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BATON ROUGE, La. – Dozens of credit unions merge every year, and the process of combining hardware, software and people is never exactly the same each time around. Just ask Ken Bordelon and Mark Staid. They’re president/CEO and executive vice president of operations, respectively, for E Federal Credit Union in Baton Rouge, a $157 million institution that has taken in three other credit unions in the past three years, including two this year alone. “There’s definitely a learning curve,” Bordelon says. The first of his three mergers was in February 2002, when E FCU merged with sister Exxon credit union EXCO, a $42 million institution which had to suddenly restrict member access to its services at its host refineries and chemical plants because of post-9/11 security concerns. That was followed this past February by E FCU’s merger with $3 million, 1,000-member Vulcan Employees FCU and the April conversion of the 3,000 or so accounts of $19 million Burnside FCU, Bordelon says. “What makes it all the more interesting is that all three were on different data processors than us when we took them in,” Bordelon says. “EXCO was using XP Systems. Vulcan was on the old Mercury system and Burnside used CUSA Technologies.” E FCU runs the CUBE platform from IntegraSys, and the big Fiserv unit was called in to help. The two 2005 mergers, in fact, were handled as one project by IntegraSys staffers. “The first thing involved in these mergers for us is blending the two sets of membership files, and then we have to work with all those third-party relationships,” says Gloria Randall, IntegraSys’s manager for convergence and mergers. She says having a core system that can adeptly handle third-party software is valuable for a couple reasons when mergers occur. “For one thing,” Randall says, “third-party products are expensive, so if you can, you want to continue to use what you have. Plus, you have your staff trained in their use. Systems also should be easily expandable, and by that I also mean you want to make sure skills for handling them are readily available in your marketplace. That’s one reason why Microsoft-based products stay so popular, because so many people know the basics of how to use them.” Dealing with some of those third-party providers, however, can occasionally be problematic. Bordelon and Staid say working with vendors on both the credit card and debit side in their mergers turned out to be a bit troublesome. “Credit card processors in particular made it clear to us that they operate pretty much on their own time,” Bordelon says. “We found that out when we were trying to decide if we wanted to support both MasterCard and Visa programs. We ended up converting our MasterCard program into a VISA one,” Staid says. Converting such core products as checking and share drafts was relatively easy, the E FCU executives say, but, Bordelon adds, “I don’t care what the technology is, one thing that always bites you is ownership. Whose name is on the account? Who are the authorized users? “That information can be very suspect. In one merger we pulled every card and looked at every ownership file, by hand. You don’t want someone’s ex-wife who’s been taken off an account to be added back on in a merger.” Many such mergers involve small credit unions with only 600 to 1,000 members or so and a technology infrastructure that’s fairly bare bones. “A lot of them don’t offer a ton of things, maybe shares and a couple of loans and that’s it,” Randall says. “Those are pretty easy to set up, but still it’s important to have flexibility. No two of these situations are alike. I’d love to be able to tell a client that, `Oh, this is exactly the amount of money you’ll need to pay and this is what we’ll do for you, but it doesn’t really work that way for everybody.” Bordelon echoed that assessment from the client side. “They have to be flexible and they have to work with you. If they just billed on an hourly rate, that would be a disincentive. They need to be flexible enough to do a contract with parameters that accommodate those bumps in the road you know you’re going to hit.” Smoothing out those bumps also can lead to greener pastures ahead, Randall says. “Mergers are a great opportunities for credit unions to analyze what they’re doing today, what they want their merged credit union to look like, to choose the best practices and the best products,” the IntegraSys mergers manager says. “That can save you money and time, and streamline your operations.” But making the technology and business processes get along in a new partnership can be the easiest part of mergers, Bordelon says. “We’ve been approached several times by other credit unions to share our experience, and usually it’s the personnel side and the board issues, not necessarily the technology side, that people are most concerned with,” the E FCU president says. “And there really are a lot of cultural issues to deal with,” Bordelon says. “Databases are easy compared with people.” -

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