The time has come for Vermont State Employees Credit Union (VSECU) to move forward with their membership vote as the next step in the proposed merger process. The vote is very important to the future of both credit unions as it impacts the services we offer members, communities, and our overall position to compete with larger out of state financial institutions that dominate the Vermont market today.
On Tuesday, September 20 VSECU will send qualifying members a formal merger member communication packet that will include information about the merger, a description of voting options, as well as the ballot to vote for, or against the merger. VSECU members will have 45 days after the ballot is mailed to cast their vote. On Tuesday, November 8 the VSECU membership voting will culminate in a Special Meeting where members can meet with VSECU leadership and cast their vote in person. This will be the last date to vote.
If you are a NEFCU member that is also a member of VSECU we encourage you to participate in the voting process. If you know someone who is a VSECU member – encourage them to also participate.
John J. Dwyer, Jr.
President and CEO
New England Federal Credit Union
We are excited to share that the NCUA has approved the New England Federal Credit Union (NEFCU) merger with Vermont State Employees Credit Union (VSECU). This means the time has come for VSECU to move forward with their membership vote. The vote is very important to the future of both credit unions as it impacts the services we offer members, communities, and our overall position to compete with larger out of state financial institutions that dominate the Vermont market today.
January 1, 2023
Members will continue to use their legacy NEFCU or VSECU products, services, branches, and ATM locations after the close of the merger until a conversion plan is implemented later in 2023. We will notify members of minimal changes required for January 1 after the VSECU member vote is finalized.
Name and Brand
In January, pending VSECU membership approval of the merger, New England Federal Credit Union will be the legal entity. Vermont State Employees Credit Union will become “VSECU, a division of New England Federal Credit Union”
The NEFCU and VSECU Boards have authorized the rebranding of the credit union. The rebranding will take time and include input from staff, members, outside brand experts, and members of the communities we serve. We are early in this process and will make announcements later.
Field of Membership (FOM)
Prior to legal merger NEFCU and VSECU have different charters, bylaws, and rules on who can join. Each credit union has a “Community” charter that makes membership available to most or all Vermonters. VSECU is open to all Vermonters plus certain employer and association groups. NEFCU has 12 of the 14 counties in Vermont plus additional communities we serve in New Hampshire and Michigan. NEFCU has a Federal charter and VSECU has a State, meaning that we operated under different FOM rules.
For the merger to be approved by regulators the charters need to be compatible. After studying all FOM options it was determined that a Federal Multiple Common Bond Charter (FMCB) was the best option. FMCB allows us to focus on one regulator (Federal) rules versus multiple States; to retain key employer groups, like: University of Vermont Health Network, IBM employees, Vermont State Employees and Colleges, and others; AND most importantly to include membership eligibility for all Vermonters and others outside Vermont through co-membership in two national associations: The American Consumer Council (ACC) and the Financial Fitness Association (FFA). This change has been endorsed by both VSECU and NEFCUs boards of directors and will be adopted in a charter bylaw change at or prior to January 1, 2023.
Upon consummation of the merger the Board of Directors of the continuing credit union will be comprised of eleven members, five of who will be from VSECU and six from NEFCU. The names of the continuing credit union’s executive officers, and their positions is also included in the notice. The current NEFCU CEO, John J. Dwyer Jr will continue as CEO and Rob Miller, CEO of VSECU will become President and Chief Operating Officer.
The NEFCU/VSECU merger plans continue to progress in the following ways:
NEFCU and VSECU Commit to Rebranding and a New Name as Part of the Merger Process.
New England Federal Credit Union (NEFCU) and VSECU are excited to announce that after evaluating and assessing each individual brand identity, we will begin rebranding to create a new name for the merged credit union.
The rebrand will coincide with the merger integration process and will help us deepen our partnership and communicate our combined beliefs and principles to our members, communities, and employees. We expect the new brand will take effect after the proposed merger has been approved and the two credit unions are operating as one entity, potentially in late 2023.
We made this decision after careful consideration and with the understanding that members and staff feel an attachment and loyalty to the brand and legacy of their respective credit unions. The primary reason for this decision is to assure members and our workforce that the merged credit union will share a unified mission and vision that incorporates the core values and goals of NEFCU and VSECU. We see rebranding as an essential step toward the successful integration of two competent credit unions with strong cultures, and will seek input from members, employees, and branding experts.
