The Steps One Small Credit Union Took Before It Chose A Merger Partner

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When one small credit union here disappears in a merger this month, it won't be because it lost control of its destiny.

Rather, the merger will conclude significant homework done by the small CU, which has also taken the unusual step of ensuring members get a payout from some of the capital that is moving to the new credit union.

The $8-million Valley Health Credit Union will soon be part of the $60-million Lakeview Credit Union. In 2004 the board at Valley Health began exploring merger options as the result of four factors: a membership that was declining, it believes, in large part because it couldn't afford many of the technology options members want; limited profitability due to its small size; high operating costs, and pending state legislation that might limit future mergers.

With a merger in mind, VHCU President Roger Fischer said the merger subcommittee considered every credit union in a 40-mile radius and mailed letters to four of those CUs seeking a proposal. Three responded, including Lakeview, which serves 7,800 members (VHCU has 1,800 members.)

"We are very well capitalized," Fischer said of Valley Health CU, which reported 12.12% capital at mid year.

But, Fischer said VHCU doesn't have a website, excluding online bill pay, e-statements, home banking and other services members routinely expect from a credit union.

"Those are all things the members will have now," said Lakeview VP Lisa Hintz.

In choosing which of the three credit unions with which to merge, Valley Health CU hired "mystery shoppers" to check out each of the respective operations. Apparently Lakeview CU frontline staff impressed the mystery-member sufficiently to spur the merger action.

"I didn't know about that until the night of the meeting," Lakeview President Patrick Lowney said. "I thought it was kind of cool. I've never heard of that before."

Office Visits

VHCU merger sub-committee members also visited the three remaining credit unions and asked tellers to change a $20 bill or to get coins for the parking meter. Fischer said VHCU wanted to get first impressions of each CU branch layout, whether employees greeted them when they walked in and simply to learn if they were friendly or not. Fischer, a 35-year CU veteran in the area, didn't visit Lakeview Credit Union, as he knew too many employees. But he did make a call to another finalist CU branch and requested a roll of new state commemorative quarters, which he collects as a hobby. While he did get his roll of quarters, no one asked for identification to ensure the member-request was going to the proper person.

Hintz said the VHCU staff and members had a normal amount of apprehension that comes with any merger. VHCU employees will now work for Lakeview CU, which in turn will keep the old VHCU office open. Valley Health members wanted to keep the employees they've become accustomed to and Lakeview staff assured them at a special merger meeting that all staff would remain after the merger was complete.

"That statement drew applause," Hintz said.

As a reward for the loyal members of VHCU, Fischer said a patronage dividend is being paid to members who had accounts before December 2004 when merger plans became known. Fischer said 2.16% of the aggregate amount of member accounts would be paid out as a bonus. For example, if a member had combined accounts with total balances of $10,000, the extra dividend would be $216. Fischer said the dividend would be paid from the reserves being transferred to Lakeview CU for the merger.

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