RANCHO DOMINGUEZ, Calif.—One California credit union has gone public with accusations that another CU is being “predatory,” operating more like a “bank,” and attempting to “steal away” its members.
In a letter from its board of directors to its membership posted on the credit union’s website under the headline, “Support Needed!,” the $110-million Schools FCU is alleging that the $11.2-billion SchoolsFirst FCU in Santa Ana has been using its “deep pockets” and similar name to “confuse” Schools FCU members and its potential membership base as part of a campaign to bring them over to SchoolsFirst.
SchoolsFirst told kb-studio.ru that the allegations suggest unethical business practices and are “entirely untrue.”
SchoolsFirst serves the educational community in 10 California counties. Its CEO is former CUNA CEO Bill Cheney. Schools FCU serves four school districts and numerous colleges in and around the Los Angeles area.
The Schools FCU letter says the alleged actions of SchoolsFirst “jeopardizes the very existence of YOUR credit union.”
“As you know, SFCU serves the employees and family members of the Los Angeles Unified School District (LAUSD) and Community College District, as well as other local educationally based fields of membership,” the letter to members reads. “Now, a predatory credit union from Orange County is attempting to confuse and steal away our members, using its deep pockets to buy access to our field of membership at their work locations.”
The letter goes on to allege that the tactics of SchoolsFirst include “misrepresenting itself and confusing our members due to the similarity of its name with ours. This similarity has made it easy for them to gain entry to our campuses. Their representatives regularly attend classified, certificated, and other LAUSD events. They donate generously to these organizations, thus making it very difficult for our credit union to compete and participate.”
The letter further states, “Since 2005, using tactics that include mergers and acquisitions, they have become the fifth-largest credit union in the United States. Needless to say, these multi-billion dollar credit unions operate more like banks than traditional credit unions. “
The statement to members reminds that the multi-billion-dollar CU changed its name in 2008 from Orange County Teachers Federal Credit Union.
“Please do NOT confuse them with us, Schools Federal!,” the letter states. “Today SchoolsFirst has nearly 700,000 members and $11.7 billion in assets compared to our 15,000 members and our $110 million in assets.”
“Our credit union is in a strong financial position as evidenced by the most recent audit by our regulators. We intend to remain a viable credit union that continues to provide products and services geared to the needs of our membership, including those experiencing financial difficulties,” the letter from the board of directors states. “If you love your credit union as we do, we are asking for your help. Email us at email@example.com and tell us that you value our personalized banking services. Please share with us your thoughts on how we can add to or improve our services. We truly value your continued loyalty and support.”
Mark Rapp. senior vice president of strategic marketing at SchoolsFirst FCU, said the SFCU claims are untrue, and that SchoolsFirst is “extremely disappointed” by the credit union’s “approach.”
“We don’t believe it represents the cooperative spirit of credit unions,” said Rapp. “Our credit unions share a common field of membership. SchoolsFirst FCU has a T.I.P. charter to serve school employees in the 10 counties of Southern California; Schools FCU serves school employees in portions of Los Angeles County. However, we strongly believe there is plenty of room for SchoolsFirst FCU and Schools FCU to coexist in the markets we serve. Credit unions are about choice; members have the right to choose the best financial institution to meet their needs.”
Rapp said SFCU’s statements suggest unethical business practices and reiterated that the allegations in the letter are untrue.
“We hold ourselves to the highest standards of conduct. Both credit unions have had their respective names for some time. We share a common field of membership, so we should expect to have members in common,” Rapp said. “Our members have the right to choose the best financial institution to meet their needs. We are always glad when they choose a credit union to meet their needs.”
Schools FCU’s complete letter can be found in kb-studio.ru’s The vault.