CINCINNATI — Members who walk into the Harrison branch of Kemba Credit Union see this city's oldest firehouse alarm bell on the entrance wall, an antique fire extinguisher in the waiting area, and a 1950's fire alarm by the offices.
Those memorabilia items, and the Firefighters sign outside, let members know that Cincinnati Firefighters CU is alive and well, and working through Kemba. KCU absorbed Cincinnati Firefighters in October 2005, and has allowed it to keep its name and run as a division of Kemba.
The philosophy of Kemba, according to CEO Stephen Behler, is that when a small credit union with a strong culture merges with a larger CU, allowing it to keep its name can be a wise business decision. And Kemba has proven that philosophy pays off. Since the merger, Cincinnati Firefighters has increased members by 25%, deposits by 50%, and has doubled its loan portfolio.
The size and the culture of the credit union being absorbed have a critical impact on the decision to keep the name the same, explained Behler. "Cincinnati Firefighters is a very cohesive group," he said. "Firefighters take a great deal of pride in what they do. So it was very important to keep this group of members together, and it has paid off for Kemba."
CFCU's name was slightly modified to Greater Cincinnati Firefighters, a Division of Kemba Credit Union. But had the CU's name been switched to Kemba, Behler believes that many firefighters would have left. "They are a tight unit and would not feel any ties to Kemba," he said. "Their loyalty is with Cincinnati Firefighters."
To emphasize Kemba's commitment to its new group, the small two-branch operation was given a new location to replace one of its offices. The new facility, that includes the memorabilia, is located central to where many firefighters live and work.
It's the first time Kemba has allowed a merged credit union to keep its name. Behler said Kemba would not have permitted the $60-million Cincinnati Firefighters to do that had it been much smaller and not had such a tight member bond. Kemba performed an analysis that indicates that for the $450-million KCU's size, to permit a merged credit union to keep its name, the CU has to have at least $40 million in assets.
Determining Factors
"You have to determine if the credit union you are acquiring is big enough and generates enough income-or if you can grow it to the point where it is making enough money-to pay for the infrastructure to keep it going," Behler said. "There is a cost to doing this."
While Cincinnati Firefighters is now on Kemba's Symitar data processing system and there are no duplication of internal functions, such as two marketing departments, Behler acknowledged that Kemba has to maintain two websites, two newsletters, allow for some marketing differences, and support additional products. Cincinnati Firefighters kept its core products - like a checking account and debit and credit cards - and added the full line of Kemba services to the new division. Behler explained Cincinnati Firefighters was looking for a merger partner so it could offer more services to its members.
Cincinnati Firefighters' CEO, Ruth Ann Miller, stayed on in an advisory role for two years, and Behler said that was very important to successfully blend the two credit unions.
"We had to learn what to expect from a firefighters credit union. We were very good at the retail side, but knew very little about what a firefighters' credit union is all about."
'A Great Decision'
Since the merger, only one of the 14 employees from Cincinnati Firefighters is no longer with Kemba, Behler shared, and all of the directors have remained as part of an advisory board. One director sits on the Kemba board.
"It's been a great decision," Behler said about keeping Cincinnati Firefighters as a division operated by Kemba Credit Union.
At press time Kemba's capital ratio was 13%, ROA 1%, assets were up 10.7%, and loans up by 7.2%.
"The move has contributed to those results. I'd never change their name," Behler said.
