Credit Union Magazine - January 2009 - (Page 32)

lluamembers w x ouldOnly growt q ls b uick ﬁll sta have i mad y lend a q easil e tAll ’s he d y uTHE SEVEN R’s OF MERGER MOMENTUM dea the ade em h hav 1 2 3 4 5 6 7 Credit union executives involved in mergers offer this advice to create smoother transitions: Reassure employees. Many continuing credit unions retain all employees, so tell employees their jobs are secure although they may change. Redeploy talent. Reassigning talented employees or managers can help a credit union establish new services such as ﬁnancial education or business development. Reach out to members. Use mail, e-mail, or the telephone to inform members. Give added attention to high-value members. Re-examine operations. Adopt best practices for your credit union without considering which merger partner brought them to the table. Restore momentum. Mergers may derail strategic initiatives, so redirect attention to strategic goals as merger demands taper off. Rally your team. Emphasize projects that bring people together. Directions Credit Union, Sylvania, Ohio, sponsored an “Extreme Makeover” episode to enlist employees in a common cause. Remember your history. Honor the contributions of merged credit unions and their members. Remember, you’re building on their success. size decide to merge, the process becomes more complex. “With two comparably sized credit unions, it’s a whole different ballgame,” says Barry Shaner, president/ CEO of $500 million asset Directions Credit Union, Sylvania, Ohio. Shaner’s $185 million asset Toledo Area Community Credit ‘You can’t go into Union merged with the [a merger] saying $135 million asset Empire Affiliates Credit Union, that we know how Mansfield, Ohio, in 2005 $135 things are done and with Shoresmillion asset Erie Credit and this is how Union, Maumee, Ohio, you’ll do it.’ last year. The combined organization changed Barry Shaner its name to Directions 32 CREDIT UNION MAGAZINE ÑJANUARY 2009 Ñcuna.org 3 Credit Union in April 2008. All three credit unions had a wide range of services, including ATMs, debit cards, and home banking access. Combining many services multiplies the issues credit unions must deal with to consolidate vendors, back-office processes, leases, and other arrangements. “That’s much more complicated than doing a small merger, where basically you can put everything on the books by hand and it’s fairly simple and straightforward,” Shaner says. In addition, “when you merge with a small credit union, culture issues are masked because the culture of the smaller credit union, intentionally or not, basically gets swallowed up by the larger organization,” Shaner notes. “But when two organizations are of comparable size, that doesn’t happen.” Before the merger, Erie Shores focused on remote services while Toledo Area Community emphasized branch transactions. Combining those approaches required “give and take.” “You can’t go into it saying that we know how things are done and this is how you’ll do it,” Shaner says. “You have to be willing to listen to the folks at both organizations that are now part of you, and learn from them.” It’s a quick ﬁx. Plan to spend six months to a year combining both board and dayto-day operations and resolving problems. “The myth is that the merger is perceived as something that’s going to fix things,” says Hank Barrett, president/CEO of $300 million asset Valley First Credit Union, Modesto, Calif., which has completed three mergers in the past decade. “It brings in a whole new set of variables. You have to be able to deal with the processes, premerger and postmerger.” Expect to spend time going through policies, contracts, data processing systems, and more. Overlapping services may linger because some electronic funds transfer (EFT) contracts run for three to five years. CEOs ruefully report learning about new contracts or leases weeks or even months after a merger is complete. Equally important, expect people to clash as http://www.cuna.org

Table of Contents Feed for the Digital Edition of Credit Union Magazine - January 2009

Credit Union Magazine - January 2009 Contents On My Way Leading Edge Spotlight President's Perspective Game Plan Washington Insider Wright Stuff Executive Suite Reverse Mortgages Come of Age Six Merger Myths Leading-Edge Lenders TwentyFour/Seven Bankruptcy Compliance Tools of the Trade Trendlines Rates & Ratios Council Corner Shoptalk System Scan Marketplace Branching Out Advertiser Index

Credit Union Magazine - January 2009

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