The merger trend of small credit unions appears on a fast trackbut that doesn't bar opportunities to both enhance and protect theculture, according to the head of the $1.5 billion Community FirstCU, Wisconsin's third largest.

Catherine Tierney, president/CEO, said her 92,000-memberAppleton CU is now embarking on its second small CU merger in 2011and remains diligent about ensuring incoming members are properly“rewarded with generous bonuses or dividends.”

That was the case this June when $400,000 was doled out byCommunity First in the takeover of the struggling $7 millionMenasha Corp. Employees Credit Union, which had maintained 13%capital.

“I know some of my peers are not too supportive of the payoutidea but we think it is good way to retain member loyalty andprevent these members devoted for years to their credit union” fromdrifting to other financial institutions, said Tierney.

Community First had managed Menasha for nearly two years priorto the merger “and let me tell you it was not easy trying to pullin a positive bottom line,” Tierney said. Like other small CUs, the1,494-member Neenah CU had coped with assessments, poor economy andpressures to offer home banking products but still found the taskoverwhelming and opted instead for merger.

Community First is engaged now on a second merger bid for theailing $1.7 million W.P.S. CU of Oshkosh, Tierney said, adding, “Weexpect to follow the same procedure and provide those members agenerous dividend” now being finalized but on a smaller scale.

As a result of the payout, the 268 members of W. P.S., whichserves Wisconsin Power employees, “will end up happy to remain asmembers” and appreciative of their new parent and in the long runthe industry as a whole, Tierney said.

“Because we are well capitalized we're able to do this kind oftransaction,” she said, noting that regulators continue toencourage small CUs unable to earn a sustained profit to seek outmerger partners.

On another topic relating to Menasha and W.P.S., Community Firstis grandfathering the life savings insurance products of the twoCUs. Those offerings popular in the 1950s through the 1970sat many small CUs represented “a sacred bond” that was developedbetween members and their CU, Tierney said.

So while other CUs have eliminated them, “we feel strongly thatthey should be continued,” said Tierney.

Apart from running her Appleton CU, Tierney is thechairman-elect of the Credit Union Executive Council of NASCUS, taking office in September, and is a member of theFederal Reserve Bank of Chicago's Community Depository InstitutionsAdvisory Council.