Serv­ing those who served…time

It’s a vow that res­onates in North Carolina, home to a wave of bank M&A ac­tiv­ity.

Credit Union Journal - - Front Page - BY PALASH GHOSH

TRU­LIANT FED­ERAL CREDIT UNION, A $2.2 bil­lion in­sti­tu­tion based in Win­ston-salem, N.C., has un­der­taken a rather au­da­cious mar­ket­ing cam­paign to help dis­tin­guish it from the com­pe­ti­tion – by un­equiv­o­cally promis­ing never to merge.

The ad strat­egy is par­tic­u­larly rel­e­vant to res­i­dents of parts of the bank-heavy Tar Heel State, in­clud­ing the Pied­mont Triad and Char­lotte, who have wit­nessed wave af­ter wave of bank­ing merg­ers and con­sol­i­da­tions. Th­ese cus­tomers, the credit union noted, are of­ten left “feel­ing dis­en­fran­chised,” since a pri­mary driver of us­ing a com­mu­nity bank is a de­sire to be a part of a lo­cal in­sti­tu­tion rather than a larger re­gional or na­tional bank.

The new cam­paign high­lights other dif­fer­ences be­tween Tru­liant and banks, in­clud­ing free in­ter­est check­ing, a va­ri­ety of low-rate op­tions on auto loans, home eq­uity loans and lines of credit, mort­gages and other loans.

The cam­paign was launched over Me­mo­rial Day week­end and will even­tu­ally in­volve var­i­ous forms of me­dia, in­clud­ing print ad­ver­tis­ing, bill­boards, di­rect mail, so­cial me­dia and a spe­cial merger page on Tru­liant’s web­site.

Chief Mar­ket­ing Of­fi­cer Karen De­salvo ex­plained that the merger is­sue has con­tin­ued to be top of mind in North Carolina, where com­mu­nity banks dis­ap­pear on what seems to be an al­most daily ba­sis.

“There are cur­rently 10 ac­tive merg­ers in the com­mu­ni­ties we serve,” she said. “The merger of two (or more) fi­nan­cial in­sti­tu­tions can be un­set­tling for con­sumers, who face the un­cer­tainty of new man­age­ment, the po­ten­tial for higher fees and the pos­si­bil­ity of branches clos­ing.”

She said she hopes con­sumers af­fected by th­ese merg­ers “will con­sider us as a bet­ter bank­ing al­ter­na­tive.”

Tru­liant plans to mea­sure the cam­paign’s suc­cess by mon­i­tor­ing mem­ber­ship and loans, and De­salvo said the credit union will “cer­tainly track ac­tiv­ity in com­mu­ni­ties where the cam­paign is run­ning.”

A cru­cial el­e­ment of a cam­paign such as this, she said, lies in “seiz­ing the op­por­tu­nity to com­mu­ni­cate our dif­fer­ences from banks to those who may not be aware of how credit unions are dif­fer­ent. For us as a credit union, it’s a way to com­mu­ni­cate that we’re driven by do­ing what’s best for our mem­bers, not for in­creas­ing prof­its.”

Thus far, anec­do­tally, the re­ac­tion to Tru­liant’s cam­paign has been “very pos­i­tive,” De­salvo said. “We had a vis­i­tor to our Matthews, N.C., lo­ca­tion, whose bank had merged twice in the last few years,” she re­called. “He said he never switches fi­nan­cial in­sti­tu­tions since he be­lieves in the full re­la­tion­ship, how­ever, he couldn’t take it any­more. He saw our ad about bank merg­ers and that we would never merge, and said ‘I knew I had to know more about Tru­liant.’ There’s a lot of value in let­ting peo­ple know we won’t put them through this.”

Sub­se­quently, she said, the man be­came a mem­ber, opened sev­eral ac­counts and brought a full range of bank­ing prod­ucts from Tru­liant. “We were able to do a lot for him, sav­ing him al­most two hun­dred dol­lars per month,” De­salvo added.

But can Tru­liant keep it’s word in this eco­nomic land­scape?

Tru­liant has been a part of the merger process in the past, but on the ac­quir­ing end. In late 2012, the credit union ac­quired the tiny, $2.4 mil­lion New River Val­ley Truck Plant Fed­eral Credit Union of Dublin, Va. In 2004, Tru­liant merged with Vic­tory Ma­sonic Credit Union, a small, black-owned in­sti­tu­tion based in Win­ston-salem, N.C.

De­salvo said thanks to Tru­liant’s more than $2 bil­lion in as­sets, it has the economies of scale to pro­vide mem­bers with mod­ern bank­ing tech­nolo­gies along with an ex­ten­sive branch net­work, mak­ing it un­likely ever to merge into a larger in­sti­tu­tion.

“Most merg­ers oc­cur [as a re­sult of ] be­ing un­able to ef­fec­tively serve your mem­ber­ship,” she said. “We have no to plans to merge — ever.”

