The Technology Lessons Learned During One Merger
Merger fervor is running high, with credit union IT departments pulling strings to get vendors on board under aggressive deadlines.
"Working back from the hard date of Oct. 1 was the biggest challenge of our purchase and assumption," asserted Stephen Drosnock, chief technology officer at First Commonwealth FCU, which won a purchase and assumption bid in July to join with the former $36-million Nor-Car CU of Easton, Penn. "There was a lot of intense pressure to get the work done."
Many credit unions may be feeling the vise of tight merger deadlines-the NCUA approved 64 unions in the first quarter this year and more than 326 mergers in 2004.
First Commonwealths was under NCUA's thumb during the Nor-Car acquisition, said Jo Ann Broderick, First Commonwealth's CEO. The NCUA wouldn't allow the CU to contact service providers or members before the Oct. 1 conversion date, she said.
"The most complicated aspect was trying to plan ahead for conversions with third-party providers," she explained. "The NCUA never allows advance notice of liquidation, so we couldn't talk to anybody."
But Broderick and Drosnock sidestepped the problem in cooperation with the NCUA by signing confidentially agreements with key vendors, they said.
Nor-Car Credit Union's ATM and debit/credit card vendor, STAR Systems, also gave Drosnock a run for his money as he tried to issue new debit and credit cards to Nor-Car members.
"STAR did not sign the confidentiality agreement with us until too late in the game," Drosnock explained.
Hence, First Commonwealth decided to forego the relationship with STAR. Instead, the 43,000-member CU asked its own ATM processor, CNS, and core system provider, USERS, Inc., to import Nor-Car member data and issue new cards.
Drosnock didn't have to twist any arms at USERS and CNS, he said. "These two vendors were key in making the card conversion happen."
USERS and Drosnock also worked some magic to convert Nor-Car's disparate core processing platform during the three-month purchase and assumption timeframe.
"USERS' Project Management Team really came through for us," he said. "We went through weeks of manual file-checking and testing as we converted the core data. We had to review a sample of individual accounts by hand, making sure that information like loans, cards, homebanking and audio response were put in the right place and in the right format."
How did IT get the job done in less than three months? "Dedicated team members," said Drosnock.
That dedication was fostered long before the merger, he said. "The success of the purchase and assumption is a reflection of how we handle IT services within First Commonwealth on a daily basis. One of our primary jobs is to support the infrastructure, and we do whatever we can to solve problems."
In addition, First Commonwealth carries a big stick with its service providers, Broderick said. "We were big enough and important enough to our vendors to get a lot of good cooperation and move forward quickly."
Before joining with Nor-Car, First Commonwealth had laid plans for upgrades to its audio response and mainframe host systems, Drosnock said.
"Those projects got accelerated," he said. "The size of Nor-Car made it necessary for us to get bigger systems last July and August."
The CU revamped its computer room and electrical configuration to make way for a Hewlett Packard AlphaServer ES-47, replacing the retired AlphaServer 1200, Drosnock explained.
First Commonwealth replaced a 12-line audio response system with a T1 connection and 24 channels to double its capacity, he added.
The Nor-Car Credit Union agreement was First Commonwealth's third and largest merger or assumption, Broderick said.
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