8
Mergers
SERVICE
Cascade FCU Backs Up No Merger Vow With Cash if It Reneges
EILEEN COURTER
Ecour58516@aol.com
f you’re a recent member
of Cascade Federal Credit
Union in Seattle and the
credit union merges, you’ll
have a little more money in your
account, thanks to a no merger
guarantee.
The credit union has put it in
writing on its Web site saying
if, as the result of
combining with
another financial
institution, one of
three things happens within two
years of the original membership,
Cascade Federal
will pay members
$100. The guarantee applies if the credit union
changes its name, alters a member’s account number or closes
a primary branch.
This is not a gimmicky, new
trend. Dale Kerslake, president/
CEO of Cascade Federal, said
the guarantee actually dates
back to 1997 when members
complained about mergers at
other financial institutions they
belonged to. At the time, several
community banks had merged
and members were frustrated.
Kerslake
“I was accused by one of my fellow CEOs of
offering the guarantee as kind of a poison pill. It
would be a pretty small pill,” Kerslake quipped.
To reassure them that a merger
wouldn’t happen at Cascade
Federal, the no merger promise
was made.
Kerslake noted that since the
“In general, I think some
mergers are a good idea,” Ker-
slake said. “But probably too
many of them are cases of man-
agement looking to make things
better for themselves
and putting themselves
ahead of the credit
union.”
Would Kerslake re-
consider if a small,
struggling credit union
approached Cascade
Federal seeking a
merger?
MERGER
other credit unions adopting a
similar guarantee but if it sounds
worthwhile, simply do it, he suggested. As far as he’s concerned,
it’s pretty straightforward.
Denny Graham, president/
CEO of FI Strategies LLC, a strategic planning firm in St. Louis,
has offered advice on encouraging members to approve mergers. He thinks Cascade Federal
has made a wise move.
“There are a lot of good reasons for credit unions to merge,
but there are also a lot of good
reasons for healthy credit
unions – and Cascade is one – to
The Rundown
Guarantee goes back to 1997.
Members complained about mergers
at other financial institutions.
Promise won’t likely have a huge
impact on bottom line.
their financial institution.”
He agrees with Kerslake that
even if Cascade Federal had
to pay off on its promise, it
wouldn’t be a major blow. Look-
“If I were on the board
or a member of the
management team, I
wouldn’t want to restrict
my flexibility,” Glatt
said.
credit union doesn’t plan on
taking any of those three steps,
it’s really a nonissue. The credit
union adds about 100 new members each month, so if the guarantee were ever
paid it would cost
the credit union
about $250,000.
With assets of
$258 million and
$27 million in net
worth, the pay-out wouldn’t be
significant.
“I was accused by one of my
fellow CEOs of offering the guarantee as kind of a poison pill.
It would be a pretty small pill,”
Kerslake quipped.
While he doesn’t condemn
all mergers, he acknowledged
some skepticism towards them.
Graham
While Kerslake
doesn’t think the
pledge has drawn
a lot of members
who wouldn’t have
joined the credit
union, it does offer
a little reassurance
that members won’t
experience frustration
that will cause them
to look for another
financial institution.
stay independent,” Graham not-
ed “So if that’s their policy, why
not say so?”
Graham said “I haven’t heard
of it as a trend, but clearly there
are a lot of credit unions that
have no intention of being ac-
quired. If that’s the case, why
not make it public? It’s a great
PR move. The public is certainly
tired of seeing signs changed on
ing closely at the guarantee, he
figures that even if a merger did
occur, it really wouldn’t affect
that many members.
GUEST OPINION
There Is Strength in Numbers
ince January 2008,
there has been a credit
union merger every
While on the surface these
numbers might indicate a
strengthening of the indus-
Steve Miller is president of
Twenty Twenty Analytics.
CONTACT
877-778-3314 or
steve.miller@
TwentyTwentyAnalytics.com
try, the fact
is most of
these mergers are generally the result of failed
or failing
credit unions
of less than
$25 million in total assets and
the completed mergers did little to significantly increase or
strengthen the industry as a
whole.
Since the fiscal crisis and
subsequent bank failures be-
ginning with the recession of
2007, credit unions have done
an extremely good job of build-
ing a stronger membership
base and increasing deposits as
more people have moved away
from other financial institu-
tions. However, if credit unions
are going to continue being
competitive, they will have to
face the challenge of other fi-
