This post is going to be a bit outside my usual branding/strategy fare, and I’m not usually one to throw any muck, but I just have to add some commentary on this matter. The unspeakable is happening in my backyard. KV Federal Credit Union ($51 million in assets) has decided to convert to a mutual savings bank in order to promptly merge with Kennebec Savings bank (a $650 million bank).
I was at the Maine Credit Union League in Portland for an orientation program when the news broke Tuesday morning. Needless to say the room immediately exploded in conversation.
Now, I’ve seen a few credit union to mutual savings bank conversions go down here on the intertubes, but never thought it would happen right next door. I’m not positive, but I think this might be the first cu to bank conversion that is being done for the sole purpose of merging with another, larger bank. To me, that is even more disturbing than a strait up conversion in my mind.
Now, there are always two sides to a story, so I’m sure my bias towards the base philosophy of credit unions will show, but I’m not here to report objective news.
KV Federal Credit Union has said, in response to questions about why they are merging with a bank, “The merger would allow the two institutions to become more efficient and position themselves for growth in a crowded banking market.”
I’m not sure what their continuing plan is, should this merger actually happen, but it is my opinion that to merge for the sole purpose of growing is one of the worst ideas ever. If your current growth plan is not building your member or customer base, how is a merger going to do anything but create an artificial jump in customers/assets? Not to mention that even though they refer to KVFCU and KSB as “two institutions”, once the merger is completed, the only institution positioned for growth is the bank.
To me, that goes against everything a credit union should stand for. The members would lose their say in the running of the institution, and their ownership. They lose their credit union, and as one member put it in a comment on a Kennebec Journal article, “I know I plan to tell them I will also close my accounts if KV Fed and Kennebec Savings merge-I joined a CU for a reason.”
I think many credit union members feel the same way.
I hope that the membership of KVFCU votes against this conversion. These members have built and owned the credit union for years and if the conversion goes through the only thing that will remain will be their account numbers.
That said, if the membership doesn’t vote this down, I feel that we should let the conversion take place. The board and management have shown that they don’t particularly care for the philosophy of the credit union movement. Those members who don’t care about the difference between being a member/owner and a customer will follow KV to Kennebec savings. Those that are a member because they know what it means and enjoy the benefits of being a member/owner will hopefully find a credit union who’s philosophy and vision fits their own.
What are your thoughts on this conversion?