NW Preferred FCU, a 63-year-old credit union chartered to serve employees of Farmers Insurance, was granted the first industry-wide charter by NCUA last week, allowing it to serve more than 100,000 insurance professionals in Washington, Oregon and Idaho.
The new charter is the first TIP-for trade-wide, industry-wide or profession-wide-field of membership approved under NCUA's five-month-old FOM rules and is sure to be followed by other credit unions seeking to broaden their FOMs, while retaining a core common bond.
According to NCUA, there are at least nine other credit unions that have applied for a TIP charter, including American Airlines FCU and NW FCU, both of which have applied to serve the air transportation industries; Idaho State University FCU, which has asked to serve educators in six Idaho counties; CAWA FCU, which has requested permission to serve the automotive products and tire industries; Operating Engineers #3 FCU, which has applied to serve all union construction workers; and several that have applied to serve the health industry.
Tom Edwards, president of NW Preferred FCU, said the $93-million credit union sought the expanded FOM powers afforded by the TIP charter to help fuel growth, stuck at less than 4% last year and just 2% through the first three quarters this year.
The credit union, known until July as Northwest Farmers Insurance Group FCU, has been hampered by an FOM that encompasses Farmers Insurance employees and agents in Washington and Oregon, while the much larger $500-million Farmers Insurance Group FCU in the insurer's Los Angeles corporate headquarters serves employees and agents from the rest of the country. In addition, the corporate sponsor has slowed its hiring over the past 15 to 20 years because of greater use of technology and other reasons, thus limiting the growth potential for the credit union, according to Edwards.
NW Preferred which claims 7,800 members, also serves a small community of Stayton, Ore., which it picked up in a 1999 merger.
"We pretty much decided not to go the SEG route because it could create problems if it involved other insurance companies," said Edwards. "So when TIP came along it was really an ideal situation for us."
In moving to the insurance industry TIP field of membership, the board and management of the credit union wanted to stay within the insurance industry which they have grown to know and serve.
"As we've talked to a lot of insurance agents we've been told that there really isn't a financial institution that fits their needs," said Edwards. "They have unique small business needs and we've been serving those needs for 63 years."
While they plan to continue to focus on core services like auto and mortgage loans and deposit products, Edwards said NW Preferred will look at expanding to new services like small business loans or payroll or deposit services aimed at small insurance agencies.
The credit union expects to serve its expanded market through the CO-OP Network and by joining Financial Services Centers Cooperative, the shared branching network, which will give its members access to 80 branches in the three states. There are no immediate plans to add new branches.
The application process for NW Preferred took about four months to complete, according to Edwards, who was so confident the application would be approved he had the credit union name changed even before NCUA made its ruling. "As we read the new regulation it sounded like it fit with what we wanted to do," he explained.
