WORCESTER, Mass.-When Webster First FCU absorbed Filene FCU earlier this year, it capped off a series of four mergers in less than seven months, a process that has grown the CU's membership and assets, and allowed it a foothold into new markets.

The process began in 2011, when Webster First absorbed Saugus FCU. "That opened up the doors to us, because before we could not compete in the Boston community, and it allowed us to have an additional field of membership and allowed other credit unions to seek us out as a potential merger candidate," explained Michael Lussier, president and CEO of the 59,000-member, $648-million credit union. "And from there the phone calls started coming in."

Over the months that followed, Webster First absorved Winthrop FCU, Fitchburg FCU and finally Filene FCU, increasing WFFCU's assets by more than $160 million, raising its capital by $8 million and adding 15,000 new members. But Lussier noted that none of that would have happened without the Saugus merger.

Lussier told Credit Union Journal that all four boards were receptive to the merger process, and some board members at each CU were offered 24-month positions on advisory committees. Because Webster First was not well known outside its home Worcester market, the CU engaged in direct mailings to new members, taking the attitude of WFFCU "as the new person on the block."

"I think our strength and integrity speaks for itself," said Lussier. "Once they went online or called and asked questions, they were able to see the strong capital and earnings, and products and services we can offer that were far beyond that being offered by their previous credit union."

In addition, Webster First has grandfathered in any fee structures that were better than those offered by WFFCU. "That allowed the members to realize nothing but positive benefits through this entire process," said Lussier.

No layoffs have been necessary, said Lussier, because all four CUs "had maximized the use of every employee. We needed every employee to make this happen."

The four former CEOs have been brought on for their various areas of expertise, and Webster First also increased its compliance and internal audits divisions to make room for all the new employees.


Lessons From A Veteran

Now a veteran of the merger process, Lussier noted "cultural shock and cultural differences are the first thing you need to address" in a merger. Case in point in its most recent merger was the strong difference between the Boston market and the Worcester/Central Massachusetts market, including different rates and different competition. That meant holding meetings with the former CEOs of the merged CUs to discuss factors such as pricing and fee structures.

"We're always competitive, and that's what's made us so successful, so we didn't have to tweak our rates that much," he said. "We did find that the rates are more competitive and closer to ours in Boston than they are here in Worcester."

Despite Webster First's recent success with mergers, Lussier stressed that merging should still be a last resort for small credit unions. "I see some credit unions out there going around talking to every small CU CEO about a merger, and that's not the right attitude. The right attitude is to help them survive and assist them when necessary. Merging is the last resort."

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