PLYMOUTH, Mich. — Detroit Edison CU and NuUnion Credit Union have announced plans to merge and create a $1.5-billion institution to be called Lake Trust Credit Union.
While mergers aren't unusual, one aspect of this combination is: plans initially call for an 18-member board of directors.
Both the $840-million NuUnion and the $690-million Detroit Edison stressed to Credit Union Journal that this is a merger of two equally strong operations, both capitalized near 8.5% and showing slow but steady growth in one of the nation's toughest economies.
Detroit Edison President and CEO Bill Thiess said both credit unions have done a great deal of work since the outset of merger talks to ensure the boards and management teams, "get comfortable with each other. Naturally, at the beginning, we had concerns about how we would fit together."
Based on interactions to date, Thiess is not concerned that the new board's size will hold back the merger's success. "Discussion between boards have never taken the tone of 'I win, you lose,'" said Thiess. "Conversations have been around problem and issue solving. We have to be sensitive (to the potential for board conflict) going forward. But I don't see anything like that happening given that there are so many similarities between boards."
Steve Winninger, president and CEO of the Plymouth-based NuUnion, agreed. "This merger has progressed fast, and during the process we have kept both boards fully apprised. I have worked at a number of credit unions, and with boards that have been dysfunctional. But this is a very functional group."
Winninger acknowledged that it is both boards' intent to eventually reduce to 11 the number of directors at Lake Trust, a name chosen because its field of membership will stretch from Lake Erie to Lake Huron to Lake Michigan. "That is something we can't just wave a magic wand and make happen," Winninger said. "Because we can't disenfranchise members' right to vote."
The two CEOs have also agreed on how they will work together in the new CU. "We will split the title and share leadership," Thiess said. "Steve will be CEO and I will be president."
No employees will lose their jobs, and both CEOs said they expect efficiencies will result from combining data processing systems and backroom operations, and reallocating resources to drive member-centric efforts. DECU is on a Fiserv XP data system and NuUnion is on Open Solutions. A decision on which system will survive has not been made. The combined credit union will have 22 branches.
Both leaders acknowledged that the merger can have an insulating effect against the Michigan economy that is showing little signs of recovery. "When we compared operating expenses to average assets for billion-dollar credit unions to those around $700 to $800 million, there is a consistent 1% difference or more between the two," Thiess said. "That could lead to a savings of $15 million a year."
Winninger added that "we are much stronger together than we are separately. That will ultimately benefit our members."
The merger is subject to regulatory approval and a member vote.
