SAN JOSE, Calif.-Long-distance marriages are becoming a growing trend, as more credit unions from one part of the country are receiving regulators' blessings to acquire struggling institutions based thousands of miles away.
Peoria, Ill.-based Citizens Equity First CU, which took over failed Valley CU here in early 2009, has learned just how tough those arrangements can be, especially over the first several months. CEFCU VP of Lending Keith Reynolds said that credit unions that follow a similar merger path must be realistic about the numerous differences between the merged institutions and the members they serve.
Multi-Lingual Issues
"About half of the people in San Jose speak a language other than English. It's less than 5% in central Illinois," he noted. "And the number of college graduates [here] is a lot greater than in central Illinois. Just from a sociological standpoint there are a lot of differences. We have to communicate that so that management and the board of directors understand it."
Demographics necessitate CEFCU running ads on Spanish television in Santa Clara county-the $4.2-billion institution had never run TV ads in the past, and certainly never targeted a Hispanic population. To ease members of the failed California credit union through the transition, CEFCU developed a transitional "game plan" where the Valley name was initially played up big, with a small reference to CEFCU. The plan going forward is to retain the Valley CU brand in some form, but to have CEFCU's brand become more of a central focus in the San Jose market.
Focus groups with non-members are being scheduled in the California marketplace to "get a feel for what people in that area think about financial institutions in general and CEFCU and Valley in particular," said COO Sandra Andrews
From an operations standpoint, Valley is also still being operated as a division, but that is simply because the credit union is in the midst of a multi-year process of changing its teller system, and merging the new credit union's operations at the same time would make the teller project much more difficult. CEFCU is taking advantage of the extra time it has to merge operations and is "asking all of our departments here to look at how they do business on a daily basis and what we need to do to get their system to link up to ours," Andrews pointed out.
Management at Alaska USA FCU has taken a different approach following its acquisition of High Desert FCU in Apple Valley, Calif., by immediately implementing the new name and brand change.
"The decision has always been consistent with branding the Alaska USA name," SVP-Corporate Administration Dan McCue told Credit Union Journal. "Alaska USA has aligned around a common purpose/mission and values that are core to our service commitment to our members."
McCue added that member feedback to the change has largely been positive, which may not be surprising given the negative publicity surrounding High Desert at the time it was part of the acquisition arranged by NCUA in October, 2009. The $3.9-billion Alaska USA is also working quickly to acclimate employees at its three new California locations to its corporate culture.
"All employees receive ongoing training and development on the brand, values and service. This is measured in each market with an independent market survey on five key questions," McCue explained to Credit Union Journal. "The survey results are reviewed with the employees, senior leadership and the board on a monthly basis. Service to the members is a top priority."
Keeping Brand Consistent
While the physical branches will never look the same, Reynolds said CEFCU is striving to make the most important aspects of the credit union's brand consistent from Illinois to California.
"We believe there are certain things that have application regardless of where you are: great savings rates, great loan rates and the quality of the member service. That's what we've tried to focus on," he said. "In the first year we have spent a lot of time and effort in terms of training on key things that have been successful for us in central Illinois. We had a fantastic loan year last year because what we had in place worked and it was sustainable despite the economic market. What we've found out is that both the employees and our members were receptive to the stability that we bring to the equation out here. That is something we hoped for but now it's coming to fruition. The employees are now confident that we are going to be successful out here."
