Although credit unions only own 3 to 5 percent of the financial market share in Pennsylvania, they remain a popular alternative to larger banks.
With 550 credit unions and $27 billion in assets, Pennsylvania has more credit unions than any other state, said Mike Wishnow, spokesman for the Pennsylvania Credit Union Association.
The number of credit unions in Pennsylvania peaked at 1,593 in 1980, with membership reaching 1.74 million. While the consolidation trend in the business community during the 1980s and 1990s impacted the credit union movement, membership climbed to nearly 3.5 million in 2008.
"We have seen membership growth over the last two years," Wishnow said. "The national growth over the last quarter was 1.9 percent; Pennsylvania's rate increased by 2.2 percent."
The credit union movement in Pennsylvania organized in the late 1920s. Postal employee groups were among the first to organize financial services for members.
"Credit unions were created around the Depression when the average working person was having a difficult time getting credit. They were an outgrowth of the underdeveloped economy and the Depression," Wishnow said. "People pooled their resources, and the money was invested. People were able to borrow if they were a member. It was a nonprofit cooperative venture."
Credit unions offer people a place to save money and get loans, but they are not the same as banks. There are no stockholders; instead, they are owned by the members of the credit union.
Wishnow said money comes back to the members in terms of better rates and fewer fees.
"It is essentially a co-op, like a rural electric cooperative or a farm cooperative," he said.
Additionally, the board of directors for each credit union are selected by the members, with each member getting one vote.
"At other [institutions] like banks, votes are based on the number of shares that are owned, said Victor Gioiosa, chief executive officer of ARC Federal Credit Union of Altoona.
Wishnow said initially credit unions served certain employers or churches. Then as they grew, he said, they started to add other employers.
For example, the Altoona Area Employees Federal Credit Union was established in 1981 to serve Altoona Area School District employees.
Today, the credit union has 1,750 members and also serves the Greater Altoona Career and Technology Center and six other area school districts, said Darci Robinson, chief management official.
The ARC Federal Credit Union was established in 1956 to serve parishioners of Sacred Heart parish. Today, ARC serves members of every Catholic parish in Blair and Huntingdon counties as well as the employees of 13 local companies.
The majority of credit unions are small in size, with less than $10 million in assets.
"Many banks won't even leave open a branch unless it has $25 million in assets or higher," Wishnow said.
The ARC Federal Credit Union, which has grown to nearly 10,000 members is an exception, with five times the assets of the average credit union.
"We noticed an increase in deposits back when the economic downturn occurred and the stock market did its little crash. We believe people looked for a safe haven to put their money where it was insured," Gioiosa said. "We have grown in the past couple of years. We now have more than $50 million in assets, and that is a milestone for us."
Credit union officials say they survive by offering good rates and personalized service.
Tricia Eicher, assistant manager at AB Federal Credit Union in Altoona, said its goal is to save their members money through cheaper loan rates and lower fees.
The AB Federal Credit Union has about 1,150 members and serves about 15 local companies.
"I know every customer that comes in here. I can have their account number pulled up before they come in the door," Eicher said.
Credit unions often work together, if there are issues or problems they can't solve.
Despite the economy, Wishnow said the future is bright for credit unions.
"We did not get caught up in the mortgage and securities crisis. The economy has been different but we think we are better positioned than any of the competition to weather the storm," Wishnow said.
Mirror Staff Writer Walt Frank is at 946-7467.