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"We don't answer to shareholders or pay dividends and use that money to benefit our members with more services, lower (loan) rates and lower fees." Peter Kavalauskas, president and CEO of Northeast Credit Union

On Notre Dame Avenue in Manchester, there is a building that holds the answer to an interesting trivia question: Where was the first credit union formed?

It was started in 1908 in Manchester as part of the St. Mary's Cooperative Credit Association and its charter members, many French-Canadian immigrants working in the textile mills, had to pay $5 a share to join.

From those modest beginnings, the national credit union industry has grown to more than 7,900 different credit unions (an estimated 39 in New Hampshire, 88 in Maine), offering a cooperative, nonprofit approach to financial services -- one that the for-profit and taxed banking community has fought for decades.

The Seacoast hosts two of the largest credit unions in the state. Northeast Credit Union, which was founded by Portsmouth Naval Shipyard workers in 1936, has nine branches, more than 145 employees, an estimated 48,000 members and $480 million in assets. Service Credit Union, which was formed in 1957, shortly after the Pease Air Force Base opened, has a little more than $1 billion in assets with 103,000 members and 27 branches in New Hampshire, Massachusetts and at military bases in Germany.

(Other credit unions in the Seacoast region include Holy Rosary Credit Union in Rochester, Salmon Falls Community Credit Union in Somersworth and Seacoast Credit Union in Hampton).

Northeast recently celebrated its 70th birthday and in July completed a $5 million, 16-month renovation of its main branch on Borthwick Avenue in Portsmouth.

Northeast was founded by 10 men from Portsmouth and Kittery and Eliot, Maine, in part to help Portsmouth Naval Shipyard workers gain access to consumer loans (they were mostly ignored by local banks in the middle of Great Depression) and, of equally pressing importance, to put an end to the escalation of loan shark activity.

"The founders were very happy when they got the large loan shark off the base," said Peter Kavalauskas, president and chief executive officer of Northeast Credit Union. (Some issues never quite go away -- one of the major initiatives that credit unions nationwide have taken on is educating their members about payday and title lenders who practice a form of legal usury.) What makes Northeast and other credit unions unique is not their asset size, Kavalauskas explained, because all of the national credit unions combined don't match one of the top 10 banks in the country. Rather it's their cooperative nature.

"The members are the owners," Kavalauskas said. "We don't answer to shareholders or pay dividends and use that money to benefit our members with more services, lower (loan) rates and lower fees." That financial flexibility has allowed Northeast, for example, to expand technological services -- including a 24/7 telephone service for everything from mortgage applications to updated account information -- and add branch locations in Lee and Northwood to serve a demographic trend.

"More and more of our members are moving west and north but still work in the Portsmouth area," said Kavalauskas, a 30-year veteran of the credit union industry who joined Northeast in 1978 (and has been CEO since 1984). Though any New Hampshire resident can join Northeast, he estimates that 90 percent of its members are Seacoast based.

Gordon Simmons, the president and chief executive officer of Service Credit Union, said his credit union (which is in the top 120 in the country) has continued its institutional legacy of innovation with major technological investments and branch expansions into once unheard of territory for credit unions -- Service Credit Union has begun to open branches in Wal-Mart stores (currently in Newington, Portsmouth and Manchester).

Eventually, seven Service Credit Union branches will be opened in Wal-Marts, an irony considering Wal-Mart itself may be a non-traditional competitor if and when the retail giant makes a plunge into the banking industry.

Simmons said the expansion into Wal-Marts was an opportunity to serve existing members and draw in even more who might not have heard of the credit union or know what it offers.

Simmons has been with Service Credit Union for more than three decades and has been in his current posts for the past 12 years. Kavalauskas and Simmons agree the credit union business will have to adapt to the rapidly changing marketplace to expand their membership numbers.

"By far, technology has been the biggest change. It has jumped leaps and bounds," Simmons said.

What was unthinkable but a decade ago have become necessary business tools. Service Credit Union, for example, will unveil branch kiosks at two military branches in Germany (including Landstuhl, the military hospital where the seriously wounded from the Iraq are taken) that will offer deposits and withdrawals but also give members foreign currency exchange potential and the ability to make recurring bill payments in 30 different Euro currency countries.

To fight the scourge of pay-day lenders for both their military and civilian members, they offer pre-payday emergency loans up to $250 for nonmembers and $500 for members.

"It's the sort of attention we can pay to our customers," Simmons said about initiatives such as extensive online account capabilities and 24/7 customer service.

"We are a true cooperative," Simmons said. "We've leaned on volunteerism (all board directors are unpaid volunteers) and don't have individual stockholders we have to pay dividends to."

Though credit unions are prohibited by law to venture into the commercial lending market, their earnings from credit card accounts, consumer and student loans, automobile and home mortgage loans, have drawn the increasing attention and competitive ire of the banking industry for decades -- especially since credit unions began to expand their membership roles a few decades ago.

Congress after Congress has seen repeated attempts to repeal the tax-exempt status of credit unions. And it's something the national credit union trade group watches carefully.

Although the bank lobby claims credit unions are "growing beyond their means" and should therefore pay taxes, the credit union share of total assets has remained virtually unchanged, the Credit Union National Association reported in September.

From 1992 to 2004, credit unions' market share has maintained a constant 6 percent of total assets, the CUNA report said. The annual growth of credit unions pales in comparison to that of banks, which in 2004 alone, grew by $812 billion "" more than 1.2 times the total assets of credit unions.

"I don't think they get it," Kavalauskas said about the banking industry. "I would think they would have more pressing problems than credit unions." Simmons said the rivalry is much tamer in the local financial neighborhood. "They do fight it out at the national level but we have a lot of cooperation with our local bankers."