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Why Don’t You Just Merge?

Tom Pinnow, CEO of County-City CU celebrates cooperation!
Tom Pinnow, CEO of County-City CU celebrates cooperation!

That’s a question a lot of small credit unions get asked these days and that was the title to an article that caught our attention on CUToday

It was written by Tom Pinnow, CEO of County-City Credit Union and he speaks to why he doesn’t consider merging to be the solution but rather the problem. So we reached out to him to find out what the struggles are of a small shop and how the collaborative CUSO model might help him not only survive but thrive.

Here’s what he had to say:

NACUSO: Hi Tom. Great article in CUToday. So tell us a little about yourself and how you came to work for County-City Credit Union, a $25 million CU with 3300 members located in Jefferson, Wisconsin.

TOM: Thanks. Well I grew up in a small unincorporated village in Southern Wisconsin called Rome. It was a community of about 200 people and most were self-employed. It was a thriving community that provided me with an ideal childhood. Everyone looked out for and helped one another very similar to the credit union philosophy.

 

UW-Eau Claire is my alma mater where I earned a degree in Business Management in 1973. I started my career at a finance company, then I sold life insurance, worked at three small community banks and I have now been at CCCU for 27 years serving as its president. I am a graduate of the ABA Commercial Lending School and I am a Credit Union Development Educator.

NACUSO: What would you say most motivates you to do what you do? What are you most excited or passionate about?

TOM: Helping people and making a difference. I get great satisfaction when I help someone; and knowing that I am doing a good job. The credit union has given me this opportunity for 27 years. It has been rewarding to help our members as well as our team.

NACUSO: Who were your mentors along the way?

TOM: It may sound cliché, but my parents. They ran a small business, so I grew up learning the importance of good customer service. They were both very involved in their church, the fire department and local politics. They set an excellent example to follow and inspired me to emulate them in helping people and carrying my own weight in whatever I do. I am what I am today because of many people, teachers, employers, friends and family. I have probably learned the most, though, from bad bosses. They showed me what did not work and inspired me to do better.

NACUSO: I know you are familiar with the CUSO model, so how might your credit union and other small credit unions utilize collaboration to survive and not merge?

TOM: The challenges for small credit unions (those <$50M) are limited human resources, especially for compliance and succession, and the inability to gain economies of scale. It would be beneficial if small credit unions could somehow: pool their item transactions to reduce the cost of item processing to a level equal to large credit unions; share marketing plans and costs, but this would require credit unions not to be in the same market; share compliance expertise; and share data processing. Most of these would require credit unions to agree to accept compromise in order to make it work. Standardization would be needed to make it workable. If every credit union wants things ‘their way’ it would become too complicated and negate the benefit of doing it. Anti-trust regulations would need to be addressed relating to any common prices charged for members.

NACUSO: Many believe there is not much of a future for a small credit union, why are they wrong?

TOM: Unfortunately, they may not be wrong. It is a very tough environment for credit unions <$50M in assets for the reasons cited above. Unless there is regulatory relief and a retreat in merger mania the future looks bleak to me.

If small credit unions are to survive large credit unions need to change their philosophy of seeking merger partners to seeking how they can help small credit unions survive. How can they, with all of their resources, help small credit unions gain economies of scale, help them with compliance issues, offer marketing help and financial analysis? I am NOT saying they need to donate these services. Why not figure out how to offer these services at a lesser cost than normal vendors? It could be a lower cost for small credit unions yet offer a small profit to the big guy. This change in philosophy also applies to our trade associations, regulators and our politicians. It just does not make sense to impose the same regulations on a $15M credit union as it does on a $2B credit union. And, it does not make sense to not have representation of credit unions under $50M on the CUNA board.

NACUSO: When you think of the future what gives you hope for the movement?

TOM: What gives me hope is the credit union philosophy itself. It is one of collaboration to help people. I am hopeful that the industry will rally to help save credit unions with less than $50M in assets and not just say, “too bad” it is the current environment.

NACUSO: Finally, can you share something interesting and fun about yourself?

TOM: I always like to make people laugh, but my sense of humor does get me into trouble once in a while. My wife just had cataract surgery. When I picked her up at the hospital I asked the nurse if “my wife would now finally see things my way.” She just looked at me and then asked my wife it she was okay going home with me. Go figure

2016 Encore with Network graphicThe 2016 NACUSO Network Conference will be addressing some of these issues at our first ever Partner Connection Sessions. We are offering two facilitated sessions to give attendees the opportunity to connect with like-minded credit unions and CUSOs to develop collaboration opportunities that, achieve scale, share/mitigate risk, take advantage of new opportunities and generate net income. We, like Tom, believe that we are better together.