Record Number of Credit Unions Merged, Changed Charters in 2003
The NCUA reported this week that a record number of credit unions merged or changed their charters to community charters in 2003. Last year, the NCUA approved 325 credit union mergers, a 10-year high. Pentagon FCU, a $6 billion credit union based in Alexandria, VA, has been involved in four mergers in the past two years.
NCUA approved 132 charter conversions last year. Six hundred federal credit unions have converted to community charters since legislation passed in 1998 allowing credit unions to expand their field of membership. Some of the biggest conversions last year include the University of Utah CU, able to serve 1.6 million residents in six Utah counties, and the Paragon FCU approved to add more than 1.5 million people in two New Jersey counties to its field of membership.
According to a November 2003 General Accounting Office report, due to the virtual elimination of the common bond membership requirement, the credit union industry is more concentrated now than it was ten years ago. Between 1992-2002, the percentage of credit union assets held by credit unions with assets over $100 million grew from 52% to 75%. These larger credit unions are much more likely to provide sophisticated financial services, such as Internet banking and electronic loan applications.
The GAO also reported that 2001 HMDA data shows credit unions made a significantly lower proportion of mortgage loans to households with low and moderate incomes than peer group community banks. GAO noted that these results confirmed what other studies by CUNA and the Woodstock Institute indicate-that credit unions serve a higher-income population than banks. ICBA maintains that the GAO report provides evidence that credit unions are losing sight of their statutory mission-to provide financial services to people of small means.