No Place Like NOME-Thank Goodness-As Year-Old Merger Helps CU, Staff Survive

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As some 3,000 municipal employees here brace for layoffs in the wake of Hurricanes Katrina and Rita, they don't have to worry about their credit union-thanks in large part to a merger a year ago.

That's when the troubled $25-million NOME FCU (New Orleans Municipal Employees) merged with the $2-billion GTE FCU in Tampa.

"NCUA shopped the credit union around to credit unions in Louisiana, and no one would take them. Then they checked in Mississippi and Alabama and Texas. And no one would take them," said GTE FCU CEO Wendell "Bucky" Sebastian. "That's when they came to us."

GTE FCU didn't say "yes," right away, he told The Credit Union Journal, instead taking the time to do its due-diligence before agreeing to take in NOME.

"We wouldn't have taken it in if we didn't feel like we could serve their members better than they were already being served," Sebastian suggested. "The members are far better off than they were (prior to the merger). And because of the merger, their credit union never missed a beat during the storms. We had all their data. I won't say there was no disruption. We did have to close the New Orleans locations down. There was maybe a split-second when we considered not reopening [them], but that was it. We are committed to reopening in New Orleans."

A Job Is Waiting

In fact, GTE FCU's New Orleans district manager was preparing to go back to New Orleans last week to see about reopening the branches as the various areas of the city are reopened to the residents and the public. The manager, Sebastian said, was hopeful his home will be inhabitable when he gets there.

Many of the New Orleans-based employees are better off, too.

"We told all of them there's a job here [in Tampa] if they want to come here, and we have told them all they can return to New Orleans when we've reopened the branches there, or they can choose to stay here, there's no pressure either way," Sebastian explained. "We had 27 employees in New Orleans, and 13 of them moved here, and another seven are on standby waiting for us to reopen."

Sebastian said he expects most of the 13 employees who moved to Florida at the CU's invitation likely will stay, even after GTE reopens its New Orleans branches.

"The people who came were those who were in a position psychologically to come, meaning they didn't have elderly parents to take care of or other such ties to New Orleans," he observed. "We happen to be located next door to a Catholic school, and the school came over and offered to take in all of their children for free through the end the year. The Boys and Girls Clubs here made the same offer, as well. For what they have been through, they have had an easy transition-if it can be called that, under the circumstances. I really think most of them will choose to stay, and that's fine. They have an open invitation to go back if they want to, but they are just as welcome to stay."

GTE FCU's employees who weren't located in New Orleans wanted to reach out to their beleaguered co-workers. So, in addition to the CU's efforts to raise money for all of the storm victims, the credit union simultaneously took up a collection for its employees in New Orleans and promptly raised $11,000, which the CU then matched for a total of $22,000. Then, without even having been told what GTE was doing for its affected employees, two of its vendor partners, PSCU-Financial Services and Member Gateways, "spontaneously sent a contribution to benefit our employees," Sebastian related.

Cash Assistance To Staff

"We gave anyone who wanted to come to Florida $250. All employees in the affected areas had $1,000 in their accounts the day after the storm, and then another $5,000 in either time or dollars," he said, explaining that staff outside the affected areas donated 1,600 hours of vacation time to their co-workers in New Orleans. None of this would have been possible had NOME FCU still been on its own. "Over the last 12 years prior to merging with us, NOME had merged in four other small credit unions," Sebastian related. "So, in addition to municipal workers, the credit union also served transit workers and a community field of membership serving the 9th Ward-you know the lowest-lying and most impoverished part of New Orleans, which flooded twice during the storms. It wasn't officially designated a CDCU, but it basically operated as one because it served the lowest-paid workers in the city."

Now, many of those workers are waiting to see if they will be among the 3,000 that New Orleans Mayor Ray Nagin said he may have to lay off as the city struggles to get back on its feet.

Had NOME been on its own, that would have been a major concern for the livelihood of the institution-but that's not a problem now, because of the merger. "We are a $2-billion institution, so that portion of our operation that came to us through our merger with NOME represents about 1% of our size, so we're not worried about our well-being as an institution, we're worried about our members."

And that, Sebastian said, is the way it's supposed to be anyway.

"You see, I have a little different slant on this than most people," said Sebastian, who while he was with NCUA helped establish the National CU Share Insurance Fund. "I believe that you have to focus on the members, not the institution. I know people are worried about the fact that some credit unions in New Orleans aren't going to be able to make it, but that's the totally wrong thing to worry about. What we need to worry about is that those credit union members still have access to credit union services. If that means some of those credit unions will have to be merged, and there's a different name on the door, that's fine, as long as those members still are being served."

That's easy for a $2-billion CU that is in no danger of being merged out of existence any time soon to say, but not so easy for the board and employees of some of those credit unions that may end up having to merge.

"Credit unions will take care of their own. For CU employees who end up being displaced by all this, I hope they will end up as employees of another credit union," Sebastian offered. "If you look at NOME, their members are 10 times better off after the merger, and their employees are 100 times better off. This is a good way to keep credit union services available to members and ensure credit union employees are able to keep working for a credit union."

And strangely enough, the debacle faced by New Orleans and the Gulf Coast offers up a unique opportunity, Sebastian suggested.

"One of the biggest challenges for the movement as a whole over the next 10 years is going to be attracting and keeping good people," he commented. "While in other industries we're seeing some poaching of manpower because so many people were displaced by the storms, I would expect to see credit unions offering to let affected credit union employees work for them until they are able to go back. We are always looking for good people, and I know other credit unions are, too. I hope that credit unions will reach to those people who had been working for a credit union to keep them in the movement."

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