WINSTON-SALEM, N.C. — A credit union here partnered with a CU in Pennsylvania in an unusual move.
Clearview FCU, based in Moon Township, Pa., is set to
Having converted to a community charter exclusively serving southwestern Pennsylvania a few years ago, Clearview's Tar Heel State branch was essentially limited to only adding family members of existing members.
"We had to be realistic about the long-term future of the branch," said Clearview CEO Mark Brennan.
While Clearview was evaluating the future of its North Carolina members, Winston-Salem-based Piedmont Advantage was looking for new ways to grow. The two credit unions were aware of one another through a mutual history of serving the airline industry, and PACU CEO Judy Tharp approached Clearview about two years ago with the idea of spinning off the members and the branch.
"It was a good surprise," said Brennan. "It fit right into what our future plans might have been for that location.... It helps our members and keeps our employees there."
According to PACU's VP of development, Belinda Wilson, the intervening two years have been spent jumping through the necessary hoops, including finalizing the agreement between the two credit unions, working with regulators — including NCUA and state regulators — and pitching the plan to Clearview's North Carolina members.
"This is not done very often in credit union land, and it is much, much more challenging than a merger, because you're not moving every single thing over — just a portion," explained Wilson. "We worked with regulators up front to find out what their criteria was and what they were looking for a successful application of a spin-off."
Biggest Challenge
The biggest challenge, of course, was the members, and Brennan said it was a difficult sell with some, because many had been longtime and loyal to Clearview. A booklet was prepared for Clearview's members impacted by the spin off, and the credit union held a meeting in Charlotte.
"We did a lot of individual conversations with them as well," said Brennan. "But we told them the alternatives — one of the long-term alternatives was obviously that that branch wasn't going to be able to sustain itself and we'd have to look at possibly closing it."
In the end, the members voted in favor of the move, and Brennan said that Clearview has not lost any of its North Carolina members as a result.
With the vote finalized as of Sept. 10, Wilson said that the transition will officially take place on February 28. Neither CU would reveal the costs involved in the process, but Brennan emphasized that "this honestly never was a money-saving decision. It was really more 'How can these members be serviced?'"
However, Clearview is set to save some money just by the reduction of staff and facility costs, and the CEO said those savings will likely be reinvested in "continuing to invest in technology and staying up-to-date with a lot of mobile opportunities for our members. We're not looking to reinvest in adding any more branches in the southwestern Pennsylvania area at this time, because we have a pretty good network of 17 branches locally."
Similar Cultures
Because both CUs historically served the airline industry, both Wilson and Brennan said the pair have similar cultures, so there has not been much of a cultural shift aside from educating the new Piedmont Advantage employees on the CU's product lines.
Clearview's CEO said that while the spin off has worked well for his CU, it is not something he expects to be adopted wide-scale throughout the credit union movement.
"You don't see a lot of it because there hasn't been a lot of it," said Brennan. "We may be a bit unique because we went from being a national field of membership down to a regional field of membership, and we just happened to have branches... in a lot of different locations. I don't see an onslaught of that.... I don't see a big rush of that happening, but if somebody has the uniqueness of going from a national field of membership to a regional one, there might be some opportunities like that."
Piedmont Advantage's Wilson, on the other hand, noted that as credit union fields of membership evolve, more CUs may undertake similar spin-offs "as a means of cutting expenses for credit unions that can no longer have growth" and as a way to grow CUs in other marketplaces.
