MISSOULA, Mont.-Members of $62.2-million Montana First Credit Union last week rejected a proposed merger into $432-million Horizon Credit Union, based in Spokane Valley, Wash.
In the weeks leading up to the merger vote, local media had featured coverage of members, including former board members, expressing concerns that Montana First planned to merge with an out-of-state based institution.
MFCU held informational meetings about the merger with members, but it was not sufficient to overcome objections or to get buy-in from at least some members that the merger would allow it to invest in expanded technology, including mobile apps it currently doesn't offer.
"We had a membership meeting, but many had voted prior to the meeting. Many of the nay-sayers who were in attendance said they changed their minds after hearing the positives, but it was too late," said Montana First CEO Chris Sisco, who said she is unsure of the board's next steps, but it's likely MFCU will hold a series of town hall meetings to disseminate more information.
"The people who came to the meetings and expressed negativity were an older demographic and do not see the value in technology," she said. "We are in a wait-and-see mode. If the merger goes forward it would be more measured and we would do a more robust job of using a variety of media to get the information out to the members. I don't think we did a bad job, but I think the process could have given more opportunities for people to get information."
Sisco lamented that a letter sent to members that included an explanation of the merger plan and FAQs did not seem "to be enough."
In the first week of November 2011 management sent members a general letter and a list of frequently asked questions, "which did not seem to be enough information," Sisco lamented.
Eighteen percent of Montana First's 9,700 members voted, with a margin of 247 of those votes being cast against the merger.
Sisco noted MFCU did not pursue the merger out of financial need. Its Sept. 30, 2011 call report showed net income of $226,396, excluding assessments. It paid $136,920 to the Corporate Stabilization Fund, leaving it with net income of $89,476.
In its Sept. 30 Call Report, Horizon reported $2.8 million in net income before assessments. It paid $890,667 to the Corporate Stabilization Fund, leaving it with net income of $1.9 million.
"It was a strategic merger," Sisco said. "Our membership is contiguous with Horizon's in Idaho. We thought the merger would serve our membership better, because Horizon is a bigger credit union and has several technology options available."
Other positives, according to Sisco: the two CUs were a "good culture match," as Horizon serves small to medium markets and focuses on service. Horizon guaranteed the smaller CU's branches would have kept the Montana First name and all jobs were secure. One of Montana First's directors was guaranteed a position on the Horizon board, with the number of seats based on comparative asset size.
