MADISON, Wis. (7/1/14)--As with virtually every other state in the country, credit union mergers are changing the financial services landscape in Wisconsin, the Milwaukee Journal Sentinel reported in a June 29 article.
But regardless of the merger trend, credit unions aren't going anywhere. "We are seeing more people served, although by fewer credit unions," Brett Thompson, president/CEO of the Wisconsin Credit Union League, told the Milwaukee Journal Sentinel.
Two Wisconsin credit unions are set to merge this week, the latest in a wave of consolidation that has cut in half the number of credit unions in the state since the late 1990s, the Journal Sentinel reported. In the state's fifth merger of the year, Capital CU in Kimberly, with $480 million in assets, and Pioneer CU, Green Bay, with $604 million assets, will create Wisconsin's eighth credit union with more than $1 billion in assets.
The mergers are driven by a number of factors--increased regulations, the demand by consumers for costly technology such as mobile apps and the difficulty of finding people interested in running small credit unions as older leaders retire--the Journal Sentinel noted.
Since the recession, both credit unions and banks have been subject to creeping regulation. Smaller credit unions struggle the hardest to keep pace with the increased resources required to meet the demand of the new regulations.
"The regulatory and legal pressure on credit unions is as heavy as it's ever been," Thompson told the Journal Sentinel. "And to comply with all those regulations takes a great deal of staff time, a great deal of resources that many of our credit unions don't have."
At the same time, consumers demand the technology, such as mobile banking, that makes accessing their accounts convenient--requiring investments that only increase the financial strain for small credit unions.
The best way to provide those products is by merging with a larger credit union, Thompson said.
When the chief executives of the smaller credit unions retire, it can be difficult to find a replacement, said Mike Schenk, vice president and interim chief economist for the Credit Union National Association. Simply put, running a small credit union be a challenge, Schenk said.
"We do periodic salary surveys, and it's very clear these folks are working 60, 70, 80 hours a week, and the pay range is actually quite low in the scheme of things," Schenk told the Journal Sentinel. "Finding people who are willing to put in that labor of love, basically, is very, very difficult."