Hartford Business Journal

16 Hartford Business Journal • May 13, 2019 • www.HartfordBusiness.com By Gregory Seay gseay@hartfordbusiness.com A s part of credit unions' never-ending search for new depositors, one of Connecticut's largest member-owned, credit cooperatives, East Hartford-based American Eagle Financial Credit Union, is casting its marketing eyes northward. Eighty-four-year-old American Eagle in April won permission from the state Department of Banking to extend its depositor marketing into Massachusetts, making it the first Connecticut credit union to expand beyond the Nutmeg State's borders. State and federal credit-union char- ters generally limit their "member- ship fields" to specific communities, industries or affinity groups. With $1.9 billion in assets and some 150,000 members, many of whom work or are retired from Pratt & Whitney and its current and former affiliates, American Eagle has an Enfield branch from which it plans to recruit new members residing across the Massachusetts border in Hampden County. Hampden's Pioneer Valley population of 470,000 reside in, among other communities, East Long- meadow and Springfield, said Brian Kennedy, American Eagle's senior vice president and chief strategy officer. And it's not just American Eagle crossing state lines. In the last three years, Massachusetts has granted two of its credit unions permis- sion to pursue thousands of new members in the Nutmeg State, activity that is raising the ire of some bankers, who have largely been opposed to the continued ex- pansion of credit union member- ship fields. That frustra- tion is fueled by bankers' resent- ment that, unlike their for-profit business model requiring them to pay state and federal taxes on their earn- ings, credit unions are not-for-profit, thus tax exempt. Meantime, Nutmeg State and Bay State banks, too, have blended their turf boundaries in recent years by crossing state borders. Michael Schenk, chief economist for the Credit Union National Association (CUNA), trade advocate for the nation's more than 5,700 credit unions serving 104 million members, said American Eagle and the nearly 500 other U.S. credit co-ops with branches in more than one state are reacting to market forces. "A big part of it has to do with the fact they want to better serve their members,'' Schenk said. Also, credit unions are moving in where banks have closed branches in markets deemed unprofitable, he said. "I don't expect it to go away anytime soon,'' Schenk said of credit union's cross-border incursions. Cross over In the financial-services border war, Massachusetts credit unions have been a step or two ahead of Connecticut. According to the Massachusetts Divi- sion of Banking, it authorized in March Springfield's Arrha Credit Union to amend its bylaws, expanding the $140 million-asset nonprofit lender's approxi- mately 11,000-membership roll to in- clude residents and workers in Hartford, Litchfield and Tolland counties. Three years earlier, in May 2016, regulators approved Polish National Credit Union, a $13 million-asset Chicopee, Mass., credit co-op, to offer membership to those living or working at a public-private elementary, high or vocational school, or college, in those same three Connecticut counties. Arrha Credit Union has no immedi- ate plans to expand into Connecticut, said CEO Michael Ostrowski, calling it a "strategic'' play that his credit union may execute down the road as it seeks to grow. "In this marketplace,'' Ostrowski said, "if you don't grow, you die.'' American Eagle was aware, Kennedy said, of both Massachusetts credit unions' efforts to expand southward before asking Connecticut regulators for permission to compete in the Bay State. American Eagle's move, how- ever, was not a retaliatory one, he said. "I think what they did was pave the way in terms of the process," he said. Growth minded American Eagle has been actively seeking expansion opportunities for some time. A few years ago it swapped its federal charter for a state one, while also asking permission to expand its membership field to New Haven Coun- ty, a request that was previously denied by its federal regulator, the National Credit Union Administration (NCUA). Mass. to CT credit union incursion These two Massachusetts credit unions in recent years received regulatory approval to expand their membership into Connecticut. • Arrha Credit Union, Springfield, Mass. (March 2019) • Polish National Credit Union, Chicopee, Mass. (May 2016) Source: Massachusetts Division of Banks Cross-Border Incursion CT, Mass. credit unions eye each other's turf for depositors PHOTO | BILL MORGAN (From left) American Eagle Financial Credit Union officers Brian Kennedy, senior vice president/ chief strategy officer; branch manager Tatsiana Bentley; and CEO Dean Marchessault at the East Hartford credit cooperatives Enfield branch, 201 Elm St.

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