Credit unions move toward historic merger
BIDDEFORD – Maine-based Ocean Communities Federal Credit Union will merge with New Hampshirebased Northeast Credit Union in July, making Ocean Communities the first Maine-based credit union to cross state lines.
Before the merger goes into effect, a reciprocity law in New Hampshire needed to be amended. The law landed on New Hampshire Governor Chris Sununu’s desk about a month ago, said Ocean Communities CEO Judy Morin, and he signed it on Friday, March 31, becoming effective immediately.
“In a nutshell, if Maine is going to allow a New Hampshire credit union (to operate in) the state of Maine, they want to ensure New Hampshire is going to reciprocate,” Morin said. “That has gone through . . . really nicely. Both states have been very cooperative.”
Now that Sununu has signed the law, a 30-day comment period is in effect with the New Hampshire Bank Department, a regulatory body that needs to provide an official approval of the merger by the end of this month. This will be followed by a Ocean Communities board meeting – projected for early June – where its members will likely vote to approve the merger, Morin said.
Ocean Communities, established in 1948, has five branches, all in southern Maine, and has a 12,000-person membership base. Morin, who was hired as CEO in 2012, said it’s valued at $167 million.
Portsmouth, New Hampshire-based Northeast Credit Union has a membership of about 124,000, Morin said, and has more than $1 billion in assets. After the merger the new entity will be valued at about $1.2 billion. This figure represents both banks, since Ocean Communities’ value will be installed into Northeast’s.
Ocean Communities is a full-service credit union, but is not a commercial bank, Morin said. It offers savings, deposit and checking accounts; certificates; individual retirement and health savings accounts; consumer and mortgage loans, and mobile banking and deposit capture. It does some business and commercial lending, but those aren’t Ocean Communities’ “claim to fame,” she said.
In July 2016, Ocean Communities and Northeast announced intent to merge, which marked the first formal step in the merger process.
The idea originated from an impromptu conversation with the CEOs of both credit unions when they first met more than two years ago, Morin said.
“We talked about it and I presented it to my board and (Northeast President and CEO Timothy Collia) presented it to his board. It’s just a really good strategic move for Ocean Communities because there is no overlap in fields of membership, so all branches stay open and no employees lose their jobs,” Morin said, adding that it was Collia who first brought up a merger.
The idea to merge with Northeast specifically was attractive to Morin because of the needs of both credit unions, she said.
“A lot of the things (the CEO) was trying to do at Northeast, we were trying to do here,” she said. “A lot of things we were trying to do here, they were already doing there, so there was a lot of synergy already.”
Collia said one of the things Ocean Communities has struggled with is having adequate capital for lending. After the merger, the company will be more financially empowered to offer loans at a greater capacity.
“Our similar cultures, complementary geographies and service strengths make this combination a natural fit,” said Collia in merger documents. “Both of our organizations are dedicated to delivering the very best to our members and we are proud to continue the support of important events in our communities. This is an exciting opportunity for the members and employees of both organizations to build the absolute best credit union in the Northeast.”
After the merger, Morin will become the senior vice president and chief operating officer for Northeast and will commute to Portsmouth, New Hampshire.
Morin said the move will behoove members of both credit unions because of greater access. Northeast has 15 branches, so there will be a combined access of 20 branches after the merger.
“We lucked out because the cultures (of both credit unions) are very similar,” she said. “Nobody loses their job. Members get access to 20 branches . . . There will be more ATMs. It’s a larger institution – not that bigger is necessarily better, it’s not about that, it’s about the fact that the cultures match. They’re about member service, and nobody loses. Everybody wins in this situation, so it’s a really good thing.”
She said the merger will also benefit Ocean Communities and its membership because of opportunities and possibilities that come with greater scale.
“To do business these days in this industry, you need scale,” she said. “The regulations have increased and it’s very expensive to be compliant. There’s a lot of regulatory oversight and its getting bigger and bigger. Technology is expensive. You just need scale. We have to do the same regulatory compliance that any other institution has and it’s expensive, so it just makes total sense.
“What economies of scale will bring to us is the ability to keep up with (technology),” she continued. “So getting it implemented was one thing – it was very expensive to do – and keeping up with it and making sure you can continue to safeguard member data for cyber security (is another). Economies of scale will (enable us) to keep up on necessary, critical things like information security, and to improve our technology and keep up with the improvements of it.”
The merger has to be approved by three separate bodies, Morin said. This includes the states of Maine and New Hampshire, as well as the National Credit Union Association, the regulating body for credit unions, which approved the application for the merger in January, she said. The application was submitted around Thanksgiving.
On Sunday, March 19, the Ocean Communities board hosted its required annual meeting where Chairman Robert Begin informed board members about the merger, Morin said.
“It was really a no-brainer,” she said. “The board gave it a lot of thought. I have to commend the board for doing this because it is a big change, but the community will benefit, too. Northeast is very much into the community. They sponsor a lot of things in New Hampshire, they are very active in the community and their employees are very active in the community. You can do that when you’re a larger institution and you have enough staff.”
Employees and members won’t see a big difference, she said, because all that will change essentially is the name, from Ocean Communities Credit Union to Northeast Credit Union.
However, Morin said after the letter of intent was made public, some Ocean Communities employees left.
“We had some fallout – not a lot. It took about six weeks for staff to come to terms,” she said. “We told them all they’ll still have jobs. They’ve seen what’s happened with other mergers, so it’s a hard thing to trust when you hear something like that. After six weeks everybody settled down.”
She said employees that are currently employed have been hired knowing about the merger, and some applied when they heard Ocean Communities was merging with Northeast. Some were already members with Northeast, then applied and began working at Ocean Communities.
“People that are here now are either really excited about this or not worried about it,” she said.
After an Ocean Communities board meeting in June, every customer will receive a document in the mail that will tell them what the merger is about and what it’ll look like, Morin said.
Morin said Ocean Communities contributes to the community, but typically on a smaller scale.
“We belong to the chambers. We’re active at their events. We have people who serve on boards, so we volunteer our time that way,” she said. “I was on Rotary. I serve on the foundation board at York County Community College. We will sponsor events, like walks and runs. So it’s on a smaller scale than what we used to do, because for the last four or five years it’s been about shoring up what we have and getting technology in place that we need, so funds have been in federal compliance.”
Morin said because the merger will make Ocean Communities the first Maine-based credit union to cross state lines, the move bears significance.
“We’re sort of paving the way here,” she said.