WASHINGTON-GTE Federal Credit Union Chief Financial Officer Rich Helber told attendees of a recent Callahan & Associates Webinar on mergers to seek out the opportunities in mergers and not focus on dilution of capital and other negatives. It costs a credit union about $100 a head to gain new members, Helber estimated, yet with a merger suddenly there can be many new members at a fraction of the cost. He should know. GTE FCU, with $1.7 billion in assets, has completed four mergers ranging from $5 million to $70 million in assets in the last 18 months. When determining whether or not to take on a merger, credit unions should look at the potential geographic contribution, size of the market, types of members, condition of the institution, and whether NCUA or the board is in control of the credit union. One of the credit unions that recently merged with GTE FCU formerly served a phosphate company that went out of business. It was out in the middle of nowhere and at first glance GTE was not even going to touch it, Helber said. However, the credit union's officials had had the foresight to apply for a three county community charter and once GTE delved deeper, the prospects were more and more attractive. Additionally, who is in control of the prospective merger is important to the decision-making process. If the board is still in control, typically their main concern is what will happen to their employees. Helber said that GTE offers to keep them on for a year, barring shortcomings and with some possible reassignments, to help smooth out the transition. "Our goal is not to cut the workforce by 20% to make the numbers work for Wall Street. We're going to keep everybody," he explained. "And that only makes sense, because if you look at it, those people are the ones who know the members. You've got to have them out there, because we're going to buy branches in new areas and you've got to have those people." When NCUA has conserved a troubled credit union, it is a whole different ballgame. The problem is not with the proposed merger is not with the credit union, but in "dancing with NCUA," he said. Helber said on one deal GTE FCU had to go back and forth with the agency a number of times to finally get NCUA to agree to a purchase and assumption as opposed to a straight merger. GTE FCU insisted on the P&A to avoid paying losses in subordinated debt from the troubled institution. According to Callahan's, 301 credit union mergers were approved my NCUA in 2003. "Credit Union Match-Making: Factors for Success in Mergers" aired Jan. 28. [email protected]

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