ICUL and NWCUA Boards Approve Merger Plan

12/19/17

Credit unions throughout the Northwest continually set a high benchmark for collaboration, modeling what’s possible when multiple state trade associations come together to excite a stronger voice regionally and nationally, while empowering local advocacy and public awareness of individual credit unions.

In January 2017, the Northwest Credit Union Association (NWCUA) and the Idaho Credit Union League (ICUL) further modeled collaboration, beginning a two-year Strategic Alliance in which the NWCUA has provided management services to ICUL’s member credit unions. The Boards of Directors of both organizations entered the strategic conversations with the understanding that a successful alliance could lead to a formalized merger of the ICUL and its related service corporation into the NWCUA and Strategic Link.

This month, the Boards of the ICUL, NWCUA, and their respective service corporations have vetted the details of a merger recommendation. A Merger Agreement was approved by the Boards last week, and they are now bringing their recommendation to member credit unions.

“The Boards and management believe this approach serves the future needs of member credit unions in all three of our Northwest states,” ICUL Board Chair Kent Oram said. “As we move this merger recommendation from the boardrooms to ICUL and NWCUA member credit unions, we recommend and encourage the ICUL and NWCUA members’ full support, and request approval of this merger plan.”

Highlights of the Merger Recommendation

The Merger Agreement and recommendation addresses Board Governance and the distribution of equity. Upon consummation of the merger, NWCUA would be governed by a Board of Directors consisting of up to 15 Directors; nine currently elected Directors of the NWCUA (the NWCUA Board Members will continue to serve as previously elected), and three newly appointed Directors, as chosen by and from the ICUL/LSI Board of Directors. The ICUL Board recommends to the membership Kent Oram, President and CEO of Idaho Central Credit Union, Trisha Baker, President and CEO of Lewis Clark Credit Union, and Dan Thurman, President and CEO of East Idaho Credit Union, as the Idaho leaders to serve in this continuing governance role.

The Merger Agreement outlines management of ICUL legacy equity in the following manner: direct rebate credits to ICUL member credit unions (recall the 2016 sale of ICUL Affiliate’s former building), a significant donation to the Northwest Credit Union Foundation (commensurate with the Oregon and Washington Foundations’ when they merged several years ago), and an equitable contribution to the combined future equity of the continuing Association, providing for adequate reserve levels within the combined organization’s policy in a post-merger three-state regional trade association environment.

These capital management actions encourage continued Association engagement, demonstrate Idaho’s strong commitment to the already-healthy continuing organization, and align with an “all-in” philosophy with a member-centric focus on advancing the Northwest Credit Union Movement.

The equity management details in the Merger Plan more specifically include:

  • The creation of a $600,000 “Pay It Forward Idaho Member Credit Union Engagement Fund,” which returns equity to engaged Idaho credit unions over a two-year period. The Fund applies to active Idaho member credit unions that have paid their respective dues no later than June 30, 2018, and continue to pay respective dues throughout the two-year period.
  • A significant contribution of $500,000 to the Northwest Credit Union Foundation to further advance strategic priorities in asset building, economic empowerment, and cooperative development initiatives throughout the entire Northwest region.
  • A contribution of the remaining equity (approximately $1.2 million) to the post-merged, three-state regional NWCUA organization.

“Both ICUL and NWCUA Boards believe the recommended merger will increase the strength of the voice, influence, and impact of this new three-state world-class trade association,” ICUL Board Chair Oram added. “Together, we continue to advance this Northwest Credit Union Movement with the leadership our member credit unions expect.”

Next Steps

Pending approval of NWCUA and ICUL member credit unions in Summer/Fall 2018, the merger would be effective Dec. 31, 2018.

“Along this journey, the Boards have shared their collective desire to ensure the next steps would formalize this three-state collaboration and continue to build on the strengths of all legacy organizations and the credit unions who support them,” said NWCUA Chair Brooke Van Vleet. “The Boards’ end in mind remains focused on achieving the maximum long-term benefits on behalf of all member credit unions.”

Your Association leadership and the Boards of both organizations remain fully committed to transparent communications. Leading up to and during the member credit union vote in 2018, they will continue to be accessible with all the necessary information and answers to questions you may have, so you can make an informed decision.

“On behalf of management and staff, we recognize and applaud the leadership of both Boards and this stellar example of credit union collaboration,” said Troy Stang, NWCUA President and CEO. “From an internal perspective, your Association team adds its voices to fully support the Boards’ merger recommendation and additionally encourages members across the three states to support the recommendation. I am proud of the team at your Association, and share their passion and excitement for what is possible—yes, we have just a little ‘obsession’ for credit unions.”

At a series of local Town Hall meetings in late Q1 and Q2 of 2018, the Boards and Association leadership will discuss the details of the merger. In the meantime, please reach out to Troy Stang at tstang@nwcua.org with any comments, questions, and perspectives.

Posted in Around the NW.