By Ray Birch
WESTBROOK, Maine–A credit union serving a commercial fishing market in Maine intends to merge with a CU based 1,303 miles away in America’s Heartland—and those kinds of combinations are becoming more beneficial for credit unions, according to the CEO of Infinity FCU.
As CUToday.info reported, $340-million Infinity FCU here plans to merge with $1.2-billion Deere Employees CU, headquartered in Moline, Ill.
“Merging with a credit union that is outside of our local market, outside of our state, can be more advantageous than combining with a local credit union or another credit union within our state,” said Infinity CEO Elizabeth Hayes.
Hayes said when local credit unions merge there is often “overlap” that can reduce the effectiveness of the combination.
“Merging with a credit union out of state gives you advantages,” Hayes stated. “One is the increase in intellectual capital. I can't stress that enough. We have a very strong and developing senior management team that goes well beyond the executive team. We have some individuals here who are smart, they're developing quickly, and they are ambitious in their careers.”
Better Opportunities to Grow
Hayes said with the out-of-state combination there is going to be no reduction in offices, no reduction in staff, and the chance for her existing 90-person team to be part of a larger organization with greater opportunities to grow and remain with the credit union.
“That, overall, leads to a better opportunity for them,” she said. “You merge locally, often some of you staff survive and stay on, and some don’t.”
Infinity FCU will keep its name and local control. Hayes will stay on as Maine market president. The deal is expected to close in the first quarter of 2021, Hayes said.
“This is true collaboration, and Deere Employees has a very strong management team,” Hayes said. “We're excited at the opportunity to collaborate with them on ideas on some of the strategies and initiatives they have and are working on. Some of the reasons for the combination is technology. Technology is certainly something we all know is expensive, and Deere is doing a lot to invest in their technology, more so than we could have done ourselves.”
Infinity, But Not Beyond
Elizabeth Hayes
Hayes said keeping the credit union’s name was important to Infinity.
“That is the other negative about combining locally; someone typically gives up their name. But when you merge with a credit union outside of your state, that is less likely to be a requirement,” Hayes said. “We can keep our brand, which is important. There are a lot of members who feel very vested in their credit union and they will continue to feel vested with Infinity.”
Combining with a credit union from outside the local market also diversifies the credit union’s risk, Hayes suggested.
“We will be less susceptible to local downturns in markets since we are not close together geographically,” she said.
Infinity does not need a merger to be successful, said Hayes, but she also said size is becoming a a stronger component in growing, especially in a Maine market that has become much more competitive in recent years.
“We are financially sound,” said Hayes, citing 9.71% capital. “We’re growing and we have a strong, young management team. It's not like everybody's retiring. The difference here for us has been it's a strategic move to find a partner that allows us to compete.”
Infinity FCU reported $177,638 in net income as of its Sept. 30, 2020 call report.
A Changing Landscape
Hayes described a financial services landscape that has dramatically changed over the last five years. When she arrived in 2014, she estimated the largest credit union in the market was approximately $400 million and the big banks had yet to gain a foothold.
“Maine, in general, has become much more competitive, but especially southern Maine,” said Hayes, citing the now strong presence from TD Bank, JP Morgan Chase and others. “There have been a lot of banks coming in from out of state, and a lot of financial institutions merging inside Maine and getting larger.”
That drove Infinity a few years ago to begin considering a merger as a growth strategy.
“And as I said, one of the things we decided on is that we didn't need to be necessarily the surviving credit union,” she said. “But we wanted to have local control of over brand and over our products and services.”
Second Merger Attempt
For Infinity, it’s planned merger with Deere Employees CU isn’t its first; in fact, it’ not even its first merger attempt with a credit union in Moline, Ill. As CUToday.info reported, a merger that had been proposed earlier with $760-million Vibrant CU was eventually called off. Leaders of both organizations cited cultural differences.
Hayes said the fact that Infinity is proposing to merge with another CU in Moline has nothing to do with wanting to become part of the Illinois market.
“No, that is not what happened. It was just a matter of Deere Employees Credit Union knowing we were interested in merging with a credit union out of our state. They knew about the Vibrant merger and when it was called off they reached out to us.”