A Town Hall Meeting for members of FME was held at Andiamo Restaurant in Warren, Michigan on Tuesday, April 23.
The Perfect Storm
Nobody made a mistake. Everyone was doing their best but all of the factors combined made for a lot of bad results. As the industry and regulations have changed,
and the membership declines, we have found ourselves in a perfect storm.
Our Journey Today
Three years ago, the BOD embarked on a discussion to develop a strategic plan to bring ourselves up to standard, or best in class. We explored many options. In year two,
we did another take at what it would take to remain an independent credit union vs. doing a merger. At that time, we were receiving feedback from NCUA following our annual audit. They were seeing some dark clouds out there and making us aware of warning signs. In year three, we engaged a consultancy group that specializes in credit union management to help us develop a 5 year plan. They came back with the same or similar conclusions as the NCUA. As a board, we were seeing the shift in membership, decline and closing of plants, and it all was constricting in on us.
The Challenges We Face
Average age of membership is in excess of 55 years old. We’re unable to generate new memberships to overcome our membership loss. Attempts were made to grow
our membership, but limited resources have been available to do so. Banking trends require infrastructure and investment – taking the vast majority of our capital.
The board weighed all of this information very carefully. We determined that while we had capital and were attractive, it would be better to merge with another credit union
with similar values, well capitalized, and will serve our members much better than the our systems can serve today.
The Decision to Merge
We want a partner in the best interest of our members and our employees. This was not a rash decision and not taken lightly. We spent 3 years with consultants, NCUA,
and others. The board unanimously agreed to bring this to the membership to vote.
We did have a change in leadership a little over a year ago. The change was needed because there were a number of things going on and we felt we needed a change
in direction. When the decision was made to change leadership, we had not yet made a decision on the merger. We sought a new CEO, but while working the consultants,
we recognized we would need a proper structure that would include an additional 15+ people and office space. The cost would be another $1 million a year.
The Credit Union does not make $1 million in revenue each year.
To our FMEFCU Staff and Members
I want to commend the staff. As we have gone through downsizing, staff took on additional duties and continued to smile and service our members. If it wasn’t for the support
of our long standing members, we may not be standing here today because it could have been much more catastrophic.
Our next steps are going to be looking at consolidating operations. We will be closing the out of state locations – it is something the FMEFCU board has talked with management about over the last three years. It was obvious to a lot of us that few loans were coming to us from these locations and when you look at it, it’s not self-sustaining. Community Choice has a many out of state members, about equal to what we have, who enjoy their membership while living out of state. We will be keeping the St Clair Shores office and the Southfield in-plant location at the Federal Mogul headquarters.
$1 Million Dividend to be Shared By FME Members
The FMEFCU and Community Choice boards have agreed to taking $1 million from the FME equity and giving it back to the membership.
Why did we choose Community Choice?
Member centricity. SEG based experience. Most sensitivity towards to members and employees. Convenience and access. I am asking for your continued trust and support
as we go through this process. We believe you will have the ultimate member experience that we have battled and fought to try to achieve for all of you. You will continue
to have affordable and reliable products and services.
CCCU was recommended to us by our attorney, Mr. LeDuc. They are often called upon by other credit unions who are struggling or are identified by the NCUA. They have a “SWOT” team to step in to help. There were a lot of improvements done before we even recognized that Community Choice was interested in merging and made the short list.
I extend a lot of gratitude to Rob Bava, CEO. To Rob and Jeff, thank you.
St Clair Shores and Southfield Locations
St Clair Shores and Southfield will undergo some improvements.
All FME employees, wherever they are located, have been invited by CCCU to apply for or look at other positions at CCCU.
Let’s talk about it
Community Choice has a reputation for helping other credit unions. We’ve helped credit unions with things like collections work all the way to providing interim CEOs.
For FME, I wanted to manage day to day operations and come up with a year plan for the next CEO. Thank you to the staff at FME for all they do for the Credit Union.
A lot of the initial concerns were just as Tim said:
Culture shift needed
Marketing and sales
Over a decade of loan decline. This is how credit union’s make money.
