by Judy Dahl
More than one-third of credit unions that were in business in 2008 had participated in at least one merger between 1979 and 2008, according to a 2009 Filene Research Institute report .
Mergers are more common and no longer considered the last resort for failing institutions, notes a new white paper sponsored by the CUNA Councils. But effective mergers look beyond systems and branches to fully integrate cultures, communities, and people.
Resistance to change
The biggest merger challenge, says Mark Shobe, president/CEO of DFCU Financial, Dearborn, Mich., is countering resistance with positive communication. Humans are naturally resistant to change, he says, “and if we’re not informed of the implications of a change, we’ll fill the void ourselves, and not always in a positive way.”
The $2.6 billion asset credit union completed its most recent merger in March 2009. “It was precipitated by a desire to expand our geographic coverage,” he explains. “We added two additional communities: Lansing, the state capital, and Grand Rapids, the healthiest large metropolitan area in Michigan.”
Integrating two cultures, Shobe says, requires helping “all employees and members feel like they’re part of the same organization. From the employee standpoint, we used everything from social events to team question-and-answer meetings, forums on things like policies and procedures, and broadcast e-mails.”
It’s most important to address the “me issue” with employees, he says. “Once people understand how it will affect them, their positions, and job stability they can embrace the larger issues of a merger.
“We communicated with members in every way imaginable,” Shobe continues, “including information on our Web site, on-hold phone messages, and posters and brochures at branches.”
Members want to know that the credit union people they interact with every day will remain the same, he adds. “If you reassure them of that, it will relieve a lot of their anxiety. It’s not the name on the door that makes a credit union, it’s the people,” and how they conduct themselves with members, he says.
DFCU Financial began communication planning before the merger was a sure thing, says Shobe. “When you’re talking about bringing two organizations together and doing due diligence, that’s the time to develop a comprehensive communication plan, so you’ll have it in place when you announce the merger,” which happened as soon as the two credit unions received board and regulatory approval.
“We communicated to employees and members at the same time, because employees are also members and word travels quickly,” he says.
The communication plan included the communities at-large. “Our primary philanthropic outreach is donating time and money to the school systems, so we called the superintendents and mayors and assured them we’d continue that support,” says Shobe. “In our new communities, we had the joyful task of telling them we’d be donating money and time, and that’s a welcome call in today’s economic environment.”
Members Source Credit Union, Merrillville, Ind., acquired a smaller, $5 million asset credit union in February. “We were one of several they’d been talking with,” says Chuck Donovan, CEO.
After deciding to merge, the two credit unions’ management teams held weekly meetings, he says. “We established a calendar of events leading up to regulatory approval and the membership vote to approve the merger.”
Members of the smaller credit union received a letter announcing the merger, a question/answer sheet, a copy of the board resolution recommending approval, contact information for both credit unions’ managers, and an invitation to a special meeting of members for a vote.
“It’s important that members of the credit union being acquired know all the facts of the merger process and their right to vote for or against it,” says Donovan.
Existing members learned of the merger through a newsletter and a press release after the successful vote. The merger added more than 2,000 members and a new branch to the now $70 million asset Members Source. The acquired credit union branch now has expanded hours, drive-up lanes, ATMs, home banking, a call center, and other services.
“The planning and training had to be exactly right,” Donovan says. “We had a month of employee training, and all line employees of the acquired credit union stayed with us. They’re still with us, and all seem to be enthusiastic about the continuing credit union.”
All members received correspondence about changes and upcoming events, such as conversions to new account numbers.
“We maintain the legacy of acquired credit unions as best we can,” he says. “This is our third one, and we honor those members and volunteers at our annual meetings, through newsletter articles about their histories, and through lobby banners naming credit unions that are now part of Members Source.”
Donovan advises full transparency during mergers. “Share the good news and the not-so-good news, so people feel they understand and are part of the process.”
Posted on YouTube
Chartway Federal Credit Union, Virginia Beach, Va., currently has six focused growth strategies, one of which is mergers/acquisitions. “We call it partnering,” says Ron Burniske, president/CEO. The last partnership in January added 40,000 members.
The $1.6 billion asset credit union’s management team talks openly with employees about strategies and the long-term vision, says Burniske, so information about the merger was part of a continuing communication process.
“They were aware a year ago when we talked about looking for credit union partners,” he says. “We looked at six or seven credit unions and did due diligence. We looked for a partner with the same values, business environment, and employee policies and found one that was a great fit for us.”
After forming the partnership agreement, Burniske met with the incoming credit union’s management team, and then with employees. “I talked about what we do, how we’re involved in the community and where we’re going,” he says. “Then we held frequent town hall meetings with all employees. Our partner’s CEO and I talked about jobs, employment, and all those things people might get nervous about.”
For members, the credit union developed a YouTube video about the partnership, published newsletter articles, and streamed e-mail and text messages about its benefits.
“At prior annual meetings we had talked about our fundamental belief that partnerships will help our credit union survive and thrive,” says Burniske. “There are some great benefits to this partnership, and we let members know we’re looking for additional partners.
“The No. 1 reason for success or failure is your employees,” he adds. “If you don’t have them on board, it’s never going to work, and we never forget that.”
It’s the same with members, he says. “They own the credit union, and they want to know why you’re doing what you’re doing and how it improves your value to them.”