Merger Should Be the Last Resort. Collaboration is Key.

This year my husband and I traveled to Roswell, New Mexico for 4th of July and the International UFO Festival. It’s not to be missed. On Saturday morning we decided to take a walk around town. Just a couple of blocks off the Main Street and at the end of the historic district we came upon this beautiful home/credit union:

florist

The Florist Federal Credit Union. Founded in 1969 the credit union only serves florists, their families and their employees. They offer business loans, deposit accounts and merchant card services. Their VISA cards are gorgeous (flowers of course) They are $7.8 million in assets with just 900 members. This is old school, single sponsor, in a house, listening to their members needs and providing the unique products their target audience wants. I wonder if they still have a credit committee? They are financially strong and as long as there are flowers and florists this credit union should be around for a very long time.

So much is written today that the small credit union will become extinct. With all the regulation, technology, etc. they cannot possibly survive.

From a MiBiz article on the subject attorney Kenley Penner said,

“Federal regulations are expected only to toughen in the years ahead, pushing compliance costs up and potentially forcing even healthy but smaller credit unions to look at partnering to generate economies of scale. There’s no clear consensus within the industry on whether $500 million or $1 billion in assets, or even higher, is the “magic point” to achieve economies of scale needed to carry the added fixed costs of regulatory compliance. We’re going to see a lot more mergers in the next half-dozen to a dozen years. It’s going to be tough for the $50 million, $60 million and $70 million institutions to survive.”

Can this small credit union survive? What about thriving? CUNA’s CFO Council published a white paper on this subject: The answer is not always merger, to gain economies of scale. The better solution is collaboration. The Florist FCU has 5,341 branches and over 30,000 ATMs. In Roswell their members have a state of the art deposit taking ATM, 2 branches, one with Saturday hours thanks to the collaboration with Roswell Community Federal Credit Union.  With $27 million in assets serving 2,362 members, this credit union not only collaborates but embraces their town’s unique history with this amazing logo:

roswell-community-federal-credit-union

Bigger is not better. Better is better.  There are very large credit unions that are not serving their members as well as these two small shops in southern New Mexico. Bank of America owns the largest building in Roswell, but Florist and Roswell Community Credit Unions have more branches. When credit unions start to see each other as competition we lose. Let’s fight the real enemy.

Cooperation among cooperatives is key to our survival.

 

About the Author: Denise Wymore is the Co-Founder of 6th Story, LLC. She believes in the sixth cooperative principle –  cooperation among cooperatives – being the key to our survival (just like she said in this blog post). She is a credit union evangelist, speaker, author, entrepreneur and lives in Cochiti Lake, NM with her husband (a credit union CFO) and her two adorable dogs, Emma Rae and Dexter Morgan.

  • Kenn Bell

    From The Florist FCU:
    Thank youfor the nice write-up. We are certainly small, but with a nationwide membership, we need to do big things to reach our membership. Mobile banking and Shared Branching aren’t just technologies to us; they are ways to serve our membership, who just happen to be mostly distant from us. Our charter challenges us in ways beyond imagination, but certain technologies helps to provide a bridge for services. We believe in strong and small, and that gives us certain advantages over larger organizations in that we still touch our member’s lives in personal and meaningful ways. How many CEOs do you know that still personally know over 50% of their members?

  • Kenn,

    Thank you so much for this comment. We believe that there will and always should be a place in this world for small credit unions for all the reasons you’ve stated. And indeed, how many CEOs can say they still personally know over 50% of their members?