In 1954, employees of the International Paper Co. mill in Corinth founded a credit union for plant workers.
Some 58 years later, the paper mill is long closed but the Hudson River Community Credit Union is going strong. So strong that it is building a new $3 million operations center — on the campus of the former International Paper mill.
Credit unions, in the Capital Region and throughout the country, have grown in membership and assets in recent years, luring people from traditional banks with promises of lower borrowing rates and reduced banking fees.
The Hudson River Community Credit Union, for example, has grown from a single office in the mill to branches in Corinth, Troy, Cohoes, Glens Falls and Hudson Falls. Originally founded for mill workers, the credit union is now open to anyone who lives, works, worships or attends school in Saratoga, Warren, Washington, and Rensselaer counties, or in Cohoes, Green Island and Watervliet in Albany County.
“We’ve outgrown our facilities,” said Ed Behan, a marketing and communications vice president at Hudson River Community Credit Union.
The new operations center, which is expected to be completed this fall, will consolidate 70 employees in Corinth and in Glens Falls. The 16,700-square-foot building is being built on a portion of a 10-acre site off Third Street that was once the wood lot for the IP paper mill, which closed in 2002.
The growth of the Hudson River Community Credit Union, a state-chartered not-for-profit financial cooperative, is typical of many credit unions in the region. In 2001 the Hudson River credit union had 16,411 members and assets of $64 million. These numbers have grown to 20,343 members and $161 million in assets in 2011.
One of the biggest credit unions in the state is SEFCU, which was once called the State Employees Federal Credit Union.
Established in 1934, SEFCU officially changed its name in 1990 and now serves employees of 2,000 organizations and businesses across the state.
Membership in the Capital Region is open to anyone related to a SEFCU member or anyone who works, lives, worships or volunteers in Schenectady, Albany and Rensselaer counties.
SEFCU, which has headquarters on Patroon Creek Boulevard in Albany, recently opened a new branch at 2537 Route 9 in Malta.
President and CEO Michael J. Castellana said SEFCU is among the 50 largest credit unions in the United States with 200,000 members and more than 40 branches in the Capital Region, Binghamton, Syracuse and Buffalo.
Over the past decade SEFCU has seen its assets and membership grow by double digits each year. Castellana said all indicators are that revenue, membership and assets are again up by double digits in the first quarter of 2012.
“We are a locally owned, locally controlled not-for-profit,” Castellana said about one of the reasons for the growth.
Credit unions are controlled by a local board of directors who look out for their members. There are no shareholders.
“It’s the way we price products and services,” Castellana said. “The way we measure our success is not in dollars and our bottom line but how we can advance the members, how we can advance the community.”
For the members
Credit unions, whether state chartered or federally chartered, are in business for their members, not their shareholders as in traditional banks, he said.
Castellana added there are traditional banks in the Capital Region “doing a wonderful job” and SEFCU sometimes partners with them on projects.
He said the effect of last November’s grass roots “bank transfer day,” in which people with accounts in traditional banks were urged to transfer to other financial institutions, has been overblown.
The transfer day was triggered when Bank of America announced that its would start charging the holders of its debit cards a $5 monthly fee. The bank later rescinded the plan.
William J. Mellin, president and CEO of the Credit Union Association of New York, said credit unions across the state saw an average growth rate of between 7 percent and 8 percent in 2011.
Mellin, who heads the official credit unit trade association in the state, said bank transfer day was not about credit unions but did provide “a good kick” in membership and assets for many credit unions.
Credit unions across the state have seen steady growth over the past decade and “accelerated growth” in the past three years, he said. “Some have grown faster than others, like SEFCU,” he said. Smaller credit unions have seen somewhat less growth.
Sunmark Federal Credit Union, which has 10 branches in the Capital Region including one right in the General Electric plant in Schenectady, was started in 1937.
“Simply deposit $5 into a savings account and all the benefits of membership are yours,” says the Sunmark website (www.sunmarkfcu.org).
Rules to join
People can join Sunmark if they live, worship, attend school, own a business, or volunteer in Albany, Rensselaer, Saratoga, Schenectady, Schoharie and Montgomery counties.
A person can also join Sunmark if they are employed by one of Sunmark’s community business partners or “if you are an immediate family member of someone who is a member or who is eligible for Sunmark membership.”
These membership conditions are the same for most of the credit unions but the counties they serve may be different, depending on location and their state or federal charter.
The First New York Federal Credit Union was originally called the Schenectady Teachers Federal Credit Union when it was started in 1937.
First New York now has seven branch offices in the Capital Region serving 28,000 members. The credit union also has branch offices in five area schools, including Schenectady High School, Mohonasen High School and Schoharie High School.
“As part of our continuing commitment to youth education, we provide each high school with a fully functioning branch office, operated by high school students and school advisors,” says the First New York web page (www.firstnewyork.org.)
The credit union movement started in the early 20th century in the United States and in the mid-1800s in Europe, according the Credit Union Association of New York.
The New York credit union movement began in the early 1900s through the efforts of the Russell Sage Foundation.
The foundation was established in 1907 to investigate social problems and propose and sponsor practical solutions. One problem was that working people had few options to get loans, other than the “loan sharks” who charged high interest rates.
After a 14-month study of the loan situation, the Russell Sage Foundation decided to create a Division of Remedial Loans.
On May 17, 1913, the Eisner-Pollock bill became law and credit unions could legally be formed in New York state. In early 1914, employees of the Bing and Bing Real Estate firm formed the first credit union in the state.
The majority of the people in the state still do business at traditional banks.
Michael P. Smith, president and CEO of the New York Bankers Association, says that commercial banks and thrift institutions doing business in the state “are among the largest private employers in the state.”
“Even after the unfortunate loss of a significant number of jobs in the current recession, the state’s commercial banks and thrifts employ approximately 200,000 New Yorkers,” he said on the association’s website.