By Ray Birch CUToday
WASHINGTON–Just what will the proposed merger between CUNA and NAFCU mean to individual credit unions? A survey of CUToday.info of CEOs across the country has found generally neutral to positive reactions, with many taking a wait-and-see approach, but others having concerns over a lack of “checks and balances,” compensation paid to association executives, and fewer resources for smaller credit unions.
The CUToday.info poll of CEOs on the question of having just one national trade association representing the nation’s 4,800 credit unions also found many see benefits from the consolidation, such as a stronger and more unified voice in Washington, greater efficiencies and potentially lower overall costs for membership.
CUToday.info has made multiple attempts to get additional comment from CUNA and NAFCU beyond the statements issued earlier this week and asking for more details on the merger and what lies ahead, but both trade groups have declined comment.
Historic Turning Point
As CUToday.info reported, in what would be a historic turning point in U.S. credit union history, CUNA and NAFCU have announced plans to merge and form a new organization to be called America’s Credit Unions.
If the merger is approved, CUNA President and CEO Jim Nussle will hold the same position with the merged organization. NAFCU reported its president and CEO, Dan Berger, made a decision earlier this year to step aside to fulfill family obligations and pursue other opportunities, but he will remain at the association until year-end before departing.
According to the associations, the boards voted unanimously in May to merge the two organizations. The merger will now be subject to approval from members of CUNA and NAFCU during a 60-day voting period, which is planned to begin later this month.
‘Sweet and Sour’
Mira Ness
Mira Ness, who heads the fast-growing $73-million New York University Federal Credit Union here, told CUToday.info she has hope for America’s Credit Unions, yet has concerns with having only one trade association.
“I was kind of shocked when I heard the news, thinking immediately this is something that is sweet and sour for us,” Ness said.
Ness believes a unified voice helps credit unions in Washington, but also believes a lack of competition between two trade groups leaves few checks and balances.
“You know, a monopoly is never good,” she said. “We’ll have to see how this goes.”
NYUFCU has been a member of both trade associations for more than 15 years, and Ness applauded NAFCU’s attention to helping small credit unions, especially with compliance assistance.
“NAFCU was always fast and responsive. I really liked NAFCU. Their compliance education and compliance manuals are the best. I hope America’s Credit Unions will be able to rise to the same level,” said Ness, who added her credit union also got more out of NAFCU’s meetings, which she termed more “intimate” than CUNA’s. “But, more than anything I really hope it's going to be a lot stronger and a lot more valuable trade association. I hope by merging, we get the best of both worlds, without too much of a hike in dues.”
Concerns Over Pay
Another CEO, speaking on the condition of anonymity, had similar concerns about how small shops could be ignored by a very large organization, adding she was surprised to see how much Nussle is being paid by CUNA as the trade group in the red in 2020 and 2021.
As CUToday.info reported, according to IRS Form 990 data available through ProPublica, CUNA posted a loss of $5.362 million for its fiscal year 2021, following a loss of $9.8 million in fiscal year 2020. For 2021, the trade group had total revenue of $69.543 million against total expenses of $74.906 million. It reported total net assets of $41.038 million.
Both 2020 and 2021 were years marked by the pandemic, which shut down many of the events and meeting sponsored by the trade associations that are significant revenue generators.
In 2021, CEO Jim Nussle was CUNA’s highest compensated employee with reportable W2 compensation of $1.798 million, plus $487,821 in other compensation from organization and related organizations.
The same 990 information filed by NAFCU shows the trade group has remained in the black. For its fiscal year 2021, NAFCU reported total revenue of $21.551 million and net revenue of $1.725 million, with net assets of $18.028 million. It showed $1.795 million in net income in 2020.
Darin Moody
‘Competition is Always Good’
At the $890-million Utah First CU in Salt Lake City, CEO Darin Moody compared the merger of the two trade groups to two credit unions consolidating.
“When the CEO is retiring and the organization lacks vision and energy to move things forward, a merger is a common occurrence,” said Moody, who said his organization—which has been a CUNA member—is looking forward to what results from the combination. “I realize keeping an organization going is difficult and hard work. But losing an independent voice is unfortunate for credit unions. Competition is always good, even among trade organizations.
“Lawmakers benefit from a united voice,” continued Moody. “There is a great opportunity to have broad representation so all voices can be shared, and yet come to a united decision that represents the industry clearly with lawmakers. I believe this benefit outweighs all challenges that may come with the merger.”
Gets More from the League
Christine Wood
In Signal Hill, Calif., Christine Wood, CEO of $90-milion VA Desert Pacific FCU, said her credit union has fared best with just support from its state league.
“I’ve always felt the league has done a better job of providing guidance and resources compared to CUNA and NAFCU, whether it’s advocacy or education or compliance support,” Wood told CUToday.info, adding her CU only pays league dues. “Although a portion of our dues go to CUNA, we don’t quite feel like we know enough about the benefits they provide to us as a small FI. Maybe the merger will make a difference with a single entity focusing on the future of credit unions. I’m not sure if the merger makes a difference.”
‘Quite Shocked’
Thomas Dominique was another CU executive surprised by the announcement.
