhoods include low-income areas, like Dorchester, Roxbury and South Boston, as well as high-income harbor front residences occupied by employees in the downtown financial district. Those neighborhoods account for about half the population of the city of Boston. But many of the neighborhoods-as many as half in the charter-are commercial in nature and empty out every night when commuters flee to the suburbs, Mann noted.
That's why the downtown community has not been tried by many area credit unions. Only a handful of credit unions have it in their FOMs, said Mann. The main service provider to the area is banking giant Bank of America, which acquired Boston-based Fleet Financial in 2005.
Despite the new face of Filene FCU, the board expects to retain the name, at least for now, according to Mann. "The Filene name still has good name recognition in the area," he said.
