Potential credit union mergers have stalled in some instances when the two organizations could not decide which of their CEOs would lead the combined company. That will not be the case in the Michigan merger of Rivertown Community Federal Credit Union and Allegan Credit Union.
Kris Lewis is already CEO of both institutions.
Earlier this month, Rivertown Community members voted in favor of the merger. With all approvals now in place, Rivertown and Allegan will be legally combined effective Jan. 1.
Lewis, who has been the CEO of the $83.6 million-asset Allegan since 2015, found out in late 2020 that the $77.2 million-asset Rivertown was in need of a CEO and was also open to discussing mergers.
Due its small size, Rivertown, which is based in Grandville, concluded that it could probably not attract the caliber of CEO that would give the credit union the progressiveness or the growth it was going to need to be successful.
"So we did a shared services contract," Lewis said. "Essentially my salary was split between two companies, allowing the organizations to share that resource."
Lewis took over as chief executive of Rivertown in February of 2021.
He said the seeds for such an executive-sharing arrangement were planted a few years earlier when Allegan hired a new CFO.
"I looked at him and thought, I've got a billion-dollar CFO who's working for me, and it's just too much caliber for me to hoard," Lewis said.
So he started a credit union service organization called MiCUSO, which facilitates the sharing of executives, including CFOs. Allegan's CFO now also works for two other companies.
After their combination, Rivertown and Allegan will rebrand as Ignite Credit Union, but the two credit unions will keep their own names as divisions of Ignite.
"The beauty behind that is we're sharing resources, we've got teams that are shared, we've got economies of scale being built because we have the same core and we're going to get our [credit] cards and all that stuff underneath the same umbrella," Lewis said. "And so we'll be able to operate as a much larger organization, but [from the perspective of] a member we'll still feel local."
Lewis said there is no shortage of challenges for sub-$100 million-asset credit unions today, including the costs of compliance and technology. Lewis initially had second thoughts after taking over Allegan and realizing what he was up against.
"I kind of regretted it at first, but as you start to peel back the onion layers, understanding how it worked, it kind of got really fun to operate a small credit union," he said.
And both Allegan and Rivertown have performed well of late.
Rivertown Community earned $450,000 in the first nine months of 2022, a 194% increase compared with a year earlier, according to call report data from the National Credit Union Administration.
Allegan earned $2.1 million in the first three quarters of the year, a 255% increase compared with a year earlier.
Lewis said more credit unions could be added into the Ignite Credit Union mix to provide additional benefits. He plans to meet with other credit unions who see what Ignite is trying to build and who could potentially be a part of it.
"Small credit unions can thrive, and if you're progressive and do the right things, I think there's opportunities for small credit unions to have success in the world that we exist in today," Lewis said.
