It takes one look at the loan, share, and member growth posted by Public Service Credit Union ($232.4M, Romulus, MI) to know something’s up.
At second quarter 2016, the credit union posted better than 50% year-over-year growth in both its loan and share portfolios as well as member growth stronger than 30%. The obvious cause for this effect? A merger.
Click the tabs below to view performance data for Public Service Credit Union.
But not just one.
In 2016, Public Service merged two credit unions and assumed another one — all before April 30. It converted the data processors at its new credit unions by July 1 and rolled out an entirely new mobile and home banking system by October 1.
“It didn’t seem so bad at the time,” says credit union CEO Dean Trudeau. “We were so in the weeds, we didn’t have time to stand back and ask ourselves what we did. By the end, though, we were high-fiving one another that we pulled this off.”
CU QUICK FACTS
PUBLIC SERVICE CREDIT UNION
HQ: Romulus, MI
Data as of 09.30.16
12-MO SHARE GROWTH: 63.6%
12-MO LOAN GROWTH: 49.0%
With time comes perspective, and Trudeau offers five lessons learned from a busy 2016.
No. 1: Be Open To New Opportunities … Whenever They Are Presented
In the beginning of 2016, Public Service was planning on merging Redford Municipal Employees Credit Union in March and Metro Shores Credit Union a month later.
But state regulators had other plans.
In March, the regulators liquidated Veterans Health Administration Credit Union, a Detroit-based cooperative with $2 million in assets and 1,300 members, and wanted Public Service to assume the smaller credit union’s assets and liabilities — in the next five days.
It was an intriguing proposition; however, Public Service’s board and executive team, including Trudeau, were all in Florida at a planning conference. Fortunately, Trudeau negotiated an extra five days, during which the team conducted its due diligence and held the board vote — all from the Sunshine State.
Public Service eventually assumed the liquidated credit union three days before the scheduled Metro Shores Credit Union merger. The hospital in which Veterans Health Administration Credit Union was located has 1,700 employees, and Public Service believes it has the potential to market and cultivate relationships with a great number of those employees.
“I thought it was good for our industry, but I also thought there was opportunity,” Trudeau says.
We were so in the weeds, we didn't have time to stand back and ask ourselves what we did.
No. 2: When Others Zig, Don’t Be Afraid To Zag
According to Trudeau, the attractiveness of the Metro Shores merger is one familiar in the world of real estate: Location, location, location.
Metro Shores operated three locations in an area known as Downriver. It’s a collection of 18 suburban cities and townships south of Detroit along the river of the same name. Up to that point, most Public Service branches were located in downtown Detroit or in immediate suburbs. The move to Downriver added a new market for the community-chartered cooperative in neighborhoods with little local competition.
In Detroit, Trudeau has noticed a trend wherein financial institutions are focusing on growing pockets of the city and its suburbs while disregarding more established, blue-collar neighborhoods such as Redford, Romulus, and Downriver.
In fact, one of the primary reasons Public Service calls Romulus home is to serve the 3,000 employees who work at the Detroit International Airport, which is also located in Romulus.
No. 3: Be Open With Communications
A single merger can be a scary proposition. Credit unions must juggle the needs and concerns of all staff members, consider cultures, and succumb to greater regulatory scrutiny.
Now multiply that by three.
To assuage concerns of incoming staff, Public Service facilitated open communication. It assured incoming employees it had no intentions to lay off workers — it didn’t. If anything, in the long run, Trudeau believed the combined talent would necessitate the creation of new positions that didn’t exist in any of the institutions. For example, the sole job of a newly created data analyst position is to analyze data for different departments and look for opportunities within the credit union’s membership.
Merger On The Mind
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One way in which the credit union could have improved its communication, Trudeau says, was in the handling of information. After the second merger, the credit union received staff feedback indicating they wanted to know about changes even if the credit union thought it did not relate to them.
“Some of our staff said, ‘You didn’t think of me on this change, but it affected me, too,’” Trudeau says. “And they were right.”
For members, Trudeau says it’s important to hit them with communications in multiple channels.
“We ask, ‘Did you get the letter from us about the merger?’” he says. “They say, ‘Yes, but I don’t read those. I go online, and it wasn’t there.’ So we need to communicate it a variety of ways.”
No. 4: Roll With The Kinks In The System
Almost immediately Public Service faced the problem of how to operate two different core systems — its own core and the one used by Metro Shores — for three months until it could complete a conversion.
For those three months, the official name of the merged credit union was Metro Shores, a Division of Public Service Credit Union. During that time, the credit union kept two general ledgers that it merged at the end of each month and tried to match products as best it could.
But this presented challenges.
For example, Public Service offers a high-yield dividend draft account that requires a minimum number of debit card transactions per month for the member to receive the dividend, but those debit transactions tripped up Metro Shore’s core. So, Public Service had to manually open, at Public Service locations, products for Downriver members that Metro Shore’s core system wasn’t able to process. Public Service had to then transfer those accounts back to the appropriate branch after the July 1 core processor conversion.
“There was a lot that was manual about that process,” Trudeau says.
No. 5: Take Care Of Staff Members
Perhaps not surprisingly, at the end of two mergers, one assumption, and two conversions, the credit union’s accountants and remote service staff were exhausted. It was all the credit union could do to keep them motivated and encouraged.
The credit union took staff bowling and randomly handed out gift cards. It also brought in a masseuse, catered lunch, and set up cornhole boards to encourage employees to walk away from their desks. One manager even took employees out for a two-hour shopping spree after work.
“We were trying to think out of the box in terms of doing different things for employees,” Trudeau says.
It was a stressful time, but the credit union made it through. Is it now time to rest?
“I’m talking to another credit union about a merger right now,” Trudeau says. “I said I am in no hurry to make this happen. I’ve got to give my staff a break.”