🔒Regulatory changes allow credit unions to broaden membership fields

Rocky Hill-based Nutmeg State Financial Credit Union is the first member-owned cooperative to attempt to expand its membership field under a new state law.

In June, state lawmakers approved several banking industry regulatory changes, including one that allows state-chartered credit unions to enroll members based on geography, employer groups and associations, rather than one or the other.

The changes, which go into effect Oct. 1, also expand the types of associations that qualify for credit union membership.

Bruce Adams, president and CEO of the Credit Union League of Connecticut, said the shifts in state law come closer to leveling the playing field between state-chartered credit unions and those chartered either federally or by other states.

“What we allowed was for credit unions to mix and match various fields of membership, and added associations,” Adams said.

Nutmeg, with $562.4 million in assets, is currently open to people who live, study, volunteer, worship or work in Middlesex, Hartford, Tolland and New Haven counties, as well as parts of Fairfield County.

It recently applied to the state Department of Banking to serve members and employees of the AAA Club Alliance, as well as employees and members of the nonprofit Community Impact Fund.

Nutmeg serves about 42,000 members in 10 branches. It also has an office at Rocky Hill High School. Its Glastonbury branch hosts a AAA office.

Pat Ahern, Nutmeg’s chief operating officer, said an expanded membership field would broaden enrollment potential.

Need for growth

Adams said allowing credit unions to broaden their membership fields could slow the consolidation wave that has swept through the industry over the past 15 years.

Connecticut credit union assets and enrollment have grown during that time, even as the number of institutions has been cut dramatically through mergers.

At the close of 2007, Connecticut was home to 148 credit unions with a combined $7.1 billion in assets and 884,449 members. Fifteen years later, at the end of 2022, the number of individual Connecticut credit unions dropped 45% to 82 institutions.

At the same time, Connecticut credit union membership grew 6.8%, and assets nearly doubled to $14.7 billion.

Credit union executives have cited higher regulatory and operating costs, and a need to modernize as factors driving consolidation.

“With an expanded basis for membership, credit unions will have more options than ever to figure out how to navigate the future,” Adams said. “If you add more potential customers to the market, you have more options for growth.”