Good Neighbor CUs Get Neighborly
After years of planning and discussion, 12 State Farm Insurance affiliated credit unions have applied to merge into what would create a CU giant with nearly $3 billion in assets.
If approved by the NCUA, the credit union would be headquartered here at what is now State Farm Great Lakes CU.
SFGLFCU CEO CEO Tom DeWitt said the new CU will be called State Farm Federal Credit Union and reflects a logical step in streamlining logistics, products and services, plus providing service to members in all of the company's regions. DeWitt, who will become CEO of the combined operation, said the $654-million State Farm Great Lakes is the logical location for the combined CUs' headquarters, as it is located within State Farm's corporate offices. "We are the oldest and the biggest. We were the first charter in 1936," he said.
As a prime example of immediate benefit to the membership under the proposed merger, DeWitt said State Farm employees will be able to access the entire State Farm network. With the existing 12 separate financial institutions and fields of membership closed to the respective State Farm region, any employee transferred from one region to another had to close that account and open a new one with a different credit union.
The 12 credit unions are all located in each of State Farm's 12 national districts and will remain so for the time being. DeWitt said there are no plans to change any CU branches or the personnel working at them, and is hoping the merger will be mostly transparent for members. After the merger there are no plans for layoffs. CEOs at each of the credit unions disappearing in the merger will become managers within their respective region. All are employees of State Farm, not their respective credit union.
"We are not changing the configuration at all," he said.
While there will be no layoffs, DeWitt does expect some staff reduction through normal staff attrition. Unlike other credit unions, the State Farm CUs will not face information technology integration issues, as all are running on the same Harland ULTRADATA system. Some had deployed different versions of the solution, and branches will be converted two-to-three at a time, he said.
As a single-sponsor credit union, State Farm doesn't have the ad budget of other multi-billion-dollar CUs, because it only markets to its membership and not the public.
As part of the merger board members will also be giving up their positions. One board member from the 11 State Farm CUs merging into the Illinois-based credit union will join the new board, along with four from State Farm Great Lakes, creating a 15-person board. "We had board members who agreed to step aside," he said.
DeWitt said officials "honestly haven't figured out" how board members of the geographically-diverse CU will meet on a regular, practical basis, but he mentioned video meetings as one possibility. DeWitt said the merger will create three new positions within the CU, with managers running East Coast, West Coast and Central regions and reporting to him. DeWitt said he doesn't expect any regulatory hurdles as no expansion of membership or additional services are going to be added.
DeWitt said if one credit union hadn't offered a particular product (IRA or CDs, for example) to its members, it would be added at that specific location to ensure uniformity of service for all members nationwide.
DeWitt said sponsor State Farm Insurance has been highly supportive of the proposed merger and sees it as an improvement to its employee benefit program. For now, the famous State Farm's good neighbors will seek to centralize its operations and focus on efficiency.
"The more we can gain efficiency, the better we are for our agents and company as a whole," he said.
DeWitt said he's hoping for NCUA approval around 30 days after last week's application and that the merger could be complete by the third quarter of 2006. A 13th State Farm credit union in Canada is not involved in the merger.
GOOD NEIGHBOR CUs GET NEIGHBORLY
The State Farm CUs being merged into one include:
Name Location Assets
State Farm California Bakersfield, Calif. $375M
State Farm Central Columbia, Mo. $245M
State Farm Florida Winter Haven, Fla. $185M
State Farm Great Lakes Bloomington, Ill. $654M
State Farm Great Western Tempe, Ariz. $152M
State Farm Heartland Lincoln, Neb. $171M
State Farm Mid-America Newark, Ohio $167M
State Farm Mid-Atlantic Frederick, Md. $207M
State Farm Northeast Ballston, N.Y. $236M
State Farm Pacific Northwest Du Pont, Wash. $161M
State Farm Southern Duluth, Ga. $179M
State Farm Texas Austin, Texas $223M