Connecticut bankers are vocal about their feud with credit unions. Bankers claim that credit unions have abandoned their mission to serve only members, and instead have begun following the same money bankers do.
But that doesn’t seem to be the case.
According to data compiled by the Hartford Business Journal, credit unions are still more likely than banks to open branches in middle- and moderate-income areas.
During the past five years — a time when an incredible 212 new branches were added in the state –- credit unions put 84 percent of theirs into areas where the median household income was less than $75,000. Banks put 74 percent of their branches in those areas.
Conversely, of the 45 new branches in areas where the average household earns more than $75,000, 39 are banks and only six are credit unions.
Credit unions have opened branches far from wealth, where banks seem reluctant to expand — in Willimantic, Norwich and Plainfield. They have opened in less-than-affluent areas of Meriden, Bristol and Berlin. Two credit unions affirmed their dedication to downtown New Britain, an area banks have been pulling out of.
Urban Downtowns Only
Though banks have opened a higher percentage of offices in the lowest income bracket, most of those are in downtown employment centers like Hartford, New Haven and Bridgeport, i.e. the places where wealthy customers work.
Kevin Chandler, president of the Connecticut Credit Union League, said recent expansion shows that credit unions are serving their members as well as ever.
When it comes to services, Chandler said, “I think credit unions are just like banks.”
For community bankers, that’s exactly the problem: Credit unions are acting like banks, but don’t pay corporate income taxes or have responsibilities under the Community Reinvestment Act.
Gerald M. Noonan, president of the Connecticut Bankers Association, believes credit unions that have expanded have abandoned their missions to only serve members.
“They’re not members, they’re just depositors. Anyone can be a depositor. They just call them members,” Noonan said.
He doubted that larger credit unions are tracking their membership as much as they are tracking wealth, saying “If you can track where your depositors or members move, then you’re way ahead of the FBI.”
He may be no FBI agent, but Edward Danek, Jr., president of Hartford Federal Credit Union, tracks members using simple zip code information, and opens branches that will be convenient to them.
“When we go to establish a branch we can tell within a three- to five-mile radius how many members we have there,” he said.
His institution, which began as a service to employees of Saint Francis Hospital, recently added new branches in West Simsbury and South Windsor — right in the backyard of community bank branches.
The new branches are in already well-banked wealthy areas while Hartford’s neighborhoods, particularly in the north and south ends, haven’t seen any new branches in recent years.
But according to Danek, adding another Hartford office would overlap with Hartford Federal’s existing branches. So to better reach existing members and their families, he plans to add two more suburban branches in Hartford County, for which the credit union has a community charter.
“We won’t just pick an area,” Danek said. “We’ll start where we have a high concentration of members.”
That doesn’t wash with Rockville Bank President William J. McGurk, who has run advertising in local newspapers explaining the differences between banks and credit unions, and asking Congress for regulatory changes.
“Our experience is that they seek out pockets of prosperity,” McGurk said.
American Eagle Federal Credit Union, he said, is a good example of that because although it was formed by 15 Pratt & Whitney employees in 1935 (as the East Hartford Aircraft Federal Credit Union) it has grown to over $1 billion in assets and 95,000 members. Its branches are fetching, professional and widely advertised to the general public.
When American Eagle announced it would be opening a branch on Hartford Turnpike in Vernon — near Rockville’s headquarters — McGurk offered to pay three months of rent for the institution if it would move to the less affluent area of town.
Serving The Underserved
But American Eagle, despite recently targeting suburbs, maintains seven banking locations in manufacturing company facilities or offices, as well as a branch in East Hartford High School.
Even the suburban branches were clearly opened to meet members’ needs, said Dean Marchessault, senior vice president of retail services for American Eagle, as evidenced by the fact that much of the institution’s recent branch growth came before its charter was even expanded from employee groups, or sponsors, to entire counties.
“We have been putting branches in over the last 10 years where our select employee group members wanted them…Plainville, Manchester, Vernon,” he said. “All those moves were made when we were a multi-sponsor credit union.”
