ST. JOSEPH, Mich.-The former customers of Griffith Savings Bank are now officially members of United FCU, following the first-ever purchase by a federally chartered credit union of a state-chartered mutual savings bank.
On Jan. 3, Griffith Savings Bank's former office opened as a branch of United FCU, expanding the credit union's reach into Indiana. While the deal has been approved by regulators and the principals involved, United CEO Gary Easterling said that the final settlement is still being worked out.
The purchase included all loans, investments, real estate, accrued interest receivables and other banking-related assets, valued at approximately $80 million.
Easterling declined to give details of any payout to GSB customers, as it is a mutual savings bank, in part because the matter is still being settled. He said that the holding company for GSB will unwind once the transaction is finalized and any assets left over will be paid out as a dividend to anyone who was a Griffith customer at the time the bank ceased to exist. He added that all payout issues are being controlled by the holding company and that UFCU has no say in the matter.
For its part, UFCU is also working on converting Griffith's back-office processes and aligning IT systems and product offerings. Easterling said that that conversion is scheduled to be competed sometime during May.
The credit union had always planned to expand into Indiana, said Easterling, but "didn't have active expansion on the planning calendar." But a rough economy forced Griffith to seek out a merger partner, and in January 2011, United was approached about absorbing the bank.
Easterling noted that because Griffith was chartered as a mutual savings bank, the two were already culturally similar. "They had a bias toward the credit union mindset already, so from a cultural mindset it made sense to make the transaction happen," he said. Before making the decision to seek out a merger partner, GSB had even considered converting to a credit union, added Easterling.
CU Difference Is Explained
Because the new Griffith branch is only about 90 minutes away from UFCU's headquarters, Easterling said there will be multiple opportunities for the Griffith and United staffs to interact. He projected that there would be little turnover among Griffith staffers, particularly frontline employees. Some back-office positions will be consolidated, he said, and some employees may also be transitioned to the CU's headquarters in St. Joseph, Mich.
Griffith had approximately 4,700 customers at the time of the sale, and Easterling said that the reaction from those new members has been strong so far. He said it was too early to tell how many Griffith customers might choose not to continue on as CU members.
The credit union has produced materials in a number of media to explain how CUs work, and had representatives on hand at a meeting the bank hosted for customers when it was considering the sale.
"We're 16 days into it," said Easterling. "So far the initial reaction from the Griffith community has been positive. That's about the only comment I can make now; we're optimistic, and we think it will be a good performing branch for United FCU in the near future."
Some of that performance will come from an expanded suite of products now available in the Griffith market. Whereas GSB had been a strong real estate lender with limited business lending, Easterling said that United has a more expansive business-lending portfolio than Griffith did, which will help grow that book of business. Additionally, Griffith did not offer credit cards, which United does. "I think we can bring them a broader portfolio spectrum of products and services," he said.
United FCU serves more than 106,000 members with $1.3 billion in assets. Membership is open to anyone who lives, works or worships in the five states it serves (Michigan, Arkansas, Nevada, North Carolina and Ohio), along with Northern Indiana and Eastern Oklahoma. Griffith, Ind. has a population of more than 16,000 people, a figure that has only declined by approximately 2,000 since the 1970 census.
As of its Sept. 2011 Call Report, UFCU held more than 67,000 loans and leases worth more than $1 billion, including 8,700 real estate loans worth more than $570 million.
With a market of more than 16,000 potential new members, Easterling said that UFCU's primary concern is to take care of existing members who joined as a result of the acquisition and then begin the process of growing its presence in that market. But, he said, United is hopeful that satisfied Griffith customers will help with that task.
Word of Mouth, Plus...
"We know that, historically, referral word of mouth is the number-one source of new business in our world," said Easterling, adding that United has also launched a direct mail campaign, along with extensive signage announcing the change and a push for coverage in local media.
"We are proud to maintain a financial institution right downtown, and we're looking forward to delivering the United value to the Griffith community," said Easterling. "We believe that once they see the value, they'll become loyal members."
