Members Narrowly Approve Merger of Vermont’s Largest CUs

The controversial merger of the $1 billion Vermont State Employees Credit Union in Montpelier with the $1.9 billion New England Federal Credit Union in Williston was narrowly approved by VSECU members.

Of the 14,926 VSECU members who cast their ballots, 7,622 voted in favor of the consolidation and 7,304 voted against it, according to a report from the VSECU supervisory committee released Wednesday. The credit union serves 71,625 members.

“Our membership is highly engaged in the democratic process as member-owners evidenced by the highest credit union voter turnout ever in our history,” VSECU President/CEO Robert Miller said. “As we look toward the future, we are excited about the opportunity this partnership promises and ready to take VSECU into our united future for all of our members.”

NEFCU President/CEO John Dwyer emphasized that the newly merged credit union would remain a local cooperative banking option and will be better positioned to serve all members throughout Vermont in today’s competitive and rapidly evolving marketplace.

“Our ability to bring two like-minded Vermont credit unions together will create tremendous opportunities, not only for our members, but employees and communities we serve,” he said.

The combined credit union with more than $3 billion in assets, 168,000 members, 460 employees and 17 branches will become, by far, the largest financial institution that is headquartered in the Green Mountain State. Currently, there are 18 credit unions and 11 banks based in Vermont, according to Deposits.com. What’s more, the consolidation will make the combined financial cooperatives the fourth largest credit union within New England’s six states: Maine, New Hampshire, Massachusetts, Connecticut, Rhode Island and Vermont.

For now, the two credit unions will continue to operate separately until Jan. 1, 2023. On that date, VSECU will become a division of NEFCU. Dwyer will lead the new organization as CEO and Miller will serve as president and COO.

No changes will occur for members of either credit union while the integration of systems, services and products occurs. While there is no firm deadline for the conclusion of the integration, it is expected that the combined credit union will operate as one entity later in 2023, the credit unions said. A re-branding process will be conducted to create a name and brand identity for the merged credit union.

About a month after the merger was announced in February, a group, Calling All Members, was organized and led by VSECU’s retired CEO Steven Post and former board members in opposition to the proposed combination of the cooperatives. They encouraged members to vote against the consolidation through their website and social media channels, while VSECU promoted the benefits of the merger to the membership on its website and social media, and hosted forums across the state. In addition, both sides posted a variety of op-eds on local media news sites.

VSECU and NEFCU warned that the current marketplace is challenged by an aging Vermont population with slow to no growth in addition to environmental, economic and social changes, and accelerated technology challenges that require huge investments to retain and attract new members. What’s more, proponents reasoned the merger was needed because there is much more competition from big banks that have been buying Vermont banks.

The Calling All Members group argued, however, that the way to defeat the competition from big banks has always been to create a unique brand and deliver quality products and exceptional service.

“That is what VSECU achieved over the years with much success,” the group said on its website. “The notion that bigger is always better and that bigger is stronger, is a fallacy that has been dismissed by Vermonters for years.”

The group predicted that the merger will mean Vermonters will have fewer options for banking services and VSECU’s distinctive, state-wide field of membership and focus will be lost because NEFCU plans to expand to areas and groups outside of the state. In addition to its Vermont members, NEFCU serves members from New Hampshire and select employer groups in Michigan and Ohio.

“I basically finished up my years there believing that I had laid the foundation for a long-term Vermont institution to be present,” Post said in a CU Times interview last week. “When that possibility disappeared over this merger news, I was very upset. And I think a lot of members are upset, too.”

From his standpoint, Post said NEFCU made the “obvious decision” that it wants to use the scale it gains from VSECU to expand its business beyond Vermont.

Post did not respond to CU Times’ request for comment on Wednesday regarding the merger vote.