As the Vermont State Employees Credit Union celebrates its 75th birthday, it prepares its members for a vote on a merger with New England Federal Credit Union (NEFCU) that would happen this fall. As part of that, VSECU kicked off the first of three member forums on the merger this month at the Vermont College of Fine Arts in Montpelier.
A group of about 50 people gathered to hear from VSECU senior staff and board members, plus John Dwyer, president of NEFCU. Most commenters said they’d been VSECU members for decades, many 40 years or more. There was a shared general concern about losing a beloved local credit union that some had joined far enough back to remember when it was a small state employee-owned banking co-op.
Concerns ranged from wanting to keep account numbers the same, fear of losing the VSECU name, and hopes that all VSECU employees will be retained (the answer to that one was a resounding ‘yes’).
In a Feb. 16 letter to NEFCU members posted on its website, Dwyer stated that, pending approval from both credit unions, they “will merge under the legal entity of New England Federal Credit Union.”
“The boards have agreed on a new governance structure,” he wrote. “I will remain as Chief Executive Officer and Rob Miller from VSECU will serve as President and Chief Operating Officer. We have also agreed to retain all employees.”
Why a Merger?
Rob Miller, VSECU’s Chief Executive Officer, said the merger creates an opportunity for better rates plus more brick-and-mortar branches, particularly in Chittenden County.
“[With the] strength of combined balance sheets and earning capacity, we will be able to be more aggressive about rates and … it will save our members hundreds of thousands of dollars per year,” he said.
Miller also said VSECU is competing with new banking services being offered by multinational corporations such as Amazon, Apple and Walmart, which are “all in our space and getting more in our space.”
“We may think of ourselves as large at $1.1 billion,” Miller said, “but we are tiny compared to organizations such as Apple and Amazon. … This decision positions us for the next 20 years, not just the next five years. It helps us to ensure this credit union continues to be available to our kids and the next generation.”
Benefits of Scale?
In an email to The Bridge after the forum, VSECU Senior Vice President of Business Development Yvonne Garand added: “The scale created (of the two merged credit unions) will provide for opportunities to offer competitive loan and saving rates and lower cost service fees. The more members that participate in a cooperative, the more financial resources to benefit each individual member…”
“We are most excited to bring together NEFCU’s strength as a mortgage lender and first-time home buyer lender with VSECUs strength as a green and renewable energy lender,” Garand continued.
Dwyer noted that NEFCU started as a banking cooperative for IBM employees, and as a result has a few small branches out of state, but, he said, it’s primarily a Vermont credit union. According to its website, NEFCU serves over 95,000 member-owners, making it the largest financial institution headquartered in Vermont.
Doubts from Past VSECU Leaders
The forum took place under the shadow of a March 16 anti-merger op-ed in the Rutland Herald written by former VSECU CEO Steve Post, plus two former board chairs, Kim Cheney and Jerome Diamond. In it, they wrote “independence is better than a merger,” and questioned current VSECU leadership. They also link to a website with more information about their opposition to the merger, and a petition that instructs VSECU board members to withdraw from “any and all applications for regulatory approval of said merger.”
When asked for a response to the op-ed by forum attendee Cathy Callahan, Miller replied “what (Post) said publicly is probably why he’s opposed to the merger … I only know what I’ve read.”
On a website page dedicated to the merger, NEFCU states “We are aware of objections to the merger organized by former VSECU executive leadership. We believe that this group does not recognize the threats which Vermont’s banks or credit unions face if they are unwilling to undertake strategic partnerships such as the proposed merger, which will allow us to meet these threats and challenges by investing and competing within Vermont.”
“When there’s a change, everyone is scared,” said Bill Day, who said he’s been a member of VSECU for 45 years. “The first thing I thought was what’s in it for me and what’s going to hurt me?”
On that note, he pointed out that a change in his account number could snowball into a host of problems. “Will our account numbers change?” he asked.
““I can’t answer the question,” NEFCU’s Dwyer replied. “We are evaluating systems…” But, he added, “We will know the answer to that before the vote.”
Garand spoke about the benefit of increased numbers of branches that will immediately become available to VSECU members. In an email to The Bridge, she wrote:
“Most immediately VSECU members will have access to additional branches in the Chittenden and Franklin areas, which will benefit the many state employees and other members in that area representing 18 percent of our membership.”
Garand pointed out that the increased access to branches comes without a VSECU financial investment, should the merger get approved by voting members. At the meeting she added that the savings could be invested in new branches in Vermont’s more rural areas.
“Branch access is the number one complaint or request that we get from our members,” she said.
More About the Vote
VSECU has 72,000 members who all have a vote, Garand noted. (Dwyer said that, as the larger institution, NEFCU members do not vote on this merger). Merger approval requires 51 percent of VSECU voting members. Garand said that typically 6,000 to 8,000 members vote per year in annual elections for the VSECU board of directors (8% to 11%). Several people voiced concerns about such a major decision made by a minority of members.
However, the credit union has been soliciting feedback via the statewide forums; has a page dedicated to informing members about the merger and upcoming vote (vsecu.com/empowering-you/merger), and typically mails information to each member prior to a vote.
The merger application currently rests with the federal government’s National Credit Union Administration (NCUA), Garand said. She said much of the information in the application cannot be shared right now “because we’re waiting for the NCUA. We expect to hear from them by end of summer.”