PONTE VEDRA BEACH, Fla. -- Perhaps they had heard the statistics--some 300 credit unions, or almost one a day, were merged out of existence last year.
By 2020 projections indicate there will be 3,800 credit unions in the United States, down from 23,100 in 1972. The top 3% of credit unions already control half of the industry's assets.
So a breakout session on coping with mergers drew a sizeable audience at the Education Credit Union Council annual conference.
Darrick Weeks, chief business development officer of Westerra Credit Union in Denver, shared the story of how that financial institution was formed from a merger of DPS Credit Union, Safeway Rocky Mountain Credit Union and Gateway Credit Union. Weeks noted Westerra now has more than $900 million in assets, and by 2012 experts estimate there will be 200 credit unions with more than $1 billion in assets. A merger can be the quickest way to create economies of skill and scale, and to build capital. Above all, he stressed, the three credit unions forming Westerra focused on how members would benefit. The answers--access to more convenient locations and expanded products and services, better pricing and rates, added technology enhancements, and enhanced future staying power of the credit union. Referring to staying power, Weeks stated, "This is important. This is the elephant in the room." Then there were employees to consider. There were no layoffs, and employees retained their salary and benefits. But, he acknowledged, some roles changed although at the same time the new, larger organization offered additional career opportunities.
Weeks emphasized merging credit unions must have compatible cultures and business philosophies. He noted studies indicate 80% of all mergers fail because of culture clash.
"I don't know about you, but 80% failure is not a percentage I can accept," he stated.
"Cultural integration is the number one priority, not operational integration. If you take care of the people, operational integration will come."
Weeks listed some key lessons the three merging credit unions learned:
o You need a balance between too much compromising and being decisive.
o What you initially see isn't always what you get.
o Don't treat governance and board negotiations like labor negotiations. "Mergers are the new reality," he said. "We think it's part of our business, and it has made us a better company." --firstname.lastname@example.org