A day after America First Credit Union announced it had converted from a state to a federal charter, two more of the state's biggest credit unions followed suit.
Mountain America Credit Union, the state's second-largest (behind America First), announced Friday it had received approval from the National Credit Union Administration to operate under the federal credit union charter. Goldenwest also announced late Friday that it had received approval to switch to a federal charter.
"The climate since 1999 has been very credit union-unfriendly," said Fred Nydegger, Mountain America senior vice president. "We know that our members' money is a pretty serious thing to spend on legislative fights. We'd much rather give it back to them in dividends and interest rates."
Mountain America has an estimated $1.2 billion in assets, with about 160,000 members.
Further details about Goldenwest's switch were not available by press deadlines Friday.
Nydegger expressed dismay at the tone of recent legislative sessions, including this year's session when a task force was established to explore credit-union issues. Rather than continue the legislative fight, Nydegger said Mountain America elected to operate under federal regulators.
Mountain America Federal Credit Union will differ from its previous incarnation in two main ways, Nydegger said. First, its field of membership will be determined by employee groups rather than geographic areas. Current member employee groups include Qwest and Questar, as well as smaller groups. Mountain America serves about 100 employer groups, Nydegger said.
America First Federal Credit Union, which announced its conversion to the federal charter Thursday, opted for the geographical area-based field of membership.
"We knew from the beginning that we would not apply for a geographic area field of membership," Nydegger said. "The opportunity we have now, as opposed to the old state regulations, is that Mountain America can build a branch anywhere it wants to in order to serve its members. Back in 1999, the state Legislature said we could offer credit union services to residents of seven counties; but the only place we could expand our branches was in Salt Lake County."
Howard Headlee, president of the Utah Bankers Association, disagreed. There were means by which Mountain America — and America First, he said — could have done exactly what they wanted to do. But, Headlee said, the credit unions' motives were more nefarious.
"It's an intriguing move," Headlee said of Mountain America's field of membership designation. "They'll have to give up seven counties. This will definitely change the way they serve the average citizen. But they're doing it primarily to enhance their ability to do big business. That's exactly why we believe that the tax issues should be reconsidered."
Like America First, Mountain America vehemently stated its motivation to become a federal credit union was not an effort to avoid paying taxes or shy away from its civic duties. Under the federal charter, Mountain America will not be obligated to pay state sales taxes. Nydegger estimated the credit union has paid $700,000 to $1 million in sales taxes per year.
"If taxation, in our mind, were the issue, we would have converted to a federal credit union decades ago," Nydegger said. "The real issue was competition. They (bankers) didn't like the competition, and the legislative climate wasn't endearing itself to keeping the largest credit unions."
Headlee and the credit unions do agree on one point, however: with the three big credit unions out of the picture, there is less pressure on the newly assembled Financial Institutions Task Force, which is scheduled to meet for the first time next week.
"This gives them an environment where they can take a real hard look at the issues, without the pressure of these tax-exempt banks breathing down their necks," Headlee said. "It's a much healthier environment to establish a policy that makes sense."
E-mail: jnii@desnews.com