AllCom's charter change helps it cheat fate
Small credit unions seek broader base to aid survival
By Christina H. Davis
The consolidation of telephone companies back into one "Ma Bell" hasn't only affected long distance carrier choice for homeowners.
It's also affected Worcester's Allcom Credit Union.
But even with acquisitions - AllCom acquired Commonwealth Gas Employees' Credit Union in 2001 - the credit union was facing extinction.
"As a result of what had been going on in the telecom sector, it became more and more difficult to grow our member base and assets," said Deb Guiney, president and CEO of AllCom.
In fact, AllCom's membership dwindled nearly 7 percent from 4,309 in 2002 to 4,023 in 2006. Its assets similarly slid more than 9 percent from $48.8 million in 2002 to $44.4 million in 2006.
"As the telephone industry has downsized, we were affected at the same rate," she said.
A booming industry
And AllCom's experience was counter to that of the state's credit union industry as a whole, which saw assets grow 42 percent from 2005 to 2006.
But AllCom - like many state chartered credit unions - didn't take the prospect of extinction lying down. Instead, it got active.
AllCom sought and received approval late last year from the state Division of Banks, which regulates state-chartered credit unions, to expand its membership pool beyond employees of area telephone companies and utilities like NStar. As a result, anyone that lives, works or attends school in Worcester County or 20 communities in Middlesex County, can join the credit union.
AllCom isn't alone in its efforts. Both Telephone Workers Credit Union in Boston and Southern Massachusetts Telephone Workers Credit Union in Fairhaven applied to expand their membership. Southern Massachusetts Telephone Workers Credit Union later changed its name to the more generic Southern Mass Credit Union.
Expanding neighborhoods
But on the smaller scale are credit unions like Grafton Suburban Credit Union, which expanded its membership region this year from a 10-town area to all of Worcester County.
Driving that change was the fact that "the definition of neighborhood has changed," according to Edward Lopes, CEO of Grafton Suburban.
In the past, Lopes said most people lived and worked with in a 10-mile radius. "But today, that's simply not the case," he said.
While seeking an expanded membership base has consistently been a popular option at the state's credit unions, Robert Kimmitt, senior vice president of public relations and marketing for the Massachusetts Credit Union League, advises caution.
"It's not a decision to be taken lightly," he said. A charter change, because it must be approved by the state, is a complicated, time-intensive and costly process.
Going postal
The cost and time may be part of the reason why Worcester Postal Credit Union, which is currently restricted by state charter to serve postal service employees within a handful of zip codes, hasn't followed AllCom's lead.
The U.S. Postal Service has also seen declining employment levels, pushing some postal credit unions to look at changing their structures.
"The post office is always going to be here, but I think growth is always a concern," said Rick Johnston, treasurer of Worcester Postal Credit Union.
But Worcester Postal Credit Union isn't rushing to make any drastic changes to its charter, although Johnston did admit that, "We always have it in the back of our mind."
However, changes at two other postal credit unions in the state might force Worcester Postal to seriously consider its options. The Lynn Postal Credit Union is currently seeking a charter change that would expand its membership area to include any post office employees in Essex, Middlesex, Suffolk and Worcester counties.
Neil Crean, CEO of the Lynn credit union, said the trigger for his organization's charter change was not a desire to pilfer customers from the Worcester Postal Credit Union. Instead, the trigger was the application by First Priority Credit Union in Boston to convert to a bank. Crean hopes to add some of First Priority's members to his roles if the conversion goes through.
Although AllCom received its regulatory approval for the charter change in 2006, it only began ramping up its marketing efforts in order to attract more members this summer. And even without a strong marketing push, the credit union grew its asset base by 5 percent during the first five months of 2007.
In order to fuel that marketing push, AllCom brought on Michael Carroll to serve as vice president of marketing and retail delivery earlier this year. He previously worked for People's Credit Union in Rhode Island.
While AllCom, Grafton Suburban and Lynn Postal have all recently sought membership expansions, they all said they are in no rush to start staking out real estate in the region.
The cost of setting up new locations is prohibitively high, and with internet banking consistently gaining popularity, it isn't as necessary to have a physical presence to serve members, said Lopes.
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