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Emblematic of this trend is Beaverton, Ore., credit union First Technology, whose motto is "Banking outside the box." First Tech's 116,000 members include thousands of young workers from firms such as Microsoft and Intel. On its website, members can do basic banking, apply for a mortgage or learn about insurance. "I probably visit the site every day," says member Erin Mulkins, 25, a manager at a mortgage broker who does all her banking at First Tech. "When I have a question about my account, I call, and I'm told immediately what's going on." Mulkins also earns 1.5 percentage points more on a three-year certificate of deposit than she would at a bank.
Under the new rules, it will be easier for federal credit unions to expand from serving workers at a single company to serving others in the same industry. Walt Disney's credit union, which had been restricted to Disney employees, their families and affiliated firms, may now apply to court any worker in the entertainment business in Los Angeles; Orlando, Fla.; or anywhere else that the credit union has a branch. Credit unions chartered to serve bundles of companies may expand to a new company simply by installing an ATM; previously a full-service branch was required. And the government has streamlined the application process for credit unions that want to serve whole communities, restricted only by, say, the county line or the borders of a metro area. Currently 885 federal credit unions have such community charters, and hundreds more are expected to apply for one.
For many credit unions, expansion is no longer just an option. "It's become a question of grow or die," says Tom Glatt, an independent industry consultant based in Sedona, Ariz. Credit unions have long called themselves the best-kept secret in banking, but they are currently looking more and more like for-profit businesses. In Colorado, six credit unions formed a trust company in 2001, and one of its members, Bellco in Greenwood Village, offers everything from investment advice to mutual funds, annuities and insurance. "We're trying to create an image that we're a full-service financial institution," says Bellco CEO Doug Ferraro, 41. "Big banks are marketing to the wealthy, and middle-income people are being underserved."
Other credit unions are aggressively swallowing smaller ones, aiming to gain the critical mass to become more like one-stop financial-service centers. Since 1995, Dallas-based Advancial has acquired 15,000 new members at 250 companies, including Perot Systems and Brinker International. Advancial's head of strategic development, Dave Selsky, courts companies whose employees have good credit ratings and steady jobs and turns down one-third of the firms that want to join. As a result of such policies, Advancial is rated one of the nation's safest credit unions.