[T]he state’s largest mortgage lender, a credit union with $1 billion in assets, is looking to grow, and a recent acquisition has carried the New England Federal Credit Union across state lines.
In a quiet December transaction, NEFCU acquired Health One Credit Union, an embattled, multi-branch credit union, which was originally formed in 1957 to serve the employees of Blue Cross Blue Shield of Michigan.
The price of the purchase is private, an NEFCU spokeswoman said, but the Michigan credit union, which had headquarters in Detroit and served four surrounding counties and an operation in Cleveland, was holding $15 million in assets, and had about 3,800 members. NEFCU has 85,000 members.
“For several years now we’ve been looking for ways in which we can continue to grow,” said Cindy Morgan, an executive spokeswoman for Williston-based NEFCU.
“We’ve been looking at a number of acquisitions and nothing seemed just like a right fit,” until they were shown Health One by the National Credit Union Administration, she said.
Health One – which has since been renamed to “Health One – a Division of New England Federal Credit Union” had been held in conservatorship by the National Credit Union Administration for nearly six months, following Health One’s failure and shutdown by state regulators in Michigan.
In a statement prior to the takeover, Michigan Insurance and Financial Services Director Annette Flood, wrote “I find that … Health One is in an unsafe and unsound condition. I further find that it is not in the public interest to disclose the specific nature of the grounds supporting this Order at this time because the information is confidential … and because any public disclosure of this information could damage HOCU and other interested parties and impede the conservator in the performance of its duties.” The agency did not return a call for comment about the credit union’s 2014 seizure.
Though HealthOne’s longtime CEO Jim Perna was ousted at the time, he blamed the credit union’s failure on a partnership with a mortgage broker, which became a subsidiary of the credit union, that went sour.
“The credit union got involved with this new company and they lost their shirt,” Perna told the Macomb Daily.
A Forbes story from late 2010 reported that the manager of a Health One mortgage subsidiary called First Mortgage – Jon Rutherford – was convicted of tax evasion – and that the brokerage had an FHA default rate of 10.4 percent on its mortgages.
NEFCU says it’s done all the “due diligence” in making the purchase, and it hopes the new credit union locations, which include one bank-at-work site at Blue Cross Blue Shield, another at nearby General Motors, and a third inside the Medical Mutual offices in Cleveland, will open up a new realm of opportunities for the credit union and its members.
In Vermont, the most customers NEFCU could potentially serve would be 300,000, because it is a community chartered credit union. (The charter dictates what population the credit union serves, and regionally that includes Chittenden and surrounding counties, which total that population.) In the Detroit metropolitan area, where Health One could serve members in Macomb, Oakland, Washtenaw and Wayne counties, a total of 4 million potential new members could join.
“The potential for growth in that area is probable,” Morgan said. “When you look at that opportunity to be able to grow, that’s a good opportunity for us.”
NEFCU is branching out and growing assets, Morgan says, to help better serve customers in Vermont with enhanced features. Like the electronic stack-check-deposit now available at many of the NEFCU ATMS, for example.
“We have to grow in order to keep up with our expenses,” Morgan said. “Every year our expenses go up. Especially with the services we offer like NEFCU online and BillPay, we need to make sure we’re bringing in the revenue to make sure we can offer the products and services our members want,” she said.
She said the bank-at-work model was one of the most attractive parts of the purchase, because the locations, including at the Blue Cross Blue Shield tower and General Motors offices at the Renaissance Center were similar to the operations NEFCU has at IBM in Essex and the UVM Medical Center in Burlington.
The GM location was reopened after shutting down during Health One’s turmoil, she added.
“They’re very happy about that. We’re going to be converting them on our systems, on our products,” Morgan said.
As of July, Vermont-originated mortgages will be offered to homebuyers in the Detroit credit union’s area. Morgan said that Vermont’s leadership is training the Michigan and Ohio credit union processors and, because Vermont will still be issuing all mortgages, they will keep a degree of control over all the loans.
“We’re really understanding that market, and we’ll have the same underwriting guidelines we have today,” Morgan said. “It’s not just the loans, but it’s also working with the appraisers, and we’re going to continue to do the sound-lending policy that we do today. And the lending is done here in Vermont. It’s underwritten in Vermont.”
