That part owner sits down in the lobby fully aware that if the credit union makes an annual profit, he or she will see the direct benefit in dividend paybacks or through lower lending interest rates.

Those rates are already lower than most banks.

That person, whether they have a $1,000 or a $100,000 account, also has equal voting power when it comes to electing a board of directors to the nonprofit credit union.

Sounds cozy, right? Who needs a bank?

Leah Olson, assistant vice president of business development at Kitsap Community Federal Credit Union says there are, in fact, many reasons why the two co-exist.

Credit unions cannot take large prospective risks; there are more conservative restrictions on personal and commercial lending, and they cannot back business accounts that use Visa credit cards to pay bills. They can, however, offer interest bearing checking accounts, while banks cannot, according to the American Banking Association.

Olson said credit unions also cannot offer insurance products. Those who do want to increase their commercial lending side set up separate for-profit Credit Union Service Organizations, such as her company’s Kitsap Financial Services group.

The American Banking Association is feeling the heat. In an April 2002 report to members it said when credit unions become big, they are more “bank-like.”

“Size does matter,” the report states. “ABA believes that Congress must reconsider the tax exemption and other legislative preferences for credit unions in light of the changes and growth that have taken place in the credit union industry over the past 30 years.”

The ABA cites a U.S. Treasury Department issued a Jan. 2001 report on the state of commercial lending in credit unions, which found that the bigger the credit union, the more risk they were willing to take in such lending.

Credit unions must define themselves and their members when they set up their founding charter, Olson said. A credit union can obtain either a state or federal charter with members seeing few direct differences.

Rosie Emmett at the Washington Credit Union (until last year the US Community Credit Union) said one of the definitions set in a charter is what qualifies someone to be a member.

“There are three fields of membership,” Emmett said. “You can belong to a community or geographic credit union, one based on associations, or one based on an occupation.”

Boeing Credit Union is an example of the latter, with employees and close family as potential members. According to the Credit Union National Association, most of its institutions are geographically based.

After two charter changes in its 68-year history, now the only people who can be members of Kitsap Community Federal Credit Union live in Kitsap, northwest Pierce and north Mason counties, Olson said.

Before credit unions can in any substantial way change a charter or a merger with another group, each and every member gets to vote on it.

“There are no surprises,” Olson said. “When a credit union does something, its members know and it benefits all of them, not just a few select stockholders.”

(Editor’s Note: Temple A. Stark is a free-lance writer living in Port Orchard. Reach him at writer@harbornet.com.)