RANCHO CUCAMONGA, Calif.-CO-OP Financial Services and Financial Service Centers Cooperative (FSCC) have entered into an agreement to combine operations and unify the two dominant credit union shared branch networks.
Beyond efficiencies, a longer-range goal is to create a national credit union branch network larger than that of Bank of America, according to the companies.
The combination will create a network of more than 4,300 physical branch locations, plus 2,200 more Vcom kiosk locations at 7-Eleven stores. More than 1,700 CUs participate in shared branching between the two CUSOs, which cited greater efficiencies in branding, technology and administrative costs, along with "enhanced patron dividends," in explaining the merger.
Under the terms of the agreement, FSCC President/CEO Sarah Canepa-Bang will become the chief strategy officer of CO-OP Shared Branching.
Canepa-Bang told Credit Union Journal the idea of merging has been informally discussed for 10 years, but the conversation began in earnest during FSCC's 2010 planning session.
"We're in pretty good shape," said Canepa-Bang. "But with the banks vulnerable right now, we said instead of spending our time competing with CO-OP, what if we join forces?" She said FSCC explored other partnerships as well.
CO-OP Financial Services CEO Stan Hollen said the goal of the combination is to significantly expand shared branching within credit unions, noting there are more than 17,000 CU branches in the nation overall. "We already have more ATMs than Bank of America, and there is no reason credit unions shouldn't have more branches as well," said Hollen. "The foremost goal is to grow shared branching. There are many, many credit unions of size that should be in shared branching."
Penetrating that market will mean overcoming some long-held objections by some CUs over shared branching, many of which both Hollen and Canepa-Bang said are misconceptions. Among those is the worry by some CUs that participating in shared branching will mean either a lobby full of nonmembers or other credit unions poaching members.
Speaking to the latter, Canepa-Bang said, "The fact we are still here after 30 years is a testimonial to the fact people are not being stolen."
Costs should also not be what Hollen called a "resistance point." Costs for participating in each network are approximately the same at about $1.50 per transaction, according to both CEOs. The merger should drive that cost down, said Hollen.
"The other big, current expense is data processing and the expense of the interface," said Canepa-Bang, adding an early objective will be to "streamline the spec and make it a whole lot easier."
Hollen indicated credit unions will also begin to see expanded consumer access channels as the result of the merger, including through kiosks and advanced ATMs; the latter the subject of a currently running pilot with Diebold.
Canepa-Bang said that the merger will not significantly affect FSCC's "lean" operations and that no layoffs are planned.
FSCC shareholder CUs will likely vote on the plan during the first week of December, with a goal of closing the deal by year-end.
The two companies have a shared history. FSCC was created in 1990 and originally operated under a management agreement with what was then known as CO-OP Network. In 1999, as chairman of the board of FSCC, Hollen hired Canepa-Bang as president/CEO.
