The Opportunity In An Outlier

A Colorado credit union gained members and loans when it first managed, and then purchased, the Boulder branch of an Indiana-based credit union.


Indiana Members Credit Union is a $1.4 billion cooperative headquartered in Indianapolis, IN. Chartered originally in 1956 to serve the employees of Indiana University Medical Center, the credit union now provides financial products and services to more than 110,000 members. In 2012, it had 24 branches located in and around central Indiana as well as one branch located more than 1,000 miles and four states away in Boulder, CO.

That lone branch piqued the interest of Rick Allen, CEO of Boulder Valley Credit Union ($299.7M; Boulder, CO).

“With all of the branches they have in Indiana and then this one in Boulder, I wondered if they would like to have someone local handle it,” says Allen, whose own credit union is headquartered less than a mile from the branch.

Although he had no indication IMCU was interested in a management arrangement, Allen reached out to senior staff at the Indiana credit union to discuss bringing IMCU’s Boulder branch and members into the Boulder Valley Credit Union fold. Boulder Valley signed a management contract to operate the Boulder branch of Indiana Members and after a few months bought the branch’s assets and the loans of Boulder-area IMCU members interested in switching institutions.

“We took over the branch; we took over the staffing of the branch; we purchased the assets from the branch,” Allen says. “And a majority of the Boulder-area IMCU members joined Boulder Valley.”

Several IMCU members already had a relationship with BVCU, and an additional 997 members created new accounts with Boulder Valley after the purchase. The institution attributes $21 million in assets to these members. The credit union also purchased $13 million in loans.

“I don’t believe there were any delinquent loans,” Allen says. “We would have taken all of the loans to serve the new members, but it was never a problem. ... We did our due diligence to make sure we were entering into a good deal for our members. We didn’t want to hurt our membership.”

That due diligence included looking for poorly underwritten loans that could cause a loss for Boulder Valley; however, Allen and his leadership team found no evidence of that.

“We pull a valuation of the collateral for these types and requested the files for any that had a higher loan-to-value ratio,” Allen says. “We reviewed [IMCU’s] underwriting to our underwriting standards and did not see any problems.”

After analyzing 10% of each type of loan IMCU had in the Boulder area, BVCU determined the portfolio was strong.

“IMCU does a great job underwriting,” Allen says. “We did not see any problems; we were impressed.”

To prepare Boulder-area members for the upcoming change, IMCU sent letters explaining the transition and the benefits, such as access to a large network of local branches, of joining Boulder Valley.

Boulder Valley took over management of the branch in December of 2012, and the two institutions worked together during the first few months to operate the location and ease the changeover. It has now been nearly eight months, and Indiana Members has ceded control of the branch completely, though it still serves area members who declined to switch financial providers.

Prior to Boulder Valley’s management, three full-time employees and one part-time employee operated the branch. BVCU kept everyone on staff and even made the part-time employee full-time. And because the branch was moving from one credit union to another, it was easier to train the staff and reiterate the “people helping people” philosophy.

“We educated the staff about Boulder Valley and trained them on how products work for us as opposed to the way they worked for Indiana Members,” Allen says. “It was mainly explaining what our different terms were, because they already had the credit union philosophy.

The branch is in a prime location for Boulder Valley. It is located across the street from Boulder Community Hospital, one of the credit union’s larger SEGs.

“The hospital people can walk over to the branch, so taking it over made good, dynamic sense,” Allen says. “Our membership in that area is now able to use the branch.”

Allen describes the deal as a win-win for all parties: Boulder Valley members have a new convenient branch, IMCU members who switched over have a larger branch network, and Indiana Members Credit Union can focus on its home state.




Aug. 5, 2013


  • What a great use of a common interest of member service to further business purposes. Truly a win for all involved. Well done Mr. Allen
  • Since Credit Unions are member owned, who gets the proceeds from the sale?
  • I love the cooperation and collaboration demonstrated here. Kudos to both shops!
    Jim Johnson