A number of different things led to the merger on Monday of the two-year-old Inspire Community Development Credit Union of Battle Creek, Mich., with the 72,000-member, $685 million First Community Credit Union of Parchment, Mich., its former chairman said.
That included the community development credit union's difficulty in finding and keeping strongly qualified leadership, not having enough profitable products, having high loan defaults and having the main street in front its primary interest closed for more than a year, according to Nancy Macfarlane, former chairman of Inspire's board of directors.
Inspire had 400 members and listed roughly $421,000 in assets on its June 2012 Call Report.
Macfarlane is CEO of Community Action of South Central Michigan, a social services agency headquartered in Battle Creek.
“It was more than just any one or two things,” Macfarlane said.
She pointed out, for example, that although the credit union organizers had strong financial backing, they lacked experience at running a financial services firm and that they experienced two leadership changes before the chartering process was complete.
“Losing two coordinators like that made it very hard to find continuity of leadership, she observed.
In the end, the NCUA began to grow concerned at the credit union's falling net worth ratio which helped move the merger forward, Macfarlane explained. The ratio dropped from 42.49% in June 2011 to 13.09% in June 2012, according to agency records.
“In the end, our business plan was just too lean,” Macfarlane said, meaning it lacked room and flexibility to maneuver in response to changing conditions.
Although she emphasized she had not been involved with the credit union effort from the first, she nonetheless wished the credit union had reached out to other existing community development credit unions for mentoring earlier.