Mergers are a pretty sore subject in the credit union industry. A nasty word we don’t like to hear, a boogyman meant to spook your credit union, and with good reason. Mergers are a huge sign of the shift in the industry as the number of credit unions has shrunk. That said, I do believe that mergers, when vetted properly, are a positive project for the right organizations.
But when not vetted properly or not consistent with the cooperative customer-owner fail safes, mergers become the tools of professional agents who can find it very easy to hijack organizations and control member capital for their own gains.
Recently we saw the story of two Pennsylvania credit unions that were undergoing their own merger drama — the leadership of a smaller, local credit union had agreed to merge with a larger, regional credit union, prompting the former credit union CEO to start an initiative to block the merger by generating enough member opposition.
Ultimately, the measure passed, and it prompted questions among my network of whether enough is being done to vet and, if warranted, block mergers from taking place, including greater NCUA involvement — a sentiment that generated at least one highly opposed position.
While I shared that person’s concerns that the NCUA would just muck this up even worse, I am equally concerned that the system is now rigged too much for “insider gains” and based way too much on the decisions of way too few people in most credit unions today. New credit union math for closing the deal is just too easy. I’m not suggesting that was the case in this particular instance, but the rewards in these kinds of transactions are coming way too close to the ideas that worried everyone when it came to credit union-to-bank conversions years ago.
Move this stuff to a transparent disclosure so that “agents” have to win the day, not just file the paperwork and count on the apathy of members who forgot they were owners. Especially when the reason they forgot they were owners is because the “agents” did so little to make them recognize that they were. A constant problem we have today, merger projects or not!
I know the minefield I am walking into, but I am also a CEO of a cooperative, and I am constantly challenged that I have too much control versus the customer-owners of our cooperative. And if I truly thought selling to a competitor or even a partner was the best thing for us all, I would have to do a far better job in disclosing the facts, details, and player benefits to my customers-owners (a much broader audience as a % of customers) than most CUs do today. Our clients would demand it. I trust my owners; and we should all trust credit union member-owners too!
Take pride in the way you lead members to consider initiatives and do it in the light of day. Trust the crowd and embrace the hard work to do the right thing. And in many cases that might be a merger. Tell me why I’m wrong.
Mergers Aren’t All Doom And Gloom
I almost ducked this whole topic. And while many might read this and think I am down on mergers, I am not. I believe every CU needs every possible solution available to them to sustain their efforts, drive their value, and protect their communities and their cooperatives. What I worry about now is that there will be an overreaction to good and poorly executed mergers should the practice not be out in the daylight and the effort to be inclusive of all owners thoughts and hopes not be sincere.
It can be hard work to win owners support and consensus, but hard work is the job. I believe for far too long credit unions have discounted the interest of our member’s owner personas as a convenient pass on having to foster and respect member governance from the crowd, not just from the documented board functions. If we vested as much outreach to owners as we do customers I believe credit unions would be far better off. While it is easier to technically excite customers, it is not the only job. And should we only consider customers and internal stakeholders in mergers we will find out that our technical talents do not go far enough to secure our futures.
The ends do not justify the means, when the ends simply lead the world to think of credit unions as bankers in cooperative designers clothing. Do the work, win the day!