Jackson — Most people know there are advantages to belonging to a credit union such as lower rates for loans and higher rates for savings. But many may still think they aren’t eligible to join because they don’t have an employment connection to a credit union.
About seven years ago the Credit Union Access Act came into effect. Following this, community-based credit unions became an attractive option to certain existing credit unions. Instead of only allowing membership by select employee groups (SEGs), community credit unions provide service to certain geographic areas such as counties or cities.
The Jackson VA Federal Credit Union (FCU), which was organized in 1935, had nearly 200 SEGs under its umbrella three years ago when it was determined that obtaining a community charter would allow Jackson VA FCU to sustain continued growth for many years into the future by being able to offer credit union products and services to a broader market area.
The credit union board initially made an application to serve a seven-county area surrounding Jackson. But after learning that it would take an additional approval process to serve a geographic area with more than 500,000 potential members, Jackson VA FCU scaled back to serving five counties. Membership is now open to anyone who lives, works, worships or attends school in Hinds, Madison, Rankin, Simpson and Copiah counties.
Stephen E. Pollman Jr., president and CEO of Magnolia FCU, said the board of the former Jackson VA FCU decided a name change was necessary to reflect that the credit union is now a community credit union — not just open to employees of the VA or other governmental entities.
“If we were going to be a community credit union, there seemed to be a hurdle to get over to convince people that they could join the credit union,” Pollman said. “We hired the Cirlot Agency to conduct a focus group survey of non-members, as well as written and phone surveys to both non-members and members, and found there was a mental block to the name. People thought in order to join the Jackson VA FCU, they needed to be a veteran, or associated with government. Most people did not think they would be eligible to join. With some reluctance, but based on that information, the board voted to look at a name change.”
If Magnolia FCU sounds familiar, that is because there was a Magnolia Federal Bank years back in Mississippi before a merger turned it into Union Planters Bank. Pollman said they initially rejected the name “Magnolia” because of its history as the earlier name of a bank. But when they did surveys in the credit union lobbies and online, Magnolia was pegged as the clear winner.
“When we first started thinking of names, we considered the name Magnolia because it does have a certain feel for Mississippi being the state tree and flower,” Pollman said. “It kind of says Mississippi. We initially discarded the idea because it had been the name of a bank with a presence in town. But when it became a suggestion by so many members and the bank was no longer in existence, we saw no downside to using it.”
An application was made to the National Credit Administration for the name change, and approval came in 2004. Then the credit union started looking for a new logo, and ordering new printed materials and signs.
Pollman said they haven’t yet done any major advertising of the name change.
“Our members have certainly been notified,” Pollman said. “The response has been good, but we are waiting until we get the signage in place before making any widespread push on advertising.”
Still, the new name is attracting additional customers, says Lanet McCrary, vice president of marketing and business development.
“Word of mouth is doing very well for us,” McCrary said. “We are getting new members every day who have heard we are now open to the community.”
Just recently a new sign went up at the credit union’s headquarters in Jackson on Briarwood Drive. Additional signage is planned at the Briarwood Drive location, as well as at the Castlewoods Service Center located in Brandon just off Lakeland Drive.
Currently the assets of Magnolia FCU stand at $76 million, and there are 10,700 members.
For years, banks have protested that credit unions have an unfair advantage in the marketplace because they don’t have to pay taxes. Pollman says, however, that credit unions are such a small piece of the financial service picture that he “sometimes wonders why banks stay on our case.”
“Credit unions are organized differently than banks,” he said. “Credit unions have volunteer boards. All the profits a credit union makes, once they have paid expenses and contributions to capital, go back to members in the form of higher rates on savings, lower rates on loans, fewer fees on checking and just better deals.”
Pollman said the cred union offer pretty much the same services provided by a bank: checking, savings, CDs, IRAs, credit cards and all manner of loans including mortgage loans, equity lines, car and boat loans and signature loans. And while it won’t ever have a branch on every corner like the big banks, the credit union plans to open additional offices in some of the counties it is trying to serve.
One way to compete with banks regarding the branch convenience issue is participation in a shared branching network with five other credit unions in the Jackson metro area. A member of Magnolia FCU can go into any credit union that is part of the shared branching network, such as Members Exchange Credit Union, and do basic transactions. The other local credit unions participating in shared branching are: Jackson Area FCU, MS Telco FCU, MS Postal FCU and Statewide FCU.
“That gives us a little more competitive edge than we used to have,” Pollman said. “The shared network, which has been around for 15 to 20 years, is not just in Jackson. There are about 1,700 branches in 40 states. For example, if you go to vacation in Gulf Shores, Ala., you can pop in and do a transaction at a member that is a part of the shared network.”
Another credit union cooperative program involves participating with a local used car dealer, Freedom Autoplex, to give credit union members the opportunity to buy cars purchased at auction for $1,000 over cost. The vehicles for sale are located in the credit union parking lots, and are for sale to credit union members only.
The program began at Magnolia FCU. Pollman said several other local credit unions liked what they heard, and decided to join the program. He said there are advantages all the way around with Freedom Autoplex. The seller is making a decent profit. The buyer is getting a great buy on a vehicle. And the credit union is gaining the financing, and perhaps even new members.
In addition to the cars located at credit union branches, a listing of vehicles for sale can be found at www.freedomautoplex.com.
Pollman sees a bright future for credit unions such as Magnolia FCU.
“We pride ourselves on member service,” Pollman said. “Any survey you see comparing member service between credit unions and banks show credit unions coming out ahead. We intend to grow, and we intend to grow by being a better service opportunity for our members than they can get anywhere else. Service is our biggest flag.”
Contact MBJ contributing writer Becky Gillette at email@example.com.