CU Merger Off To Good Start

December 3, 2004
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GRAND HAVEN — The recent merger of State Employees Credit Union and Ottawa County School Employees Union represents the largest merger of two independent credit unions in the state’s history and creates a new company with more than $730 million in assets and 88,000 members.

Michigan’s Office of Financial and Insurance Services gave its blessing to the merger in late October and the two credit unions officially began operating as one Nov. 1.

Jim Falvey, former CEO of Grand Haven-based OCSECU and now senior vice president of Lansing-based SECU, said the two are compatible because they treat members and staff in a similar manner. The core values and the philosophy of the organizations blended very nicely, he said.

Jim Costello, executive vice president of SECU, couldn’t agree more.

“We have similar cultures. We were just amazed that the values of our organizations were almost exactly the same,” Costello remarked. “Another thing is that they were looking for ways to provide more services to their members, and we were looking for ways to utilize excess capacity.”

The Michigan Credit Union Act modernization passed in June 2003 helped pave the way by making it easier for credit unions to merge, Falvey acknowledged.

“We know that others in our business are looking to get bigger, and there’s going to be consolidation in the industry. There has been such pressure on earnings in the past couple of years because of low interest rates that everybody’s looking at what their options might be in order to survive.”

Prior to the merger, OCSECU had $80 million in assets and 50 employees and SECU had $650 million in assets and 240 employees. OCSECU served Kent, Ottawa, Muskegon and Allegan counties, while SECU served eight counties in southern middle Michigan.

It’s really a “true merger,” Costello said. “Yes, one of the charters goes away, but it’s not like one company buying another company; it’s actually merging everything into one surviving charter.”

Falvey said OCSECU had been seeking merger opportunities for some time and talked with other credit unions about the possibility of getting together, but “the right time and the right fit” didn’t come along until SECU.

His friendship with Costello was the turning point. Costello was instrumental in bringing the two organizations together, and earnest discussions ensued in February, he recalled.

SECU was looking to expand beyond the greater Lansing area market where competition is intense not only among large credit unions, but among banks, Falvey said.

“This (merger) will allow us to bring in more members and more deposits so that the new organization will be able to get bigger and thrive for the good of all membership.”

He said SECU has a lot more mortgage products than OCSECU alone was able to offer and has a large indirect lending program with car dealers that his organization can now tap. The merger also opens the door for OCSECU to get into business services, he added.

“We’re going to operate as a separate region over here and keep some local identity and local pricing on certain products, which will be good for our members and will help the whole organization,” Falvey noted.

Even before the merger, he said, both credit unions had been mulling name changes because their respective names no longer accurately reflected the membership they served.

Steve Winninger retains the titles of president and CEO of the combined organization. Currently, OCSECU is operating as OCSECU Financial, a service of SECU. But a name change and new logo for the combined organization is in the works.

Falvey said the organization and its consulting firm have launched a branding process to look at how it can maintain regional identity and yet come up with a name that “tells membership what we’re all about.”    

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