Membership decline. Members make money for the credit union by using the services like checking accounts and debit cards.
Average of credit union member is 55. National average is 42.
Lack of formal strategic plan.
Everyday, something new happened. We realized there are many foundation issues that needed to be addressed. Given the investments that need to be made, the capital would be dramatically impacted. This could cause red flags for the NCUA and I wanted the board to be fully aware. I shared with the board that we can take the risk or find
a merger partner who is already able to offer these things to members.
Your vote counts
You will then have the opportunity to vote on this merger. The goal of tonight is to ensure you have answers to your questions. Next, you’ll receive a ballot in the mail.
You will be invited back to this room in June for a special meeting to vote. Or mail in your ballot. Following a positive vote, the merger will begin August 1. Any account changes that happen, will happen in the fall of 2019. Even though the legal merger date is August, the system and account changes will occur in the fall. Community Choice is prepared
to help FME members. If there is a successful vote, all of the lessons learned over the years, and CCCUs many merger successes will be applied here. Your feedback is valuable. We want to hear from you.
Thank you FME Federal Credit Union
Thank you Tim and Jeff for sharing the details of the FME journey and process you’ve gone through, to the board for allowing us to participate in tonight’s meeting.
We appreciate the opportunity to say a few words about CCCU and welcome your questions and comments. Thank you and welcome to those who could not be here tonight
but are watching on video.
I’d like to commend the board for the process they’ve gone through to get to this point. It was immediately evident how caring this board is about the membership.
By far, this is the most extensive I’ve seen a board go through when faced this kind of decision. They talked to a lot of different voices, relied on many expert resources,
and it’s commendable. We thank you for being your merger partner. It’s an honor to be trusted to take care of the FME membership. We’ll do our best to ensure the process is a seamless as possible.
Most consumers today are looking at what digital channels you have, and the mobile app. Back in February we rolled out a new state of the art e-Banking system with a new mobile app. Knowing the process the board went through and the number of credit unions they spoke with, we are proud to be here today. I think there a few things you would want to know:
Has a partner been selected who has merger experience? Yes, we have gone through 12 mergers over the last decade.
Extensive expertise in the data conversion.
Expertise in managing the regulatory requirements.
We offer a merger integration team whose sole charge is to serve the members of FME on the transition.
A hallmark of CCCU is our GetBigReward$ program. Members can earn up to $9 a month for being members of the credit union and using our products and services.
We offer up to 10% back on qualified loan products. Many members easily get the $9 a month and in fact, some with the loan rebate are getting over $500 a year.
Not based on balances so any many can get the top reward of $9 per month.
Both boards have agreed to the $1 million divided to the FME members. Very proud to be apart of that, it’s well deserved by the FME members.
We’re also proud of the many work place awards we’ve won over the years. We’ve won national best and brightest awards among others.
Over the last 10 years we’ve averaged well over $ 1 million in technology investments. As a result we continue to enroll about 10,000 members per year.
We’ve started our EComm department a few years ago to support our members growing demands for service over the digital channels. I mentioned our state of the art home banking system and our 24 hour contact center. Important to note this for our out of state members to know they can access through the digital channels or dial us and speak
to someone 24 hours a day.
We have over 4,000 members who live out of the state. We are effectively able to serve our out of state and out of country members with our 24 hour contact center.
We have built an infrastructure to help support other credit unions. Sometimes it leads to mergers, most often it doesn’t. We’re proud to help either way. We’re very involved
with other CUs, in fact, we’ve started 5 companies with other credit unions. We’ve started a technology company, title company, trust services called Credit Union Trust,
and a mortgage company that serves our needs and other credit unions around the country.
Your representation will continue, up to three FME board of directors will continue to serve on the CCCU board. Thank you for being here and considering us as your merger partner. You can view highlights from the Town Hall Meeting conversation.
Hear the questions asked by members in attendance of the Town Hall Meeting, and responses shared by Tim, Jeff, and Rob.