Elevations changing charter to attract more members

BOULDER – Elevations Credit Union is dropping the word “Federal” from its name.

The 54-year-old institution is converting from a federal to a state charter. An 81 percent majority of its members voted for the change, which should be final by the end of March.

The change has to do with serving its members, said Rich Jones, Elevations marketing vice president.

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Most of the credit union’s employer groups are in Boulder County, but he said, “There’s an urban flight of new incoming employees that are working in Boulder County but living outside Boulder County, primarily driven by housing costs.”

Elevations wants to open branches in Broomfield and Westminster to serve those potential account holders but can’t under its federal charter.

According to Jones, it’s important to have a presence in those cities because people want to bank close to home.

“The competition around your core deposits – checking account – is not rate driven. You may cherry-pick rates for CDs or money markets, but not checking and savings,” he added.

Jones believes opening new branches will lead to significant growth.

Opening the Longmont branch last March contributed to a 7 percent increase in Longmont account holders.

“If we open a branch in Broomfield or Westminster or some common area I would expect we could have the same growth,” Jones mentioned.

Initially, Elevations considered getting a broader charter from the National Credit Union Administration, the federal agency that regulates federal credit unions, but the administration has a moratorium on extending charters due to a number of lawsuits against it initiated by the American Bankers Association and banks in Utah and Pennsylvania.

The administration extended charters in these states, and the association and banks are arguing that credit unions have an unfair advantage since they are nonprofit cooperatives and do not have to show a profit to shareholders.

John Dill, president of the Credit Union Association of Colorado, said in an e-mail that the charter change is “… primarily an administrative and regulatory issue,” and “members will see no changes in service, values or culture of the credit union.”

Deposits will continue to be insured by the National Credit Union Administration.

Jones said a positive change for members is a reduction or elimination of some fees. For example, members with auto loans have been able to skip their December payment, for a fee. Under a state charter, Elevations will no longer be able to charge that fee.

Bounced check fees also will be reduced

The lost fees will amount to about $600,000 a year, “But it’s a member benefit,” Jones said. “Obviously, we’re going to have to cut some expenses, and we don’t see the ability to make those up with rates or fees. But with more members you pick up economies of scale.”

Jones admitted there is another financial downside: The credit union will have to pay state sales taxes of about $150,000 per year. But with $721 million in assets, it’s a relatively minor expense, he said.

The main cost of the conversion is the approximately $30,000 spent to send ballots to the 75,000 Elevations members, he said. At the same time, it’s saving the credit union about $63,000 because the state examination fee costs less than the federal one.

Elevations’ name change from U of C Federal Credit Union last year is not related to the charter conversion, but it is a lucky coincidence, Jones said.

The name change came about because of the perception that members need to be affiliated with the University of Colorado.

Although 30 percent of members have university ties – students, alumni, staff, faculty – Jones mentioned that, “Our footprint is much larger than the university alone. We could not afford to have a false impression by potential account holders.”

Having the new name already in place minimized the cost of charter conversion because, “We don’t have to reprint a lot of stuff; we can go with what we did on the name change.”

Today, 47 percent of Colorado credit unions have state charters; 10 years ago it was 41 percent.

Contact Caron Schwartz Ellis at 303-440-4950 or csellis@bcbr.com.