1st MidAmerica Credit Union ($577.3M, Bethlato, IL) has completed five mergers since 2010, including two so far in 2014 and another in the works. Historically, the credit union has merged with smaller credit unions that need help to continue serving members. For example, past mergers have included a one-man shop that operated out of a private residence and a single-branch cooperative whose SEG location closed. But during its 2010 strategic planning session, 1st MidAmerica began looking at mergers as a source of growth.
Amber Scott, Vice President of
Marketing at 1st MidAmerica.
This year, 1st MidAmerica completed its largest merger to date when it acquired Laclede Credit Union, a more than $60 million credit union with 10,000 members and slightly fewer than 30 employees. The merger represented 12% growth for 1st MidAmerica and added four branches as well as more than two dozen employees to its operations.
Here, Amber Scott, vice president of marketing at 1st MidAmerica, talks about the credit union’s merger strategy and best practices to assimilate acquired branches and employees.
How does 1st MidAmerica assess merger candidates?
Amber Scott: We’re aware of what’s going on in the marketplace, and we stay informed with what’s happening at other credit unions. The first few opportunities were unexpected. They were small credit unions and we absorbed those fairly easily. But for the past couple of years we’ve been looking at mergers as a means to grow and solidify our position in the market.
You had your largest merger of the past five years with Laclede Credit Union. What prompted the merger?
AS: Laclede was a neighboring credit union with whom we had shared training and other resources over the years. After the economic downturn, it had to put cost saving measures in place and was fighting to survive. It had closed one branch and its board thought it would be in the members’ best interest to look for a merger partner. We finalized the merger in May of this year.
How many branches did you pick up?
AS: Laclede had four branches and we kept two open after the merger. Its branch footprint overlapped with ours, so we kept the two open that were spread out a little more and closed the two within a mile of existing 1st MidAmerica branches. But we were able to absorb that staff into our branches and other departments. We offered a position to every Laclede employee.
How did you integrate Laclede employees into your operations?
AS: With the new size of the credit union, we knew we were going to need different capacities to handle increased business. We put some of the new employees in back-office functions like accounting, IRA administration, and lending, and we kept some working at the branch level. We mixed existing employees and acquired staff to help the new employees assimilate into the 1st MidAmerica culture.
There is potential for a lot of things to get lost along the way, little nuances of the culture, so we assigned each merging employee a “merger buddy.
We interviewed each employee to find the best role for them. A person’s job title doesn’t always reflect their responsibilities and experience, so we spent an extensive amount of time talking to each employee about their job, their daily tasks, and their skill set. Then we put employees in roles that leveraged the experience they were bringing over from Laclede.
Our retraining focused more on the 1st MidAmerica way of doing things. For example, at Laclede an employee might have worked in lending and collections. At 1st MidAmerica they’re still focusing on collections in our financial recovery department, but they’re using a slightly different methodology.
How do you structure those employee conversations?
AS: The employee met with our head of operations and our head of human resources. We spent time with each employee learning about their skills and experience and addressing concerns about the merger.
How else do you ease the concerns of newly acquired employees?
CU QUICK FACTS
1st Midamerica Credit Union
data as of 06.30.14
HQ: Bethalo, IL
12-MO SHARE GROWTH: 12.7%
12-MO LOAN GROWTH: 18.8%
AS: We had a town hall forum immediately after the membership voted to merge. Our executive staff met with the new employees, and we just opened it up for questions. We talked about our employee benefits, we talked about the timeline, we talked about how we expected things to go, and we told them repeatedly: We want to hear from you. We want to know your concerns. We want to know what concerns you think are going to come up from the members.
These are the people who work with the members every day. They’re going to have the best insight.
How do you teach new employees about the culture at 1st MidAmerica?
AS: There is potential for a lot of things to get lost along the way, little nuances of the culture, so we assigned each merging employee a “merger buddy” — a peer employee that’s helping them to understand the intricacies of life at 1st MidAmerica. If a new employee is now working in accounting, we assign a merger buddy in accounting. This is a person they can call and say: Hey, what do you guys do for employee birthdays? Do you think these shoes are okay for the dress code?
Merger buddies help with things not typically touched on in training.
Did you have this process — the interviews, the town hall meeting, the merger buddies — before the Laclede merger?
AS: We created 95% of it as we made our way through the merger this year. We’ve been building a template for future mergers and these are the pieces that worked well.