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Wegmans Federal Credit Union is merging with New York state's largest credit union to head off future financial difficulties.

The National Credit Union Administration approved the merger of Wegmans credit union with ESL Federal Credit Union, effective Jan. 1. Of the 15,730 Wegmans employees who belong to the credit union, 12 percent work in the Buffalo Niagara area, said Steve Van Arsdale, chairman of the board of directors for Wegmans credit union and Wegmans' assistant general counsel.

Wegmans and its credit union have an unusual relationship. Most credit unions receive no support from the employers of its members. However, Wegmans food markets cashed its checks through the credit union's account at the Federal Reserve and provided some customer support and accounting services.

In return, Wegmans had a low-cost way of processing checks and the credit union received hundreds of thousands of dollars a year in fees. However, starting next year Wegmans will no longer cash its checks through the credit unions, Van Arsdale said.

"That was really the factor that pushed us to look for some change in the way we did business," he said.

Wegmans credit union also faced another problem. Most of its members were young and tended to borrow rather than save. At one point last year, the credit union had to borrow money from other financial institutions to provide all the loans its customers wanted.

ESL was founded as Eastman Savings and Loan Association and today still services employees of Kodak and its related companies.

ESL is the state's largest credit union with assets of $1.8 trillion and deposits totaling $1.2 trillion.


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