PREMIER GOVERNED BY STATE RULES CREDIT UNION EXPANDS.

Byline: Chris Sieroty Staff Writer

CHATSWORTH - Premier America Credit Union has joined the growing number of credit unions using a new state charter to entice a broader clientele, an aggressive recruitment tool that is rankling the banking industry.

The more liberal state rules governing credit unions under the state charter allows Premier America to expand its service to any resident of Los Angeles or Ventura counties. Traditional federal rules allow credit unions to enroll new members only in specific business or professional groups.

``We have a very large concentration of members in the San Fernando Valley and Simi Valley,'' said John Merlo, president and chief executive officer of Premier America. ``Now we are able to reach out and serve the entire community.''

Premier America is one of at least three credit unions in the area that is using more liberal rules to expand its potential membership.

Charlotte Birch, a spokeswoman for the American Bankers Association in Washington, said it is a trend that ``we are concerned about.''

``The expansion of credit unions is making life hard for all locally owned financial institutions, including small community banks,'' said Birch.

With expansion there comes a point when a credit union is no longer a ``mom-and-pop financial institution'' serving a certain segment of the community, and should be regulated like a bank, she said.

Along with its new charter, Premier America will now be regulated by the state of California instead of the federal government. It will still operate as a nonprofit, cooperative financial institution.

However, under California law, Premier America must still be insured by the federal government, said Lesia Bullock, a spokeswoman with the National Credit Union Administration.

The change in charter could also mean less regulation for Premier since ``state laws governing credit unions tend to be more liberal than federal law,'' she said.

Bullock said local banks might find the expansion of Premier a threat to their business, but credit unions operate on the belief that there is enough business to go around. Nationwide, credit unions control about 2.1 percent of consumer deposits, she said.

Merlo said the decision to change from a federally chartered to a state- chartered credit union has paid off with an $18 million increase in deposits.

Premier America is just the latest local credit union to receive state- chartered status. In December, Chatsworth-based Telesis Credit Union announced it had changed its charter in an attempt to increase membership eligibility.

Point Mugu Federal Credit Union, based in Ventura, increased its service area to all of Ventura County in 1997.

Premier America was founded in 1957 to serve the employees of Litton Industries. Today, the credit union has five branches serving customers from 150 local businesses.

Credit unions - nonprofit, cooperative financial institutions owned and run by their members - originated in Europe in the mid-1860s. The first credit union in the United States was formed in Manchester, N.H., in 1909. Today, more than 12,000 credit unions with $316 billion in assets serve 70 million people nationwide.

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Photo: (color) Premier America Credit Union CEO John Merlo said deposits are up $18 million since the firm became state-chartered.

John Lazar/Staff Photographer