By Ray Birch
RICHMOND, Va.—Three credit unions, based in three different states, have decided to merge, and the pandemic helped them make the decision.
As CUToday.info reported, $51-million MUNA FCU in Meridian, Miss., $95-million Pinnacle CU in Atlanta, and $80-million RVA Financial in Richmond, Va., have announced plans to merge. The organization’s combined assets would be approximately $216 million serving more than 23,000 members with five branches across Virginia, Mississippi, and Georgia.
A big reason for the merger is greater scale, the leaders of all three credit unions explained, adding that the distance between the headquarters of each organization is not a concern—as the health crisis showed.
“There are a lot of organizations that work across state boundaries, and it was made even clearer how easy this would be to do once the pandemic hit,” said MUNA FCU CEO Bo Pittman. “During the health crisis most people learned that remote working is possible with the technology that we have.”
All three credit unions are running on the same CU*Base core system made the decision easier, Pittman noted.
“That will help the conversion process, as we’re all familiar with the same core,” he said.
Long Relationship
Discussions about a possible merger began more than a year ago with the three CEOs all being part of the same CU*South technology CUSO board.
“We’ve all been on this board for five years and spent a lot of time together, talking about our businesses,” said RVA CEO Richard Preble, adding the CEOs have all talked about facing similar challenges that greater scale could address. “We also noticed we have very similar philosophies and business approaches. We came to the conclusion that we all were pretty much trying to crack many of the same nuts. We had built a pretty good relationship and just determined that for all of us it made sense to merge the balance sheets and gain all the efficiencies.”
Pittman said he hopes the deal will show smaller credit unions they can band together to continue forward and compete, finding partners outside their local areas. He said he understands how some credit unions may not choose to work with a bigger credit union, to collaborate and receive assistance, because they fear the large organization may try to merge them in.
He explained that if a CU can look beyond its local borders, even across state lines, it can find more small credit unions to work, or combine, with.
“We hope to show everybody that what we're doing here is possible, and that a small credit union does not have to wait to be absorbed by a really big credit union,” Pittman said.
The move is being made, in part, to give members more products and services, as is often the reason stated for many mergers via information posted on NCUA’s website.
“This is going to allow us to give our members products and services that we couldn't afford to
offer individually,” said Pittman. “A great example of this is RVA has a call center. That is a tremendous expense for a smaller credit union to do on its own. Once we are united that's going to be a huge help for us and our membership.”
Greater Opportunity
Preble said his credit union will gain greater commercial loan and home equity lending expertise with the combination.
“These are things RVA does not have today,” explained Preble. “Pinnacle has a commercial lending program that would take us years to build on our own. You have to find the right people with the right skills, establish processes, the whole nine yards. There's just so many advantages to do things a lot faster and less expensively than we could on our own.”
The combined organization will also have a greater pool of money to focus on digital delivery.
“We want to improve the digital experience for all of our members at all three credit unions,” said Preble. “We want to make things easier for our members because easy is the new loyalty.”
Preble acknowledged that some things will move more slowly due to the distance between the current headquarters offices, such as building new standard operating procedures for the combined organization.
“Being apart may add more time to this effort,” Preble said. “But I've worked at credit unions with branches 700 miles apart, so this is not insurmountable in any way. It's really about dedicating the time and effort to putting the right people together to build these new processes and thinking.”
When the two credit unions combine, after the members of Pinnacle and MUNA vote on the merger—the CEOs stated they expect combination will be approved—and state and federal regulators sign off, a new name for the organization will be developed. Pittman said that might take a year following completion of the merger. Until then, the combined organization will work under RVA’s charter.
The new board will be comprised of three directors from each credit union. Pittman will be the chief executive officer and regional president of Mississippi. Pinnacle CEO Matt Selke will be the chief financial officer and regional president of Georgia. And Preble will be chief operating officer and regional president of Virginia.
“We're trying to provide the best services to our members,” said Selke. “At our size we just can't offer all the bells and whistles that the big banks here can. Right out of the gate our members will get their phone calls answered at a much higher rate, with RVA’s call center having 24/7 hours.”
Members at Pinncale and MUNA are not receiving any capital payout from the merger, the CEOs of both organizations stated.
According to Call Report data, MUNA FCU’s capital ratio is 10.47%. The credit union made $575,400 in 2021 and $286,558 through June of this year. Pinnacle’s net worth is 9.01%. The organization made $141,074 in 2021 and $2.04 million through June of ’22. RVA’s capital is 9.27%. The CU made $1.7 million in 2021 and $179,123 through the first six months of this year.