CUNA's new Network CU model provides merger alternative

May 28, 2015

WASHINGTON (5/27/15)--CUNA’s Small Credit Union Committee is advancing an initiative intended to provide a “win-win” merger alternative for many credit unions who are interested, but hesitant, to pursue a merger growth opportunity.

A key factor preventing credit unions from pursuing those opportunities is a perception that one credit union “wins” while another “loses” in a merger. The initiative improves upon an existing informal process and builds it into a truly collaborative approach.

“We recently presented the National Credit Union Administration with a Network Credit Union concept white paper and have asked the agency to take the lead in developing regulations that would formalize and improve a now-existing informal process that is highly confusing and all too often defective,” said Debie Keesee, chair of CUNA’s Small Credit Union Committee and CEO of Spokane (Wash.) Media FCU.

“As a first step in this process, we’ve asked agency leadership to appoint an advisory group to explore options, address concerns and strategize potential solutions to bring the Network Credit Union concept to life.”

As credit unions consolidate in an evolving financial landscape, the Network model facilitates viability and competitiveness of participating credit unions while each retains a seat at the table. The option provides a framework for credit unions to look at other credit unions as potential partners for adding value to their member benefits while the credit union is still healthy, and when it makes sense.

Rather than resulting in a “winner” or “loser,” the model is built on two or more credit unions joining together to create a stronger organization under a new Network designation.

“The Network model can advance true collaboration and cooperation--reducing back office redundancy and helping credit unions achieve scale economies, while affording each the opportunity to maintain a critically important sense of identity. As a consequence it would likely help improve overall system safety and soundness,” according to Bob Hoel, Filene Research Institute liaison to CUNA’s Small Credit Union Committee.

George McNichols, CEO, Hoosier Hills CU, Bedford, Ind., provided key leadership in developing and refining the Network model over the past 12 years. McNichols was inspired by his detailed study of the organization and governance structure of the not-for-profit Network Hospital system in his home state.

“The Network Credit Union concept evolved with input from Desjardins, Indiana Credit Union league staff, credit union CEOs, CUNA staff and other credit union support organizations” McNichols said. “The concept has been well-received in discussions with other credit union CEOs, especially those from small and medium-sized operations,” he notes.

The Network Credit Union white paper is available at CUNA’s Collaboration Ideas and Resources page