Is a credit union just a bank by another name?
No, says Kris VanBeek, president and CEO of USAlliance Federal Credit Union in Rye.
“It is all about the cooperative model, meaning the members are actually owners. That model ”” at the highest levels at least ”” changes everything,” he said.
The difference is visible at his company. For starters, the CEO of a banking institution with more than $900 million in assets doesn”™t walk around the office in jeans and a casual button-down on a Monday morning and the company CFO doesn”™t wear sandals, as they do at USAlliance.
- USAlliance Chief Financial Officer James White, left, and President and CEO Kris VanBeek at their new office in Rye.
That is just one example of the cultural divide that separates a bank from a credit union, VanBeek said.
“Publicly traded banks are kind of a slave to the shareholders; in the cooperative model you are a member and as a result of that you are actually driving the direction of the credit union.” he said.
Across the state border in Stamford, the same philosophy of people before profits holds true as well.
“Many of us will counsel our members and sometimes we help them out when other people really can”™t,” said David Lucas, CEO of Stamford Federal Credit Union. “There have been times where we have paid for people”™s medical bills, car repairs, rents or mortgages when they have been short for a month and just couldn”™t make the payment.”
Because of their member-focused structure, credit unions are able to maintain flexible and personal relationships with customers more so than a typical bank, said Lucas.
Unbeholden to shareholders, they are also able to reinvest dividends into the company and focus on offering more favorable loan and deposit rates to consumers.
In Connecticut there are 124 credit unions operating, 30 of which are state-chartered, according to the state Department of Banking.
Founded in 1952, Stamford FCU manages more than $57 million in assets from a membership that includes more than 4,500 people from a majority of the communities in Fairfield County. Like USAlliance and credit unions elsewhere, the company started by servicing a select group of people ”” Stamford city employees and their families.
In New York, there are nearly 400 credit unions serving more than 5 million members, with combined assets of $68 billion, according to the New York Credit Union Association (NYCUA).
Coming up on its 50th anniversary, USAlliance began in the basement cafeteria of IBM Corp. as a credit union for IBM employees and has grown to include 22 branches across New Jersey, New York, Connecticut and Massachusetts, serving more than 75,000 members.
Like many credit unions, one of the key distinctions from banks at the Stamford and Rye companies is their leadership. Both USAlliance and Stamford FCU are led by unpaid boards of directors. At Stamford FCU, directors are credit union members elected by the membership. Every member in good standing has one vote.
Stamford FCU on its website touts “there is no select group of shareholders that profits more than anyone else. All members profit ”” individually and collectively.”
One small example of the credit unions”™ different approach can be found in a new financial product USAlliance is preparing to release ”” a capped $500 savings account with 3 percent interest ”” a virtually unheard-of offer with traditional savings accounts, which typically offer 0.05 percent interest, said VanBeek.
The CEO said the idea for the product arose after the company held a financial seminar for retirement planning with an expected attendance of a few dozen members. The event drew approximately 100 people and prompted the company to launch a multi-year strategy focusing on promoting financial education and awareness.
“It is not for making the rich richer,” VanBeek said. “We do a lot of things as a credit union that are almost counterintuitive for a bank.”
But aren”™t there limitations to a company that doesn”™t put profits first?
In a word ”” no, said VanBeek.
“There really isn”™t anything we don”™t offer because we have reached those economies of scale,” he said. “I would go head-to-head with any big bank.”
Online banking and features like mobile check deposit, branch locator and detailed monthly credit reports have been offered by the company well in advance of major institutions, he said.
Some services have yet to be offered by mainstream banks, such as a mobile app, soon to be rolled out, that will allow prospective USAlliance customers to automatically open an account by simply photographing their driver”™s license.
“It is those little things that you typically don”™t see at a bank that make the credit union difference,” VanBeek said.
However, credit unions are not without obstacles to their survival and growth. Across the country, 30 percent of Americans are credit union members, yet credit unions hold only 6 percent of all financial assets, while banks hold 94 percent, according to the NYCUA.
Credit unions face more regulation and paperwork, VanBeek said. And at times not having shareholders can be both a boon and a burden.
“If Bank of America wants to grow faster, they issue new stock. Credit unions can”™t do that,” he said. Any growth has to be through a merger or continued growth operations. We can”™t say we are going to raise a million dollars and open a new branch somewhere.”
The pace of growth is also an issue for Stamford FCU. Lucas said it has experienced “small growth” and is working to address it, but falls back to the old adage of quality over quantity.
“We are a two-time Stamford Chamber of Commerce company of the year and for the last two years we were named the number one credit union in Fairfield County in the Fairfield County Reader”™s poll ”” a vote of the public,” he said. “That is something that I am proud of because we didn”™t solicit it, that is just our members going out there and voting, and there are bigger credit unions than us in southern Fairfield County. It was a nice honor to know our members appreciate us.”
