One Idea Goes Pretty Much As Planned, Another Does Not

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When you turn the page–no, not yet–you’ll find an opinion piece from David Bartoo analyzing what 2008 holds for credit unions and mergers.

Mr. Bartoo writes, “Mergers are rarely a result of poor financial performance and short-term trends but rather a combination of negative long-term sustainability trends, emotional concerns and external changes in the market.”

And sometimes, they just come about because every time you show up at a local school event or civic function you find yourself running into the CEO of another credit union. That was the case in Minnesota, where two credit unions, the $115-million Anoka Hennepin Credit Union and the $44.5-million Anoka County Credit Union, are now one, effective Jan. 1. Both CUs operate in counties of the same names north of Minneapolis.

Jeffrey Claussen, CEO of Anoka Hennepin CU, which is the surviving entity, said he had long had a friendship and been a golfing buddy with Paul Dammann, CEO of Anoka County CU. When not on the course, Classen said he often saw Dammann at the very same community functions where both were representing their respective credit unions. That naturally led to discussion of the need for just one person to make such drives.

“We talked about (a merger) for about a year and a half,” said Claussen. “We were doing so many of the same things in the community and in the schools. We realized we could do twice as much together as we could apart. It just made sense to combine resources.”

Maybe it’s that sturdy Scandanavian stock we hear so much about in Minnesota or just those long nights around Lake Woebegone with few distractions, but the two credit unions handled the merger themselves without retaining a consultant to guide the process. “We did it ourselves,” said Claussen. “We didn’t feel like we needed any help.”

But what about the bugaboo so many of those consultants are always citing in failed mergers: “culture conflicts.” Claussen said he already had some cultural insights from his VP of branch operations, who formerly worked at, you guessed it, the other credit union. “Our cultures were very similar,” he said. “We believe the same things about how to serve members. Even our colors were similar.”

The two CEOs pitched the merger proposal to their respective boards in May of 2007, each of which signed off on it, and the membership vote at ACCU was completed by October. Regulatory approval followed.

The two credit unions are now operating under the Anoka Hennepin umbrella, with the former Anoka County CU branches operating under the new name but with their location added, such as “Anoka Hennepin Credit Union at Circle Pines,” etc. There are eight branches in all, with Dammann now the senior vice president of member service at the combined shop.

One of the touchiest issues in any credit union merger is the fate of the board members. In the case of volunteers at Anoka Hennepin CU and Anoka County CU, all survived–for now. The merged CU is operating with a board of 14; plans call for whittling that to nine by 2009.

For those who collect a paycheck from the credit unions, there have been no lay-offs. Instead, said Claussen, as the merger talks proceeded he and Damman avoided hiring anyone new, knowing the two staffs would eventually overlap. “It’s worked out pretty well HR wise,” he said.

Where the two credit unions have found economies of scale (the motivation cited in most mergers), has been in marketing expenses and technology. Some of the marketing dollars will be redeployed toward opening branches inside local schools, although Claussen said local bankers are opposing that move. Apparently Minnesota’s bankers feel school kids might as well learn early about “subtraction,” as in fees being subtraced from the kids’ balances.

On the technology side, Anoka Hennepin Credit Union has migrated the home banking and bill pay functions at Anoka County to the system it operates in-house, but will leave the ACCU system up and running for three months for archiving purposes. Anoka Hennepin runs on a system from CUSA.

There is one change still to occur, with Claussen saying a new name and branding are planned, but that isn’t likely to occur until next year.

* You’ve probably seen or heard the advertising from LifeLock, the identity protection service that has partnered with some CUs, in which its CEO publicly advertises his Social Security number. The point of the ads, which are certainly striking when you first hear or see them, is to hype just how secure the LifeLock solution is. But a similar strategy by another person hasn’t been so effective in the U.K., where there has been a data breach involving 25 million people.

TV commentator and columnist Jeremy Clarkson published all his bank account information, including account numbers, sort code and hints about his address, to make a point that the data could not be used for fraud. One person took him up on the challenge, and made a $988 donation to a charity from his account in Clarkson’s name. “I was wrong and have been punished for my mistake,” Clarkson wrote.

Frank J. Diekmann can be reached at fdiekmann (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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