In ad­di­tion, De­salvo as­serted Tru­liant will not be buy­ing up smaller credit unions. “We do not buy credit unions,” she said. “Over the years, a few smaller credit unions have asked to merge with us out of hard­ship or to be able to pro­vide their mem­ber­ship with ad­di­tional ser­vices that they were un­able to de­liver, due to their size.”

Rather than merge, Tru­liant has been ex­pand­ing in the key Char­lotte mar­ket. It now has a total of 14 branches in the Char­lotte metropoli­tan area.

A WORD OF PRAISE

Jim Blaine, the for­mer CEO of $36.5 bil­lion State Em­ploy­ees Credit Union of Raleigh, N.C., and a well-known credit union fig­ure in the state, praised the ad cam­paign, de­scrib­ing Tru­liant as “a great credit union.”

“I be­lieve they are re­spond­ing to concerns by North Carolini­ans about the dis­ap­pear­ance — via merg­ers with out-of-state banks — of so many of our lo­cal com­mu­nity banks,” Blaine said. “Most folks pre­fer high-qual­ity, lo­cal

in­sti­tu­tions, if avail­able.”

Blaine fur­ther as­serted that he thinks Tru­liant will honor its com­mit­ment to re­main in­de­pen­dent, “un­less the mem­ber-own­ers choose oth­er­wise — [and] that’s the mem­bers’ choice.”

A DIF­FER­ING VIEW

Paul Lu­cas, a credit union mar­ket­ing and brand­ing ex­pert, was less con­fi­dent that Tru­liant will be able to back up its prom­ise to never merge.

“If the ad had of­fered Tru­liant FCU’S in­tent to not merge as one proof state­ment of their com­mit­ment to their mem­bers it would have made sense,” Lu­cas said. “How­ever, as a stand-alone premise, it is ab­stract and some­what con­fus­ing.”

If credit unions wanted to in­vite bank­ing “refugees,” as Lu­cas called them, that would make a lot more sense, he said. “The ben­e­fit here is se­cu­rity and com­mit­ment to the con­sumer,” he added. “That makes a case for what Tru­liant FCU will do for them, not what it will not do to them. That cre­ates more of an emo­tional connection.”

More­over, a board of di­rec­tors and CEO should never make a prom­ise that the or­ga­ni­za­tion might not choose to keep in the fu­ture, Lu­cas added.

“Ul­ti­mately, this ad should re­as­sure Tru­liant FCU’S cur­rent mem­bers they made a good choice in se­lect­ing the credit union, of­fer sta­bil­ity to merger-weary bank cus­tomers and make Tru­liant FCU em­ploy­ees [know] they are part of the team,” he con­cluded.

THE BIG­GER PIC­TURE

Tru­liant may have one trend on its side: merger ac­tiv­ity among credit unions has fallen in re­cent years. Ac­cord­ing to Cal­la­han & As­so­ciates, the num­ber of merg­ers in­volv­ing credit unions has dropped from 274 in 2014, to 229 the fol­low­ing year, then 224 in 2016. Through the first quar­ter of 2017, there have been only 39 merg­ers – sug­gest­ing, at this pace, an­other drop for this cal­en­dar year as a whole.

But does this re­ally mean that credit unions are now less in­ter­ested in merg­ing?

Cal­la­han’s di­rec­tor of in­dus­try anal­y­sis Sam Taft said it de­pends how one looks at it. “The num­ber [of merg­ers] has de­clined slightly, but so have the num­ber of credit unions,” he told Credit Union Journal. “If you look at the num­ber of merg­ers as a per­cent­age of the total num­ber of credit unions, it’s ac­tu­ally held pretty steady over the last sev­eral years – about 3.5 per­cent.”

More­over, Taft noted, the ma­jor­ity of merg­ers are oc­cur­ring with rel­a­tively small credit unions – those with as­sets be­low $20 mil­lion.

Smaller in­sti­tu­tions sim­ply can­not sur­vive, much less com­pete, due to ris­ing com­pet­i­tive pres­sures and their economies of scale.

And the num­ber of credit unions is likely to keep shrink­ing.

Den­nis Dol­lar, a for­mer NCUA chair­man and now prin­ci­pal part­ner of Dol­lar As­so­ciates, a credit union con­sult­ing firm in Alabama, be­lieves con­sol­i­da­tion will per­sist in the in­dus­try for “the fore­see­able fu­ture” due to mar­ket con­sid­er­a­tions and reg­u­la­tory and com­pli­ance is­sues.

How­ever, Dol­lar cau­tioned that the rate of such merg­ers may slow down a bit partly due to field of mem­ber­ship re­stric­tions and stricter dis­clo­sure re­quire­ments.

“Fed­eral credit unions with [dis­sim­i­lar] FOM can­not get NCUA ap­proval to merge their mem­ber­ships in most cases,” he said. “Both the FOM re­stric­tions and the en­hanced dis­clo­sure re­quire­ments are mak­ing some merg­ers take longer and are mak­ing some credit unions ques­tion whether the vol­un­tary merger is worth the fight.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.