The top mortgage lender in Berkshire County isn’t a major regional or national bank. It isn’t even one of the county’s prominent local banks, like $2.7 billion Berkshire Bank and $926 million Legacy Bank.
The owner of the largest share of the area’s mortgage market – a whopping 31.33 percent through the first quarter of this year – is Greylock Federal Credit Union.
According to data obtained from The Warren Group, publisher of Banker & Tradesman, Greylock held almost a third of the mortgage market during the first quarter of this year, more than tripling Berkshire Bank’s 9.7 percent. Legacy Bank, No. 3 on the list, has 7.7 percent.
Greylock’s dominance in the county demonstrates the power credit unions wield when armed with a community charter, able to draw members from far beyond a single community or employer base. In this case, however, it also shows how a limited geographical boundary can create a laser-like focus for an institution, and yield impressive results.
“We have to be the best, we have to be better than anybody, because this is our playing field here,” Greylock’s President and CEO Angelo Stracuzzi told Banker & Tradesman.
‘The Poster Child’
The institution has a few strategies that have helped bring in business, but the $1.2 billion Greylock does so well in Berkshire County in part because Greylock can lend anywhere it wants within the county – but can’t set foot outside of it.
Membership to the credit union is restricted only to residents of Berkshire County.
Unbounded by restrictions on its activities, competitor Berkshire Bank operates in New York and Vermont. Legacy also has New York branches.
“We don’t have the luxury of doing that, even if we wanted to,” Stracuzzi said.
Bankers, however, aren’t as quick to congratulate their credit union rival.
Of course Greylock can have tremendous success competing against banks, said Bruce Spitzer, spokesman for the Massachusetts Bankers Association. As a nonprofit institution, its tax burden is slight compared to the 30 percent or 40 percent tax on income banks must pay to state and federal authorities. Instead of paying taxes, Greylock can put those earnings to use building more branches or marketing its services, giving it a leg up on banking competitors.
“[Greylock is] sort of the poster child of what we consider the type of credit union that has grown so large it should be a bank, or it should be paying taxes,” Spitzer said.
Greylock, once the credit union for General Electric employees in Pittsfield, has held its community charter since 1994. As of March 31, it had $550.4 million in purchase mortgage loan volume and $163.7 in other real estate loans, according to statistics from industry regulator National Credit Union Administration.
It’s not the only large credit union in the state, but its peers are stretched out over greater geographical distances and are less likely to dominate any single area. Fitchburg-based Workers’ Credit Union has more than $725 million in assets, and its charter covers anybody who lives in Massachusetts or New Hampshire. HarborOne Credit Union has $1.8 billion in assets and covers four counties in southeastern Massachusetts.
Digital Credit Union covers certain residents and employees across four states, and has purchase mortgages of $1.5 billion. Tim Garner, senior vice president, said DCU’s charter doesn’t hinder its competition with financial institutions of any type, and even provides a leg up since the employers under its charter offer membership to employees as a benefit.
Decentralized Strategy
Banks rail against large credit unions’ advantages, but the credit unions themselves argue that they are staying true to their communities. In addition, their lending activities are vital for their members, especially during difficult economic times when many institutions have been criticized for not lending enough.
In the case of Greylock, its limited geography pushed it to the top of the county stats, but a number of other factors also played a big role.
According to The Warren Group data, Greylock has gobbled up ever-greater chunks of the market. It owned 19 percent of the market in 2007, leaped up to 27 percent in 2008, and landed at 29 percent of the market last year.
Stracuzzi said much of that coincides with the disappearance of major mortgage lenders like Countrywide, whose absence left a void that feeds local institutions. As part of that trend, borrowers are increasingly choosing to go local.
But the credit union has also worked on the quality of its service, he added. Rates are competitive but not necessarily the lowest in the market; more important is the way loans are made. The credit union turns around mortgage applications quickly, and has decentralized decision-making so customers can get answers from their local branch managers, rather than the main office in Pittsfield – important in a sparsely-populated county like Berkshire.
“You can’t walk into a competitor’s branch and get a decision on a loan,” Stracuzzi said. “But in mine, anybody can walk in and get it right there.”
