Why So Many Out of State Mergers?
Out-of-state mergers seem to be the norm these days, especially in my home state, California. I don't understand why more California credit unions are not viable options for consideration. Not all of us have shrinking capital and loan delinquency issues. And we certainly know the market better than those who have had no experience in this market. It's also surprising that many entering the state have never operated a branch outside of their home state-which makes me wonder if they know what they're in for. As a credit union that operates in six states (and has for many years), we certainly know that it's not an easy thing to do.
States other than California are also following this trend. Most recently Security Service Federal Credit Union from Texas merged Beehive Credit Union in Utah. Security Service Federal Credit Union is a large and healthy credit union, so no doubt a good candidate for any merger. I would be shocked to learn that there weren't viable, attractive options available to Beehive in Utah. Utah has some very successful credit unions-many of them leaders in our industry. I'm sure they too would have been solid options for the continued service of Beehive members. And on the flip side, there should be plenty of merger opportunities in the state of Texas for credit unions already serving members in Texas.
Unfortunately, some out of state credit union mergers have become very bank-like and may be driven by a market share grab. We've witnessed this with the large banks-and it is rarely a good thing for the bank customer. Chase has recently entered the California market in a very aggressive fashion by taking over the failed Washington Mutual. They've done a terrible job of understanding the needs of Californians with their ad campaigns pretending to be from California. It's frankly offensive.
At the end of the day, credit union mergers must be based on what's best for the member (of both credit unions). At Xceed FCU, although we operate across the country, we wouldn't merge a credit union just for the sake of expanded asset size. There's far more at stake than what first meets the eye. The fit has to be completely in line with our vision-that of a 'workplace' credit union. We are driven to preserve the legacy of the merged credit union and its members. There also has to be a fit in a geographic sense, therefore consideration of future mergers in geographic areas of where our members already live (or perhaps where we already have a branch) are also preferred. I completely relate to the desire of credit unions to merge other credit unions in markets where they already have a presence. These opportunities give them a chance to be more efficient in delivering service to their members as well as providing a vehicle for future growth (through being able to better service to the new membership set). Mergers call for serious consideration and although I appreciate the unprecedented difficult operating environment we find ourselves in today-let's continue asking the question "What's in it for the member?"
Teresa Y. Freeborn is president/CEO of Xceed Financial Credit Union.