🔒CT credit unions pursue different charter paths in quest for growth

Two Connecticut credit unions are taking opposite regulatory paths to achieve a similar goal: expanding beyond their traditional markets and reaching new members in an increasingly competitive and digital banking environment. Plainville-based United Business & Industry Federal Credit Union (UBI) recently received approval from the Connecticut Department of Banking to convert from a federal charter to a state charter, change its name to UBI Financial Credit Union and expand its field of membership. At the same time, Rocky Hill-based Nutmeg State Financial Credit Union is seeking approval to move in the opposite direction, converting from a state charter back to a federal charter as part of its long-term growth strategy. The differing approaches underscore how credit unions are rethinking traditional geographic boundaries as they compete for members and deposits, and adapt to changing regulatory frameworks.

For UBI, the state charter conversion is intended to support expansion beyond Hartford County, according to President and CEO Edward E. Bohnwagner III. The state has approved the credit union’s request to extend its field of membership to Litchfield, New Haven, Middlesex and Tolland counties. The move also allows UBI to serve members of the Community Impact Fund, a Colorado-based nonprofit that provides financial education, tools and grants to financially vulnerable workers. Through that relationship, the credit union could potentially attract members beyond its newly approved Connecticut service area and even outside the state. Bohnwagner said the broader membership base will allow the institution to bring its services to more consumers. He said UBI’s nonprofit structure allows it to offer favorable savings and loan rates along with fewer fees. The credit union, which has 11,241 members and $143.4 million in assets, operates branches in Plainville and Bristol, along with a branch inside Plainville High School. While UBI is not committing to additional branches, Bohnwagner said management will explore opportunities for a broader brick-and-mortar presence. “It is very expensive to open a branch, but we are doing very well financially, so we are looking to supplement our current locations,” Bohnwagner said. “We will be looking to find a good spot.” The credit union is targeting Oct. 1 for the conversion and name change.

‘Unique name’

Nutmeg State Financial Credit Union is pursuing a different route to support expansion. The Rocky Hill-based institution received state approval on June 17 to convert from a state charter to a federal charter, a move already approved by the National Credit Union Administration. The transition is expected to be completed in the fourth quarter.

Nutmeg CEO John Holt said the federal charter now provides a better fit for the organization’s growth plans than it did a decade ago. In fact, Nutmeg moved from a federal charter to a state charter in 2015 because state regulations at the time offered greater flexibility to expand into new markets, including New Haven County. Holt said changes in the federal regulatory environment have since altered that equation. Holt said the credit union’s expansion strategy will rely largely on digital banking tools rather than a broad network of new branches, though out-of-state locations could be added through a future merger. Nutmeg has used mergers to fuel growth in recent years, completing deals with credit unions in Bristol and Hamden. It also has proposed a merger with New Haven Teachers Federal Credit Union. “We’ll just have a very strong digital platform and a very well-equipped call center to manage anything that’s needed or video chats or whatever, for people that might open an account, say in California,” Holt said. Today, Nutmeg has 66,654 members and $885.2 million in assets. Holt said the credit union intends to continue focusing on serving underbanked households and helping families build wealth across generations. He acknowledged that Nutmeg leaders have discussed whether its Connecticut-themed name remains the best fit for a broader footprint. The credit union will keep the Nutmeg brand after its conversion to a federal charter, but its name will change to Nutmeg State Federal Credit Union. “It is a unique name too,” Holt said. “So, people always question, what is the Nutmeg State? So at least it gets people talking.”