Mergers are the Talk of the Town in the Northwest
Three Northwest states–Washington, Oregon and Montana–have become the nation’s epicenter of merging activity among credit unions, with supporters claiming the trend underscores a higher level of member service.
The phenomenon, backers claim, also highlights new credit union strategies to deal with both keener banking competition and a favorable regulatory climate.
By far, the biggest consolidation this month. and the one with the most profound impact, involves a planned $1 billion entity, which would be created with the combination of the $778 million Harborstone Credit Union of Tacoma, Wash., and the $241 million Prevail Credit Union of Seattle.
Under a letter of intent, the two credit unions encompassing 67,000 members and 17 branches could be complete by Jan. 1, forecast Phil Jones, president/CEO of Harborstone. As the survivor, Harborstone will retain the brand after member and regulatory approval of the consolidation.
Prevail said in a release that the merger would extend each credit union’s reach throughout the entire Puget Sound region. Both credit unions are state chartered. and both hold community charters. Tom Graves, president/CEO of Prevail, would become executive vice president following the merger.
In another merger milestone, the $452 million Horizon Credit Union of Spokane Valley, Wash., said last week it has a few minor regulatory hurdles to clear but is gratified it won approval in a membership re-vote of a merger deal with the $64 million Montana First Credit Union of Missoula, Mont.
Though both credit unions hold community charters, managers stressed there can be some extra paperwork and logjams in clearing regulations in both states to finalize the combination planned for September.
Under the transaction, which earlier this year looked to fail when Montana First members balked at losing control to an out-of-state credit union, both credit unions put on an aggressive public relations campaign to sway members that the deal was worthwhile and service would not suffer. It finally passed June 26 on a 56% to 44% vote among the 9,700 members.
Jeff Adams, president/CEO of Horizon, said his credit union can now move forward in developing marketing strategies for the combined entity. One immediate task will be to solicit bids from newspaper, TV and radio stations for credit union ads that would appear throughout western Montana extolling merger benefits.
Adams credits the staffs of both credit unions and a Tacoma ad agency, Jayray Branding, with helping persuade members of Montana First to vote for the combination.
Another merger with overtones of member opposition fell through last week in neighboring Oregon, with the $162 million St. Helens Community Credit Union calling off a consolidation with the $134 million Wauna Credit Union of Clatskanie.
That merger went off the rails, said the parties, following a sudden switch by the St. Helens board to go it alone and hired a new president/CEO, Brooke Van Vleet, who is the former chief administrative officer at the $5.3 billion First Tech Federal Credit Union of Palo Alto, Calif.
That switch followed long-simmering member protests over the firing of a former CEO who left in April and drew opposition at the annual St. Helens meeting in June. A bloc of members seeks to oust five directors who apparently voted for the dismissal of Jeffrey Schwarz as well as pursuit of a merger with Wauna.
The merger bailout drew a sharp rebuke from the president/CEO of Wauna, Robert Blumberg, who claimed St. Helens “needs to get their house in order” before pursuing a merger.
As for overall merger trends in the Northwest, Troy Stang, the president/CEO of the Northwest Credit Union Association, itself a product of a 2011 merger of the Washington Credit Union League and the Credit Union Association of Oregon, said Montana, Oregon and Washington have been witnessing more activity than most because of a general repositioning by credit union managers.
“These are credit unions that are coming out of the recovery in good shape and deciding on new growth paths,” said Stang noting also a favorable regulatory climate in at least two of the states, Washington and Oregon.