ORLANDO, Fla.–Member credit unions of the League of Southeastern Credit Unions and Georgia Credit Union Affiliates have voted in favor of a merger.
The League of SECUs, which serves credit unions in Alabama and Florida and which was created by a merger of the respective leagues a decade ago, will be the surviving organization.
Under the agreement, the structure will include creation of a new holding company called Affiliated Consolidated Services (ACS) that will be led by Patrick La Pine, current president of LSCU & Affiliates. ACS will include LEVERAGE, the LSCU service corporation, and business services currently offered through the Georgia Credit Union Service Corporation and CSI. La Pine will also oversee all shared services (back office) functions for the reconstituted LSCU & Affiliates.
Georgia Credit Union Affiliates CEO Mike Mercer will lead the league/association side of the organization. La Pine said he and Mercer will essentially operate as co-CEOs for a “period of time.”
The League of Southeastern Credit Unions will function as a parent organization to the subsidiary operations. Once the merger is completed, LSCU will represent 342 credit unions in Alabama, Florida and Georgia. La Pine said the three states “stole the idea” for the holding company model from the Iowa league.
The holding company will be legally domiciled in Florida, the association will be domiciled in Alabama.
‘Significant Discussion’
During a press conference at LSCU’s annual meeting in Orlando, at which both La Pine and Mercer were on hand, La Pine said the two organizations have been in discussion about a “strategic consolidation” since first discussing the option during CUNA’s GAC earlier this year. Since that time there has been significant discussion about what the organization would look like, said La Pine, who said members of LSCU voted 60-1 in favor of the move. ‘
Mercer said Georgia’s credit unions OK’d the deal by a “large margin.”
According to Mercer, numerous in-person town halls were held to meet with credit unions to explain the proposal.
Asked about the pushback that might have been heard, both La Pine and Mercer said there was very little.
“We encountered very constructive support from credit unions,” said Mercer. “Everyone felt this was a good approach to the future and an effective way to sustain the value proposition into the future as credit unions continue to consolidate. They felt some sort of collaboration would be necessary at some point.”
Added La Pine, “Credit unions see the value in the larger, more diversified, more sustainable organization.”
The one concern raised, said Mercer, had to do with ensuring credit unions will continue to receive the personal attention they are accustomed to.
Not Purely About Efficiencies
“This is a strategic merger; it’s not purely about efficiencies,” said Mercer. “It will lead to efficiencies down the road, But the staff will still be around.”
La Pine and Mercer said no layoffs are planned but people may move into new roles and many will report into new bosses. Plans also call for keeping employees in the field, as well, in order to be closer to credit unions.
“We did not approach this as driven by a need for efficiencies or to cut costs,” said La Pine. “We approached this from the perspective of how can we be better; how can one plus one become three?”
La Pine did say, however, that approximately $800,000 in annual savings have been identified. He added when the Alabama and Florida leagues merged they found $1 million in annual savings. “We expect cost savings going forward, but you can’t cut your way to excellence.”
The two association presidents declined to identify specific costs related to the merger. La Pine said the costs are primarily related to retaining a law firm to assist in the deal, adding that if done right there will be “little or no tax consequences and no tax event as a result.”
The combined assets of the organizations involved is approximately $30 million, he said.
Future For Leagues?
Asked by CUToday.info about whether the model in which a league serves a single state is sustainable moving forward, La Pine noted credit unions in 27 states are already served by some sort of multi-state league. Ten years ago, he said the merger of the Florida and Alabama league represented the first true consolidation of leagues (the Nevada league has a management agreement with the California league, as do the states served by the Cooperative CU Association).
The Pennsylvania and New Jersey leagues also recently announced plans to combine.
As political advocacy has become a primary focus of trade groups, La Pine and Mercer said plans call for maintaining a strong presence in the state capitols of the three states. LSCU’s co-main offices in Tallahassee, Fla., and Birmingham, Ala., will be joined by a third office in Duluth, Ga., where the GCUA is headquartered.
Board & Management
Plans call for an 18-member board, with six members each from Georgia, Florida and Alabama, with the chair rotating among the three states. The holding company will have a separate board.
La Pine said overlaps in senior management have already been addressed as part of the new organizational chart.
“We have been very transparent with both credit unions and with our staff,” said La Pine, adding staff were involved in helping design the new organizational structure. “All of the staff will be in very meaningful roles.” Senior staff have already held a joint meeting at LSCU’s offices in Birmingham to discuss the combination.
Plans call for completing the consolidation legally in the next 30-45 days.
As for future plans to bring additional states under the LSCU umbrella, La Pine said, “I think if we are successful in what we do here, hopefully, others will see the value in what we have created. But there is nothing on the tarmac.”
Mercer said the plan calls for he and La Pine to lead a “highly focused approach” on both the league side and the business services side of the new organization.
The ‘Long-Term Gas’
Through its subsidiary CUSOs, La Pine said LSCU has client credit unions in more than 30 states, and that by combining its operations with those in Georgia will allow it to expand products and services, and along with it, sales and new revenues. There will also be opportunities to perhaps purchase other companies or launch other ventures.
“We see that as the long-term gas in the engine,” said La Pine.
Plans call for LSCU to host its Southeast Credit Union Conference & Exposition (SCUCE) in 2020 at its traditional home, the J.W. Marriott Grande Lakes in Orlando. The GCUA has no contract in place for a 2020 meeting, so it will join in the event. Beyond that, he said the site will rotate between Florida and Georgia. The size of SCUCE––approximately 1,200 were in attendance at this year’s meeting––limits the sites that can host the meeting.
The Next Steps
According to the organizations, the next steps also include the acquisition of two credit union service organizations, including Cooperative Services, Inc. (CSI),CUSC of Alabama, and the merger of the Georgia Credit Union Foundation into the Southeastern Credit Union Foundation. The shareholders of CSI have approved its sale as part of the larger league consolidation. CUSC of Alabama shareholders are expected to vote on their proposed sale to LSCU & Affiliates on July 11.
The second half of 2019 will be focused on the consolidation of the two organizations, legally and structurally, acting as one consolidated entity effective Jan. 1, 2020, the organizations said.