Let's Celebrate Our Independence

The industry's merger rate is on the rise, but there are still plenty of credit unions developing innovative, cooperative methods to remain independent institutions. This week, CreditUnions.com takes a look at four of those methods.

 
 

The credit union merger rate is increasing at a steady clip. In 2010, 210 credit unions merged. In 2014, that number was 254, a nearly 21% increase. All told, from 2010-2014, 1,197 credit unions merged, a number that represents approximately 19% of the credit union industry. However, there are many examples of credit unions working together or using third-party solutions to remain independent.

To buck the trend in rising merger rates, credit unions are developing innovative ways to operate independently. From CUSOs to credit union partnerships, merger alternatives are numerous. Learn more about these alternatives as well as the benefits of cooperative solutions in this week's featured Graphic Of The Week, The Benefits Of Cooperative Design.

Jon Hernandez began his credit union career 20 years ago as a teller at Mattel FCU. The chief executive is now responsible for guiding three independent California credit unions, each with their own boards, business plans, 5300 reports, exams, audits, and membership bases.

Although the credit unions, which range from $27.3 million to $67.8 million in assets, operate separately from one another, they do share resources when it is fiscally logical to do so — for example, in matters of compliance or technology, real estate loans, marketing, and, of course, executive leadership. It is a strategy that has allowed Mattel FCUCalCom FCU, and Nikkei to remain independent within a cooperative world. It has also allowed them to stay true to their missions and members.

Learn more about how a shared CEO model benefits smaller credit unions and underscores the competitive advantage of the cooperative model in this Q&A, 3 Credit Unions, 1 CEO.

Four years ago, executives from several Michigan credit unions posed a question rooted in the cooperative spirit: What would it take to create an employee-sharing program?

That question prompted First United Federal Credit Union to form a legal partnership with FedCom Credit Union and another credit union — that has since merged with a larger institution — to share part-time tellers. Other credit unions have expressed interest in the partnership, too.

“Our credit unions aren’t interested in merging,” says Mark Richter, CEO of First United. “We’re interested in being independent credit unions.” Learn more about this strategy in 2 Tips To Build A Strong Employee-Sharing Arrangement.

To help small credit unions tap into the power of the cooperative system while remaining as independent as possible, MidAtlantic Corporate Federal Credit Union and a group of committed credit union participants created the ReKindle initiative. Its No. 1 goal? Provide credit unions alternative solutions to their daily challenges.

One such solution is the rkGoBig credit union service organization. The CUSO is owned by six natural person credit unions whose assets range from $57 million to $150 million.

“The immediate goal of the rkGoBig CUSO is to gain scale in our operations without merging,” says Peter Barnard, CEO of rkGoBig. “We’re committed to achieving a 25% reduction in operating expenses.”

Learn more about the cost savings, the concept, and the coordination that goes into this partnership in Survive Together Or Merge Alone.

Happy Reading.

 
 

June 29, 2015


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