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The $1.5 billion TruStone Financial Federal Credit Union and the $1.3 billion Firefly Federal Credit Union said Tuesday they plan to merge by 2021, which will create Minnesota's second largest financial cooperative if approved by members and regulators.
TruStone Financial, which will be the surviving credit union in the industry's first multi-billion consolidation so far this year, is looking to switch its federal charter to a state charter that will position it to expand throughout Minnesota and Wisconsin.
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"Under a state charter, we would have greater flexibility to expand beyond the current areas we serve today, positioning the credit union for future growth," TruStone Financial said in a prepared statement. "The federal charter limits our ability to grow into new counties and would, after the merger is concluded, limit our ability to serve some current members."
If state regulators approve the charter switch, TruStone's members also would need to green light the charter change.
Based on first quarter financial reports filed with the NCUA, the combined credit unions will operate under the TruStone Financial brand that will manage $3 billion in assets, $329 million in capital and employ 568 staff who will work from 23 branches across Minnesota and southeast Wisconsin, serving a membership of nearly 190,000.
"For the past several months, we've been working side by side with Firefly's board and its President/CEO Dale Turner to assess the value of this partnership," Tim Bosiacki, president/CEO of TruStone Financial, wrote in a letter to members. "During our work together, one thing became more and more evident: Our two organizations are, simply put, better together."
Both boards of directors approved the proposed consolidation in April.
Bosiacki said he plans to retire next year and Turner will become the CEO of the combined credit unions.
"After much consideration and a lot of hard work, the board of directors and I can say with confidence that this merger would provide a tremendous amount of value to our members, more opportunity for our employees, and would allow us to make a bigger impact on the communities we serve," Turner said.
Although the credit unions said in their prepared statements that it is "our intent is to keep many individuals in the same roles and locations, in some instances, employees may choose different opportunities."
The credit unions noted there are no plans to close branches and that the consolidation could provide the opportunity to expand its branch network.
The decision to retain the TruStone Financial name was based on brand recognition research conducted in the Twin Cities, St. Cloud and southeastern Wisconsin.
The Plymouth-based TruStone Financial was founded by eight Minneapolis teachers in 1939, and Burnsville-based Firefly is Minnesota's first financial cooperative, established in 1925 by Minneapolis postal employees.
In addition to regulatory approval, the proposed consolidation requires the approval of Firefly's members. That special membership meeting is expected to be held later this year to meet the anticipated finalization of the merger in January 2021.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
