The $1.5 billion asset Lake Trust Credit Union, Lansing, Mich., opened its doors on April 1, 2010.
It was the result of a merger between $850 million asset NuUnion Credit Union of Lansing and $750 million asset Detroit Edison Credit Union.
Steve Winninger assumed the CEO duties of Lake Trust, and Bill Thiess served as president. Winninger had been CEO of NuUnion and Thiess was CEO of Detroit Edison.
They both retired nearly two years after the merger, turning over the reins to David Snodgrass.
Mergers of credit unions, especially those of relatively equal size, can be difficult because the partners often struggle with leadership, governance, and cultural issues. What follows is Winninger’s description of how he and Thiess, along with their boards and staff, grappled with these issues during their merger.
♦ Expect doubts, conflict, and personal biases to surface as the merger process unfolds.
♦ Plan for operational efficiencies in the newly merged CU. They won’t happen automatically.
♦ Board focus: Communicate early and often to guide members, board, management, and staff through a merger.
Credit unions larger than $1 billion in assets tend to be more efficient than smaller ones, according to industry research and the principle of economies of scale.
Achieving greater operational efficiency certainly was an impetus as my credit union—NuUnion Credit Union—considered merger partners. When Detroit Edison Credit Union, of near-equal size, emerged as a candidate, I thought about the terrific opportunity to improve value to our members and—with three years before my retirement—the legacy I could leave.
Bill Thiess, Detroit Edison’s CEO, thought it could be a good fit and was willing to talk. Before discussing the merger possibility, Bill and I had researched the same industry data about economies of scale. We knew there was merit to exploring this further, and discussed this research at our first face-to-face meeting.
Bill and I knew of each other, but we didn’t know each other well. Early on, we decided that if we were going to do this, we might consider retiring at the same time because we’re about the same age. We could oversee the integration of our two credit unions and then provide for an orderly transition of leadership.
After a couple of conversations, we resolved three tough questions:
1. Who will be the new CEO?
2. Who will make up the new board?
3. What will be the new corporate name?
The plan we presented to our boards included:
► Splitting the president and CEO duties between us;
► Joining our nine-member boards so they could decide the correct board size of the merged credit union;
► Selecting the name “Lake Trust,” which Detroit Edison already had chosen before any merger conversation took place. Bill offered to postpone the announcement of this new name for his credit union in case we decided to use it for the merged credit union.
Instead of blending the best practices from both organizations, we would design a new organization from the ground up—one built on current and not historical needs.
Our formula became A + B = C; we didn’t want to create a bigger A or a bigger B. This strategy reinforced our decision to retire at the same time, which would preclude the new credit union from slipping back to one culture or the other.
NEXT: Moving forward