OSHKOSH, Wis. — A trio of Wisconsin credit unions have decided to merge — a rare event in itself, made all the more unusual in that none of the three are struggling.
CEOs at the three institutions — Best Advantage in Brillion, CitizensFirst in Oshkosh and Lakeview in Neenah — told Credit Union Journal that the move was proactive to ensure the long-term relevancy of all.
"What do we have to do individually as organizations or as an industry to continue to not only survive, but thrive into the future with all the regulatory issues and challenges economically?" asked Kevin Ralofsky, CEO of CitizensFirst CU the largest of the trio with $395 million in assets. "What we found was that we all shared a vision for a completely different concept of a credit union and how it can operate in the future."
Lakeview CU currently has $109 million in assets and Best Advantage has $68 million. The three institutions current serve a total of nearly 47,000 members.
One of the chief reasons behind the merger, added Ralofsky, was a desire to truly collaborate, rather than just pay lip service to the idea or occasionally sharing best practices.
"In a traditional merger you'd see the surviving credit union dictating how everything is going to happen," said Pat Lowney, CEO of Lakeview CU. "In this case, we're trying to put all three credit unions together and take the best practices of the three, or find a best practice that none of us are doing and bring it in and make the best possible organization we can."
In addition to expanding best practices, reducing operating costs for each individual CU and more, the three-way merger will also expand the three credit unions' foothold throughout the region in a way that would have been much more difficult for each CU individually.
Ralofsky emphasized that one of the guiding foundations of the new institution will be a renewed focus on the "Seven Cooperative Principles." Additionally, the three CEOs hope to create closer ties to the communities it serves, and will be creating a department dedicated entirely to working in those communities.
All three CEOs said that the project got a positive response from NCUA and state regulators.
"They were surprised we were doing this and the proactiveness of it," said Lowney. "They're not seeing many mergers of partners coming together because they can." Rather, he added, most mergers take place because at least one of the participants is in financial trouble.
Staff & Member Matters
Discussions about the possibility of merging began years ago, but things won't be finalized until later this year. Ralofsky said that approval from NCUA and the Wisconsin Department of Financial Institutions is expected by the end of April, after which the CU will operate under the CitizensFirst charter but with three separate brands.
The three CEOs plan to operate under the CitizensFirst banner through the remainder of 2014, and will be developing a new name and brand that they expect to roll out in early 2015.
Ralofsky will continue to serve as CEO, with Tammy Williams (currently president/CEO of Best Advantage) and Lowney taking over EVP roles covering innovation and culture and government relations, respectively.
An 11-person board will oversee the credit union, made up of eight CitizensFirst board members, two Lakeview board members and one Best Advantage member. The new institution will also have an enterprise risk management committee that serves as a feeder to the board, and past board members for all three CUs are expected to participate.
While no major cultural shift is expected, Williams said she plans to oversee a combination of a sales and service culture, taking elements of each CU's best practices. She also plans to create a young professionals group across all three organizations.
No layoffs are expected as a result of the merger, though Lowney noted that some people may see changes in their job descriptions as new opportunities emerge in the new combined institution.
"For example, on the regulatory side we have been struggling for a long time with how we handled regulation," said Lowney. "In the past it has been one person takes this part, another takes this part, another takes that part, et cetera. Now we're going to be able to create a regulatory department and bring a number of people into it. We're already starting to mold that together."
The new organization does expect to see some cost savings as a result of the merger, including cutting back on bond costs, internal audit costs and other mandated third-party reviews.
