Ask Chuck: Small Credit Union Advice from the CUinsight Community #7
Chuck Cockburn travels across the United States coaching small and mid-size credit union CEOs on how to create a foundation for long-term success. Submit your confidential question to Chuck by emailing AskChuck@CUinsight.com.
Dear Chuck:
I see a great opportunity for our members, community and credit union. The headquarters of a peer credit union of similar size is located one block from our headquarters. The CEO is slated to retire in one year and there is not an apparent successor. We both have community charters, serving the same people in our city. My impression is that the elimination of one branch is an immediate expense reduction that benefits both memberships without reducing service, there are many more. How do I go about approaching the credit union to introduce the idea that everyone can benefit if we merge? I’ve never been involved in a merger before. What other insights can you share to support our success?
Signed,
Merger to Benefit Members ($120 million in assets)
Dear Merger to Benefit Members,
Before approaching the other credit union, I would determine if there were any obvious roadblocks to a merger and I would discuss the issue with my board. Examples of roadblocks include: poor financial ratios and/or trends and incompatible corporate cultures. Communication with your board is essential because they need to favor a merger and they will help set the parameters for negotiations. For example, which credit union is the survivor and how will board positions be determined.
If your board gives the O.K. and sets the board parameters for negotiation, you are now ready to approach the other CEO. In some instances, the board may want a board member to be involved in the preliminary discussion.
Finally, I have a few insights on the keys to a successful merger “of equals”. The main negotiation points are as follows:
- Which credit union is the survivor and will the other credit union retrain its name for brand and marketing purposes?
- How many positions on the new board will each credit union have?
- Who will be the CEO of the merged credit union and what happens to the other CEO? (different position, supplemental/early retirement, etc)
Keep in mind that all decisions should be made in the best interest of both memberships.
Chuck is the President of Credit Union Strategic Planning, leading the Net Worth Restoration, Field of Membership Expansion, Board Governance and Small Credit Union CEO Mentorship Programs. Chuck’s 25-year CEO track record (and 40 in the business) has been to profitably grow credit unions while significantly improving service and morale. Chuck’s coaching resulted in eight prior direct reports becoming credit union CEOs.
