Four Colorado CUs Explore Benefits Of Being One
Four northern Colorado credit unions are in the "preliminary" stages of a possible merger, according to spokespersons for the credit unions.
If the plan succeeds, it will create a $638-million credit union.
Tom Evers, president and CEO of Premier Members FCU, told The Credit Union Journal the discussions are in the "talks and due-diligence" phase. "We don't have board approval to go beyond that," he said.
The $224.7-million Premier Members FCU, headquartered here in this university town north of Denver, already shares credit union service organizations (CUSOs) with the three nearby credit unions with which it is discussing a merger: the $67.8-million Colorado Central CU, based in the Denver suburb of Arvada; the $52.9-million Horizons North CU of Northglenn, and the $291.7-million Norlarco CU in Fort Collins. The four credit unions jointly participate in a business lending CUSO and an indirect lending CUSO. All but Horizons North have a shared branching CUSO, Evers said.
"Talks have been on and off for the last three months," said Evers. "We know if we proceed, the merger would need to be done by year end, due to the (FASB) accounting change that would affect pooling of interests after Dec. 31."
Brad Harvey, president and CEO of Horizons North CU, said the CEOs of the four credit unions have been having regular meetings. "We have a tentative timetable. Our goal is to have the paperwork in position to have a member vote by Aug. 1. That gives us a little wiggle room to have everything wrapped up by Dec. 31, but it still is a pretty ambitious schedule."
Not finalized at this point, according to the CEOs of the four credit unions, is who will be CEO of the one, combined credit union, and what will be the titles and responsibilities of the other three executives. Other personnel decisions must also be made.
Evers said the concept of the four-way merger is appealing to Premier Members FCU's management because it would mean more coverage for its members. "Between the four of us, we have 16 branches with no overlap. That is the main attraction, plus the other advantages that come with size," he said.
Horizons North CU's Harvey said his credit union likewise is looking for a way to help its members. "We are a single-location credit union and we would like to open one or two more branches, but that is not economically feasible right now," Harvey said. "If this merger happens, it would give our members 15 more branches to transact business."
Mike Litzau, CEO of Colorado Central CU, said the four credit unions have established relationships in different areas, including shared data processing. "We started saying, 'Maybe there is a way to bring more value to our members through consolidation.' So, we started analyzing that. We believe there is a potential to enhance convenience for our members. We have two facilities, and both are in the city of Arvada. The merger would give us branches across northern Colorado."
According to Litzau, the merger would bring efficiency through improved economies of scale. He said it would bring value to the bottom line, and also increase the number of services Colorado Central could offer. Currently, his credit union does not offer mortgages directly, and has limited investment and business services products.
"We partner with a mortgage company and we partner with a broker-dealer company, and we don't believe it is at the level our members would like," he explained. "Also, we don't do well with our business accounts. We have a few, but we don't give them everything they would like us to."
Chuck Mabry, president and CEO of Norlarco CU, said the proposed merger currently is in the "research phase."
"It all depends on member benefits. We are assessing the benefits and value to the members of all four credit unions, and we should be zeroing in on the answers fairly quickly," he said. "If there is no benefit to the members, it makes no sense to do it. If our four boards of directors decided there is, then we will go forward."
Mabry believes the combined CU would give much broader branch operations for members of all four credit unions. "There would be more convenience to members and a lot of other potential benefits. Our gut tells us it is there, but we need to put substance to that gut feeling."