A Springfield credit union’s bid to expand its field of membership has met with little opposition from the banking community, a signal of how much has changed since the industry fought expansions by Cambridge Portuguese Credit Union and Greylock Credit Union in the late 1990s.

Western Massachusetts Telephone Workers Credit Union in Springfield has applied to the Division of Banks to expand its membership to people who live or work in Berkshire, Franklin, Hampden and Hampshire counties. The $187 million-asset credit union was established in 1923 as an employee group credit union serving workers of Bell Systems, which has gone out of existence.

In the 1970s the credit union changed its charter to serve employees of Springfield-based companies. If the Division of Banks approves the requested charter change, Western Massachusetts Telephone Workers will be able to accept as members individuals as well as employees of telecommunications companies and other firms. The comment period on the application ends March 29.

“Telephone employment has dropped because of technology, and we felt to survive we needed to take on other employee groups,” said President and Chief Executive Officer Paul C. MacDonald. “We’re not looking to expand all over the world. The bylaw will allow us if we want to go to individuals, but our philosophy is kind of company-related.”

The credit union has approximately 15,000 members and operates a single branch at its Springfield headquarters. MacDonald said the Hampden County credit union has no immediate plans to branch into the other three counties, but wants to change its bylaws because it already serves telephone company employees in those areas.

“The reason we asked for four counties is we serve telephone employees that are all over the place,” MacDonald said. “We do a lot of our business via the mail. I would not anticipate putting a branch anywhere.”

The credit union offers a full range of services including NOW accounts, mortgages, car loans, IRAs, CDs, and Christmas club accounts. MacDonald has spoken with the larger credit unions in Western Massachusetts and said none opposed the move. However, he does not know how banks will receive the charter change.

“We’re evaluating our options,” said Kevin F. Kiley, executive vice president of the Massachusetts Bankers Association. “We’re troubled by the continuing proliferation of the expansion of these bank-like credit unions. Unfortunately we have been unsuccessful up to this point with asking the commissioner to reject applications.”

Banker William S. Hogan Jr. said regulators should closely examine credit union expansion plans. The president and chief executive officer of Easthampton Savings Bank believes the tax-free status granted to credit unions places community banks at a disadvantage.

“It seems to me that before credit unions get a blanket approval to expand their fields of membership beyond their original intent, that somebody’s got to say ‘enough’s enough,'” Hogan said. “If they look and act and are able to compete like a bank, they ought to have the rest of the liabilities and burdens that go with it, including taxation.”

A number of community banks and credit unions serve Western Massachusetts, vying for customers by pricing product and services competitively. Western Massachusetts Telephone Workers will become a new competitor in three counties. But MacDonald said the credit union will not be aggressive about signing up new members.

“We’re not trying to take over anybody else’s business, we’re just trying to give more people an opportunity to come to us,” MacDonald said.

‘It’s Healthy’
Greylock Federal Credit Union President and Chief Executive Officer James H. Lynch Jr. encouraged the move. At $419.4 million in assets, the Pittsfield institution is one of the largest credit unions in the state. It started out by serving employees of General Electric, but changed to a community credit union serving people who live or work in Berkshire County. It has 50,000 members.”

“If you limit yourself to a specific industry, the future success of the credit union is specifically tied to that employee level,” Lynch said. “We’re not concerned about the competition.”

Polish National Credit Union in Chicopee serves the same four Western Massachusetts counties that the Western Massachusetts Telephone Workers Credit Union proposes to serve.

“Although it’s not common for credit unions to have multiple counties field of membership, it is not that rare,” Lynch said. “I think you’re going to see more of this. I think it’s healthy.”

Greylock converted from a state charter to a federal charter in part because of opposition it received from the banking industry each time it had an application before state regulators, Lynch said. But the banking industry has not launched such visible attacks since the passage of H.R. 1151 and the state credit union parity bill.

“In the past two years the bankers have been somewhat reluctant to spend a lot of time opposing credit union activity,” Lynch said. “In many respects, we are not the major competitors.”

However, many community bankers remain opposed to credit union expansion in their markets. Easthampton Savings’ Hogan said credit union competition is a growing concern for banks like his. The bank has five branches and assets of $375 million.

“I think that the sentiment remains as strong as it was before,” Hogan said. “The reason you haven’t heard about it is there haven’t been these applications to expand.”

With the advent of financial modernization legislation, banks compete even more with insurance companies, mutual fund firms and securities companies for customers. Merrill Lynch announced plans to court its brokerage customers with banking services. Many banks have invested heavily in technology to compete with online institutions like Wingspanbank.com and NetBank.

“It’s probably making less and less sense to worry about what one perceived competitor is doing versus the macro picture,” said Rob Kimmett, senior vice president at the Massachusetts Credit Union League. “I think the rational person would look at the credit union and say ‘that’s not a threat.'”

Since the passage of state credit union parity, state-chartered credit unions have focused on adding products and services customers have asked for, Kimmett said.