In the second reported rejection of a proposed credit union merger in as many days, members of the $96 million Main Street Financial FCU of Baton Rouge, La., have turned thumbs down on a consolidation with the $260 million Jefferson Financial CU of Metairie, La.
It was unclear Wednesday if the Louisiana credit union members rejected their takeover offer for the same reason as members of the $63 million Montana First CU of Missoula. They turned down a merger deal with the $432 million Horizon CU of Spokane Valley, Wash.
But officials of the CUs in all three states acknowledged both private and publicly their concern among some CU members over what they see as their fears of losing a local financial provider and hometown CU brand and perhaps a lessening of personal service.
Top managers said the technology-related benefits of a merger coupled with the emergence of a new suite of improved products and services needs to be fully explained to members of the CU being taken over to perhaps win over doubters.
Nonetheless, there may be any number of factors that apparently ditched the Main Street Financial combination with Jefferson Financial, located in a New Orleans suburb. The vote to kill the deal which has been in talking stages since last fall was “overwhelming, by 1,000 votes,” said one source close to the negotiations.
A spokeswoman for Main Street Financial declined to elaborate on what was behind the Jefferson Financial defeat, saying only “the planned merger was rejected by the members.” The Baton Rouge CU has 15,300 members.
John Lyon, Main Street Financial's board chairman, said in a statement: “The Board of Directors is taking the merger vote under advisement, and further action is still being determined at this time.”
Officials of Jefferson Financial did not respond to queries from Credit Union Times.
The smaller credit union, with 7.90% capital, lost $2 million in 2010 but had been on the rebound after suffering “big losses from the corporates,” said Cary Anderson, the former president/CEO of Main Street who retired Dec. 1.
Now an Asheville, N.C., consultant, Anderson said he had been a supporter of the merger plan and is “surprised” at the defeat. The CU has been operating with an interim CEO, Pat Duhe.
Sources said factors may have included anger over the closing of a Lake Charles branch and moving too slowly in explaining the benefits of merging with Jefferson Financial.
Said another source, “This is a day of information overload and I think people are able to get much more online information than they used to and are able to make judgments” which sometimes can be counterproductive.