If Del-One Federal Credit Union’s decision to affiliate with a league outside of its home state of Delaware is the shape of things to come, it could have major implications for credit unions’ collective advocacy efforts and collaboration in general.
The $422 million Delaware credit union’s move was essentially unheard of prior to Credit Union National Association eliminating the dual league/CUNA membership requirement from its bylaws. Add in the fact that the National Association of Federally-Insured Credit Unions, formerly devoted to federal charters, has opened its membership to state charters, and some in the industry are wondering if the competition for credit unions will mar the unity of what is supposed to be a cooperative movement.
“We’ve already seen this on the federal level,” said Patrick La Pine, CEO of the League of Southeast Credit Unions and a CUNA board member. “The two national trade groups are not always in alignment, and I think we should be looking at that as an example of what could happen at the state level if we see a lot more of this. If leagues are suddenly in competition with each other, it could create fractures in our messaging. We’ve also seen it when individual credit unions have significant overlaps in field of membership. Our success as an industry and our viability has been rooted in cooperation. Individually, we can never compete with Bank of America, but together, we can—shared branching is a perfect example of that.”
But before it comes to that, La Pine and others interviewed for this story noted, it will need to be more than just one credit union choosing not to affiliate with its home state league.
The Dover, Del.-based Del-One has chosen to affiliate with the Maryland/DC Credit Union Association (MD|DC CUA), which is based 90 miles away in Columbia, Md. The decision came not long after the Delaware Credit Union League merged with the Cooperative Credit Union Association that already was representing credit unions in Massachusetts, New Hampshire and Rhode Island.
However, in its press release announcing its decision to affiliate with the MD|DC CUA, Del-One was careful to point out that it was not affiliated with the Delaware league at the time it merged with CCUA and had not been a member of either its home state league or CUNA since 2013.
Indeed, CCUA CEO Paul Gentile was quick to note that every other credit union in Delaware was affiliated with the Delaware league prior to the merger, and all of them have chosen to remain with the league since its merger with CCUA.
In an interview with Credit Union Journal, Del-One CEO Dion Williams said that DCUL’s merger with the New England-based CCUA meant that joining an in-state league (i.e., one based in Delaware) was no longer an option. “Even with the somewhat autonomous structure the CCUA promotes to its member leagues, the model, frankly, did not appear sustainable over the long-term because the number of credit unions in the state of Delaware continues to decline,” he said. (Indeed, according to NCUA data, there were 27 credit unions in Delaware in 2012 -- today there are only 19.)
Though Williams said he agreed the Delaware league needed to merge, he favored a merger with MD|DC CUA over CCUA, in part because there was “frequent collaboration” between DCUL and MD|DCCUA. “The Volunteer Leadership Conference [was] one example of an annual, joint conference between the two leagues,” he observed. “Thus, over the years, the Del-One board and staff had relationships and trust established with the [MD|DC CUA] leadership and [its] member credit unions.”
Geography also factored into the decision. “Even with the benefits of technology to connect people and organizations, the ability to attend functions in person to network and do so close to home is relevant,” Williams added. “’Fit’ can be a broad term but the ‘fit’ between Del-One and the MD|DC CUA is excellent.”
MD|DC CUA President and CEO John Bratsakis said he is unaware of a credit union choosing to affiliate with a league outside of its home state prior to this.
“We believe it is more the exception than the rule,” he explained. “This was a unique situation, given our long history of working with Del-One through our collaboration with the [DCUL], providing programs, services and training opportunities to its staff and volunteers when they were affiliated with DCUL. We are pleased that they see value in re-engaging with the system.”
Williams of Del-One also praised the CUNA for modernizing its bylaws, thereby creating new opportunities for credit unions to link up with leagues of their choosing – even if they are located across state lines.
“The changes CUNA made are still taking hold and leagues are adjusting,” he said. “Competition is a good thing. Del-One is committed to being a model at the national level for cooperation between leagues.”
"Great advocacy efforts are driven by the collective efforts of many rallying around a common cause. Delaware credit unions have clearly stepped up their advocacy efforts into the model of the Cooperative Credit Union Association as we've come together. Our model is driven by the local credit unions driving the agenda in each state,” CCUA’s Gentile said. “As shown by our strong showing at Hike the Hill by Delaware credit unions, our impact on the key Delaware Congressional race, and our upcoming Small Business Caucus meeting at the Delaware State House, the local advocacy couldn't be stronger. That's what I think we have to all be focused on as Leagues — ensuring our members are driving the agenda and are supportive.”
But will the industry see more examples of CUs crossing state lines for their advocacy efforts? Credit union leagues have long had a “gentlemen’s agreement” to offer “associate” memberships to credit unions that are headquartered in one state but have branches in other states so long as the CU has full membership with its home state.
Although the New York Credit Union Association, Albany, N.Y., was an “early adopter” of membership choice, noted the league’s communications director, RJ Tamburri, “we strongly believe our advocacy efforts are the most effective when we’re working together with one united voice.”
But Bratsakis does not believe that the emergence of more partnership choices will hurt credit union advocacy efforts, nor impair collaboration and cooperation within the industry. “[The recent] GAC was a great example of the strength and effectiveness of the CUNA/League system with record attendance,” he cited. “It [featured] as high a level of energy, engagement and enthusiasm that I can remember in my years in the [credit union] movement.”
Still, LSECU’s La Pine said it would be unwise for the industry to ignore this potential issue.
“There are a lot of credit unions out there who are going to look at [Del-One’s decision] and think, ‘gee, I didn’t think we were even allowed to do that,” La Pine said. “Now, the genie’s out of the bottle. We need to be having this conversation at CUNA and at AACUL (American Association of Credit Union Leagues). We should be having open dialogue about this. Right now, it’s being pushed aside because no one wants to have that difficult conversation.”
In fact, Del-One’s Williams agreed, cautioning that both credit unions and leagues need to keep in mind that the “cooperative spirit” needs to prevail regardless of what choices are made for league affiliation.
“I can assure you [that] ‘turf wars’ over credit union affiliations is not going to help the industry fight to get data security standards implemented for merchants, preserve the tax status of credit unions, or bring forth regulatory relief,” he warned. “We’ve all got to work together within this new framework of choice.”
And it’s not just a question of advocacy, La Pine observed, it’s also a question of collaboration on other efforts, as well, such as the charitable work for Children’s Miracle Network, shared branching, disaster recovery efforts and other “downstream impacts.”
“The day we stop collaborating is the day we lose to the banks,” he said. “We could do to ourselves what banks haven’t managed to do—splinter ourselves so we can’t ably defend the credit union tax exemption.”
AACUL declined to comment.
