Transition Members Smoothly To New Institution

Park Community demonstrates the value of strategically exiting a region, but only after leaving membership in good hands.


Whether it’s in another town, another state, or across the country, the challenges of managing a remote footprint are vast. Even when it becomes clear the stars really weren’t aligned for a particular regional endeavor, credit unions still have the opportunity to transition members and other assets to their cooperative peers rather than closing up outright.

That’s what happened to Park Community ($543M, Louisville, KY), who in 2010 successfully spun off two branch outliers in Macon, Georgia ─ as well as the members, loans and other assets  tied to those locations ─ to a more localized player, Robins Federal Credit Union ($1.7B, Warner Robbins, GA)

An Experiment In Georgia

The spun off assets and members were originally acquired in 2005 in a merger with B&W Credit Union, says Jim Spradlin, current CEO of Park Community and credit union loan manger at that time.

B&W was headquartered in Louisville, KY as was its sponsored group, but the institution also had a remote satellite location in Macon, GA. After its main sponsor group relocated to North Carolina, B&W sought out a merger with Park Community, but on the understanding that the new institution would try continue to maintain service in that Georgia footprint.

“B&W was around $50M in assets and we saw a lot of potential in the merger, particularly with retirees in the Louisville area,” Spradlin says. “So Park Community brought them in and also committed some additional resources to Macon to help them out and try to make that work.”

The credit union kept its word, and even constructed another branch in Macon to help cover that market. But ultimately the 800 miles between that city and Park Community’s central Louisville footprint provided a bigger hurdle than expected, both in terms of operations and brand equity.

“It wasn’t efficient for us and we didn’t feel we could provide the products and services those members really needed,” Spradlin says.

“The rates we would set based on our presence in Kentucky wouldn’t be as competitive down in Georgia. Plus, people like to know who their credit union is and that’s hard when you’re 800 miles away.”

A Cooperative Solution

In hindsight, the credit union might have been better served by spinning off those assets sooner after the merger. But when it really became clear it was time to shift strategies, leadership ─ including Spradlin, who by that time was vice president ─ knew they had to find a cooperative substitute for the needs of those locations’ 2,000 members, rather than just pulling up anchor.

“We could have closed branches and just left town, but we didn’t want to leave those members high and dry,” he says. “We wanted to make sure they were taken care of.”

Over a decade ago, the credit union had some success spinning off another acquired branch in Tyler, TX to a more established partner in that region. But because Park Community had reached roughly $400M in assets at the time of Macon spinoff, finding an institution with an overlapping branch footprint and similar product base would be even more important than before.

“We wanted to make sure the members wouldn’t lose anything switching between the two institutions,” Spradlin says. “With a smaller acquiring institution there would have been some concerns there.”

After approaching several credit union candidates, Park Community finally settled on Robins FCU ─ a financially healthy institution that was well established in community, had a good branch network , and has a history of maintaining brand equity with members.

“Robins is a very familiar name down there and was well though of,” Spradlin says. “That helps a lot in this type of process.”

Making The Switch

All product and service details were hashed out by both parties through both electronic meetings and in-person sit downs at half way point between the two cities. Valuation was greatly streamlined by Park Community’s decision to forgo any valuation of goodwill and instead focus on the paper value of its fixed assets, shares, and loans. The move not only sped up the process, but also helped assuage any concerns that the move was about money rather than the members’ best interests.

Park Community also needed to make Robins comfortable with assets that had been acquired outside their own control mechanisms. Any uneasiness was greatly mitigated by the fact that Park Community had a history of reliance on proven, established products and services, without a lot of exotic options or concerning concentrations.


Some product features, like the interest paying checking account that Park Community offered, did have to be tailored at Robins to more closely match the original, but these changes were nominal at most.

In all, the assets and accounts spun off to Robins would total around $15 million.

Even after the valuation, there was still the matter of communication strategies to consider. A series of membership meetings led up to a final, open member vote, and once approved, a series of dual branded mailings went out from Park Community to introduce members to the new institution.

“We wanted an open line of communication,” Spradlin says. “And we needed to assure these members that this wasn’t going to happen to them every three to five years.  It was very bank like to do it in 2005 and then again in 2010.”

The Post Acquisition Robins

All eight employees at the acquired locations were retained, with some promoted to management roles, says John Rhea, president of Robins.

With a localized presence and the ability to invest more heavily in that market, Robins was able to attract around 732 new members, $7.5 million in new deposits, and $5.6 million in new loans from the acquired Macon locations, despite shuttering one branch due to its close proximity to another Robins location.

The Post Spinoff Park Community

Immediately after the sale in March 2010, loans and shares decreased by roughly around $12.5M. But the credit union’s strong net worth limited any potentially negative effects, and the removal of two branches brought a substantial reduction in operating costs and as well as travel cost for administration staff who visited the locations monthly.

“We were able to take all the expenses in marketing and other areas from Macon and refocus that in our main markets here in Kentucky and our branches in Indiana and Alabama,” Spradlin says.

Although these plans were already in the works prior to the spinoff, the credit union has also been able to move one in-store location to a free-standing, green LEED certified building and open up another branch in Louisville.

Park Community also shifted the focus of its call center to provide centralized support for the entirety of its electronic footprint. Operated, managed, and assessed just like a normal branch, the call center now has proprietary ownership over, and responsibility for, monetizing and enhancing virtual interactions.

‘We enabled employees there to handle the membership needs from beginning to end without a handoff,” Spradlin says. With the addition of electronic signatures, members can electronically close loans, open accounts, and do anything else a branch handles.

Good To Great

While some performance metrics took an initial dip after the spinoff, key metrics have improved in 2012 ─ many to levels much higher than before the spinoff.


“Right around springtime, credit unions in the area began to see a big influx of funds,” Spradlin says. “We joke about how Kentucky runs a little behind the west coast, but we really think that was the residual effect of Bank Transfer Day making its way east.”

A new marketing strategy talking about the cooperative difference and featuring interviews with employees and members broke from Park Communities’ traditional product-focused outreach, but had a big impact in the community.

“We’ve always been strong in indirect, but we really refocused ourselves on forming these relationships with auto dealers,” Spradlin says. The credit union is also rebuilding its mortgage loan base after selling mortgages for several years to balance the portfolio.

“Once we have the proper mix, we’ll really be able to keep that loan growth going.”