Members of the Maryland Bankers Association are concerned about the rapid, unchecked growth of the state's largest credit unions. The group proposed that large credit unions adopt a business model based on the case of the $187 million HAR-CO Maryland Federal Credit Union of Bel Air. That credit union recently approved a suggested conversion to a bank charter. This was the first such switch in Maryland since 1998, but the bankers hope to make such moves commonplace.
The CEO of the MBA argued that large credit unions have expanded too quickly and should be forced to cease performing some bank-like functions until they apply for a bank charter. She explained that several recent Business acquisitions and mergers between credit unions exemplify the problems posed by their growth.
"Those aggressive credit unions in our state which function like banks and don't pay taxes should consider adopting HAR-CO formula," asserted the CEO. She went on to discuss the recent offer made by the $2.2 billion State Employees Credit Union of Linthicum to purchase the $82.4 million Anne Arundel County Employees FCU, describing the deal as an attempt on the credit unions' part to unfairly benefit from their status as tax-exempt entities.
The CEO and president of SECU, who was recently elected as an officer of the Credit Union National Association, previously stated that the proposal to merge with the Anne Arundel credit union is part of a strategic plan aimed at expanding the company as a whole. SECU is currently Maryland's second-largest credit union. The executive has not yet commented on the recent declarations by the Maryland Bankers Association.
The date of HAR-CO's conversion into a bank charter is still unclear, with company officials unable to predict when HAR-CO would obtain approval from unspecified auditors. In a second quarter report issued to its members, HAR-CO suggested that the conversion might be approved in early April, but a representative with the credit union recently said it is unlikely that approval will be issued by then.
Source: Credit Union Times, "Maryland Bankers Assail Credit Union Mergers," Jim Rubenstein, March 27, 2012