“I was quite shocked,” said the CEO of the $125-million Labor CU in Washington. “This is the credit union advocacy equivalent of JP Morgan Chase and Bank of America announcing a merger. After digesting the news for a minute, I see the value that this will bring not only to advocacy efforts, but to the members of both groups.”
But Dominique does have some concerns.
“Having these two groups operate separately had created a diversity of options when it comes to the various certification programs, conferences, schools…as well as when advocacy efforts are needed,” he explained. “When a legislative bill that impacts our industry is up for debate, having two large associations attack this might possibly have greater weight than one mega-association will in the minds of the politicians, who receive the advocacy letters and testimonies. Also, federally chartered credit unions have slightly different restrictions and limitations—and some advantages—than state-chartered credit unions. CUNA does a good job of representing all credit unions, but having an association focused on federally chartered credit unions’ needs was beneficial.”
Dominique said as the merger unfolds and America’s Credit Unions moves forward, he will be watching for how the new entity addresses the specific needs of the two types of charter.
“I also will be watching out for how the different certifications and training programs will shift,” he added. “Our board relies on NAFCU for some of their training and certifications, and watching how these events will shift in focus and scope during the merger will be something we monitor. Also, as we were a member of both, and with dues paid to both, I will be watching for some cost savings in our membership dues since (we will be) paying a single association.”
Scott Wilson
Not a Surprise
Scott Wilson, CEO of $807-million Sea Comm FCU in Massena, N. Y., was not surprised by the announcement by the two organizations.
“I am certainly not surprised by the intent to merge,” said Wilson, whose CU has been a member of both CUNA and NAFCU. “It is indicative of what is happening across our industry and our two trade associations’ reasons are similar to why natural-person credit unions merge, as well. The combined resources will allow our industry to have a bigger impact in Washington. Certainly, it will be more efficient. I wasn’t surprised, as this topic comes up on occasion—about how having two trade associations that do similar work just doesn’t make a whole lot of sense today, especially since NAFCU no longer just focuses on federal issues.”
A unified message will be the biggest benefit, asserted Wilson.
“Having one voice that is united…Not that both organizations have been that far apart, but a unified message will be something that will be much better in the long term,” he said.
Ending Divisiveness
Jeff Carpenter
In Oklahoma City, Okla., the CEO of $1.5-billion Weokie FCU said the combination will end “divisiveness.”
“I am now in my 36th year working in credit unions; 19 of them were spent at the state leagues and CUNA,” said Jeff Carpenter. “In 2011, I was hired as CUNA’s first vice president of membership and spent nearly five years helping credit unions understand and leverage their league/CUNA membership. During that time I saw first-hand how two associations could create divisiveness over unity. I see significant benefits of a united voice in Washington, and increased efficiency by eliminating duplicative functions and coordination of efforts.”
But even as competitors, CUNA and NAFCU spent significant energy cooperating and collaborating for the benefit of credit unions, added Carpenter.
“However, both organizations appropriately spent funds trying to sell their value proposition, and now these resources can be dedicated to representing and serving credit unions,” said Carpenter, whose organization is affiliated with the Heartland Credit Union Association and CUNA.
Unbiased Review Needed
Carpenter hopes that nothing will be lost in the merger and that Nussle and Berger will complete an “unbiased review” of both organizations’ strengths and weaknesses to create a new organization that delivers “best in class in every product, service and function. Over the years there were some who felt that two associations created a good check and balance system and fostered debate over differing views. I believe that a balanced approach can still be achieved, with all voices being heard through a representative board, committee structure and strong leadership that encourages and invites different views as part of healthy debate on critical issues.”
Luke Labbe
‘Wicked Good Deal’
In Saco, Maine, PeoplesChoice CU CEO Luke Labbe said his $332-million shop had for many years sought to NAFCU.
“But, as a state-chartered institution, we could never join NAFCU and I always felt that was discriminatory. When NAFCU changed its policies (by opening to all federally insured CUs) around this issue they offered a wicked-good deal, so, we signed up,” Labbe explained. “We took advantage of some research, but never attended trade shows, and quite frankly, we have too many trade shows in general. We truly didn’t have the time to utilize both resources, so we dropped NAFCU after a couple years. With the continued CU consolidation this makes a lot of sense.”
‘We See Value’
In Montpelier, Vt., Robert Miller, president and COO of the $3-billion New England Federal Credit Union and the $1.1-billion Vermont State Employees CU, which are in the process of merging themselves, is another in favor of having only one, larger, trade association.
“We see value in having one unified trade association and voice working to support and advance credit unions,” Miller said. “We look forward to learning more information as part of the process. We currently belong to both associations.”
Michael Goad
‘Logical Move’
Michael G. Goad, president and CEO of $2.1-billion Dow Credit Union in Midland, Mich., said the merger was a logical move.
“The combination of CUNA and NAFCU makes complete sense given the strength of both organizations and the promise of a bigger, even more powerful primary national advocate and trade organization for the industry,” Goad said. “Dow Credit Union currently belongs to both organizations. We appreciate how their approaches complement each other and we look forward to experiencing how America’s Credit Unions will bring the best of both organizations together to serve credit unions across the country. We believe the combined organization will have even more effective advocacy with federal lawmakers and regulators due to greater resources and focused messaging.”
Comments
Post a Comment
Please no profanity or political comments.