Merging a Credit Union but Retaining its Identity

A student-run credit union could not offer the high-tech products demanded by today's university students. A community credit union took it over, retained its identity and gave it the technology it needed.


In 1984, a group of students and professors at the University of Missouri-Columbia (MU) founded the Missouri Student Federal Credit Union (MSFCU) because they were unhappy with the quality of services offered by area banks. Since its inception, the credit union has operated under the philosophy of “students helping students” and is one of a handful of student-run credit unions in the United States. The credit union provides valuable internship experiences for about 40 students a year, who are responsible for running all aspects of operations. It developed a reputation of being fairly progressive, offering products such as free checking before many area banks.

The students were proud of their credit union, and its 600 to 700 members were always extremely loyal. But in the late ‘90s, technological advances began to change the financial services environment. Students entering the University wanted electronic convenience services such as online account access, bill pay, debit cards and credit cards. Alumni were looking for competitive rates on home equity products and mortgages. Unfortunately, MSFCU could not afford the technology needed to offer these services, and they lacked the experience and manpower to manage them. They also lacked an effective marketing budget and expertise to compete successfully.

Taking the Leap

Across the state in O’Fallon, Mo., West Community Credit Union discussed in a planning session how to better understand and serve Generation Y. CFO Jason Peach remembered his good experiences working at MSFCU during his undergraduate years at MU. Through the years, Peach maintained contact with MSFCU President Christos Cossyphas and knew the credit union was struggling to stay competitive and grow. Peach saw the situation as a win-win opportunity for both credit unions.

“Part of the challenge we had was determining how to encourage younger generations to join our credit union,” recalled Peach. “MSFCU seemed like a great place to start. And, because they needed services we could provide, it seemed like a perfect fit.”

After several conversations with Cossyphas, it became clear that a partnership could be in the making and could potentially be very positive. Of utmost importance to both Cossyphas and managers at West Community was maintaining the foundation upon which MSFCU was built. Both sides wanted the credit union to retain its educational mission of being operated by student volunteers. It was also very important that MSFCU remain independent and autonomously run.

A Partnership Forged

On July 1, 2006, MSFCU officially merged with West Community Credit Union. Unlike traditional mergers where the smaller credit union often loses its identity to the larger, MSFCU continued to operate autonomously but with many new benefits the larger credit union could now help MSFCU offer its members.

Because of the new state charter, a name change for MSFCU was necessary. The new name, Tigers Credit Union, was chosen to strengthen the brand and appeal to the loyalty of students and alumni. West Community worked closely with Tigers to create a new logo, collateral materials and a marketing plan, signifying a commitment to strengthening the brand and ensuring Tigers maintained its own identity.

Today, Tigers Credit Union remains a student-run organization serving the University of Missouri-Columbia community, as well as both Stephens and Columbia Colleges. An advisory board of directors, as well as both supervisory and credit committees composed of students, oversees the various functions of the credit union, including finance and marketing. The students maintain an open dialogue with employees at West Community, drawing on their expertise and experience. This dialogue evolved into an informal mentoring program between the two institutions. The mentoring aspect continues to grow and provides a valuable element to the student internship experience.

Strong Results

“I am proud that the merger has allowed us to do a better job for our members,” said Cossyphas, whose title is now President of Tigers Credit Union. “Much of our membership has been loyal since the beginning. When we weren’t able to offer the best services and rates, I felt we were not adhering to our mission. I’m very happy to say this has changed and our members currently receive improved levels of service and superior products. ”

Tigers now offers the services that today’s tech-savvy students demand, such as free online account access, bill pay, instant-issue debit cards, high-rate money market accounts and credit cards with attractive 0% balance transfers. Tigers was also able to lower loan rates significantly and offer risk-based pricing. The membership has responded positively — the number of accounts, loans and assets have all experienced good increases.

“When we entered this partnership, we expected our gains would be long-term,” said Gary Hinrichs, President of West Community Credit Union. “But, in less than one year, we have been very happy with the growth of Tigers as well as its revitalization.”

So while many in the credit union environment remain wary of mergers, Tigers is a classic case that a merger can be a positive development for both organizations and memberships.