Superior, Hermantown credit unions consider mergerNext week, members of Metro Credit Union in Superior will be asked to ratify a merger agreement with Hermantown Federal Credit Union.
By: Maria Lockwood, Superior Telegram
Next week, members of Metro Credit Union in Superior will be asked to ratify a merger agreement with Hermantown Federal Credit Union.
If approved, Metro’s office at 25 Belknap St. will become the newest branch of the Hermantown-based credit union May 1. The partnership would result in the third largest credit union at the Head of the Lakes with 18,000 members.
Scott Lundgren, president and chief executive officer for Hermantown Federal Credit Union, said the merger presents a great opportunity to grow in the area. The move has already been given the green light from the National Credit Union Administration, the Wisconsin Department of Financial Institutions Office of Credit Unions and both boards of directors.
“Hermantown Federal Credit Union obviously is a very sound institution that has an opportunity here to take on a partner,” said George Althoff, communications director for the Wisconsin Department of Financial Institutions (DFI). The merger, he said, would also strengthen Metro Credit Union, which has been a Superior institution for 75 years.
A recent letter from Metro to its members stated that the current Great Recession has impacted the credit union; local job loss has resulting in a rash of loan defaults. While the management and board have worked to right their economic ship, they have not been able to issue enough new loans to recoup losses and get the books in the black. The DFI directed Metro’s board of directors to seek a merger partner.
Credit union mergers are not unusual. According to Althoff, there were 20 credit union mergers in Wisconsin in 2011, 13 in 2010 and 14 in 2009. Two Eau Claire credit unions merged last year and an Eagle River credit union merged with one in Rhinelander. While mergers that cross state lines are less common, Althoff said, geography plays a role in such matches. If both institutions are in the same market area, it enhances the potential for success. Last year, for example a Milwaukee-area credit union merged with one in Illinois. At the end of 2011, there were 203 state chartered credit unions, two federal credit unions and a corporate credit union serving Wisconsin citizens, according to the DFI. Metro is a state chartered credit union; Hermantown is federally chartered. Metro currently has more than 5,700 members and $30 million in assets. Hermantown has more than 12,000 members and $76 million in assets
Althoff said credit union mergers are usually very successful due to the strength of at least one of the partners. When asked about the impact of the Great Recession on Hermantown Federal Credit Union, Lundgren said the institution did have some rough patches. But 2011, he said, was the credit union’s best year ever. The NCUA has also approved a widening of the area Hermantown Federal Credit Union covers, Lundgren said. The institution can now serve residents of St. Louis, Carlton and Douglas counties. Regardless of what county they reside in, Lundgren said, current Metro members will be members of the new merged institution.
Both Althoff and Lundgren said that, should the merger be approved, it would remain “business as usual” at Metro. More details on how the two credit unions will become one are expected after next week’s meeting, Lundgren said.
Members of Metro Credit Union are asked to attend a special membership meeting at 6:30 p.m. Thursday, April 19 at the Wisconsin Indianhead Technical Conference Center in Superior to consider and act upon the merger proposal.