Leusink said he and Kempf went to great lengths to try to identify who would be the CEO of the surviving organization, 4Front Credit Union.

Michael N. Lussier, president/CEO of the $831 Webster First Federal Credit Union in Worcester, Mass., often jokes about writing a book on credit union consolidations after he retires.

“I've done 16 mergers so far here in my career and I think I have experienced everything,” he said.

One of the challenges he experienced is that many smaller credit unions hold all kinds of vendor contractual obligations. Lussier has also noticed that it's very common for the board of directors to jack up the salaries of executives in the last year of their employment contracts.

“These challenges usually become liabilities and expenses at the time of merger,” he said. “Often times, a vendor realizes that this is considered lost business and is not usually very forgiving. Sometimes the vendor is the same one used by the merging credit union, and contract obligations are usually dissolved and/or absorbed into the merging credit union's contract. Unfortunately, if a contract for a vendor or an employee is outstanding, it is usually considered a true obligation and must be paid.”

Regardless of who pays off the vendor and employment contracts, the net result is the same, he added.

“I often have the merged credit union expense it prior to conversion as this is a direct liability, or we make sure the liability is booked properly so that the true value of the capital and net asset valuation is done correctly at the time of the merger,” Lussier said. “There is no other way. It is what it is.”

Bob Steensma, president/CEO of the $329 million Five Star Credit Union, found that one of the behind-the-scene merger challenges for him has been melding workplace cultures. In addition to overseeing the consolidation of credit unions into Five Star CU, he has led the mergers of banks into the Dothan, Ala.-based credit union.

Integrating the employees of the merged institution into the Five Star CU workplace culture took a lot of training and education in products, sales, services and systems.

“We have developed our own program that talks about the way we do things and the way we approach the sales and services aspects of the business and all of the expectations,” Steensma said. “We also provide them with their job descriptions before we get into the training because we want to make sure they know what they are walking into on day one. We are as open as we can be because training is very expensive, it takes a lot of time and effort and we don't want employees leaving because we failed to share something that was a key piece of information.”

Find out how Leusink and Kempf worked out who would be the new CEO, plus get more insights on consolidation challenges in the Oct. 14, 2015 print issue of CU Times.