We are excited to begin this process and identify a new name that reflects our partnership and commitment to our members and communities we serve. We look forward to exploring the many similarities that create cohesion between our brands. We will make every effort to remain true to the spirit of both brands as we create a more unified identity that will support our work together now and in the future.
A merger application was filed with the National Credit Union Administration (NCUA) on Monday, April 25th. Review and approval are expected to take 3-6 months. The application described due diligence NEFCU and VSECU performed before each board of directors approved the intent to merge. It also outlined a high-level business plan that explains benefits of the merger to members; the senior leadership team composition; and financial pro-formas for the combined organization.
After the NCUA completes its review and “approves” the merger, the next step will be for VSECU to notify members of a Special Meeting and provide ballots to vote for or against the merger. We expect this will happen in the fall. If the merger is approved by VSECU members, the credit unions will combine as one legal entity, likely in early winter. NEFCU members are not required to vote as the combined legal entity will continue as New England Federal Credit Union.
The answer is that members can expect some change, but it is too soon to tell you what these may be. Most member facing changes would likely occur later in 2023 as the technology platforms are integrated. Both credit unions are committed to making any change as seamless and transparent as possible to both members and staff.
The process of integrating two credit unions is complex. We have established internal teams that are evaluating each credit union’s products and services; policies and procedures; and business plans and priorities. The evaluation also includes a formal assessment of whether the combined credit union should maintain the New England Federal Credit Union (NEFCU) name. We are utilizing advisory and consulting services for overall integration planning, technology system evaluation, and brand assessment.
We appreciate member and staff patience as we evaluate the integration. We are committed to only make changes that are in the best long-term interest of those affected. We will notify those impacted as soon as decisions are made, with sufficient time to adjust, and with minimal impact or requirements.
Recently, NEFCU John Dwyer joined VSECU Rob Miller to discuss the proposed merger and to speak to questions that members have raised.
The financial services industry is evolving at an extreme pace. Five years ago, it was relatively easy to stay competitive with a collection of traditional offerings. These included a branch close to home or office, a call center, online banking, and a few convenient ATMs. Competitive pricing and friendly, trustworthy staff rounded out the mix. However, while once sufficient, these basic services are no longer enough.
Modern mobile technology has generated an exploding demand for new products and services. To capitalize on this trend, big technology companies are partnering with large national banks or financial service providers, investing billions to deliver products and services from outside of Vermont. Unfortunately, the strategy is working. Our state’s rural nature and declining population growth make it difficult for independent institutions to compete. Smaller banks and credit unions are losing market share, and NEFCU’s member growth has slowed in recent years.
There are many examples of financial service innovation that are putting pressure on community banks and credit unions. NEFCU thus far has met the challenge of these new market demands. But we would not serve present and future members well if we did not tell you that the increasing pace requires significant investments. These in turn drive the need to seek new tools and partnerships to remain competitive. The merger with VSECU is just such an organic partnering, combining the best of both credit unions to create significant, lasting benefit for members, employees, and communities. The merger does not need our members’ votes because NEFCU is the “continuing” credit union. But it will require patience and trust in the leadership which has rewarded that trust, year after year, by making NEFCU Vermont’s leading and largest credit union.
The proposed merger’s direct benefits include VSECU products and services that synergistically complement NEFCU’s existing array: nine additional branch locations, a comprehensive energy-efficiency program, and a more robust range of business services, including merchant and payroll services. These additions would require multiple millions of dollars of investments by NEFCU independently. With a combined membership and market penetration, we will be able to better serve smaller market segments and communities.
We are aware of objections to the merger organized by former VSECU executive leadership. We believe that this group does not recognize the threats which Vermont’s banks or credit unions face if they are unwilling to undertake strategic partnerships such as the proposed merger, which will allow us to meet these threats and challenges by investing and competing within Vermont.
We deeply appreciate our members’ loyalty and trust, and highly value input about the quality of our existing services and those we commit to in the future.
John J. Dwyer Jr.
President & CEO
New England Federal Credit Union
On February 16, 2022, your Board of Directors and those from Vermont State Employees Credit Union (VSECU) unanimously agreed to file a merger application with our regulator, the National Credit Union Administration (NCUA). This vote followed extensive due diligence performed by each credit union.
The planned merger is contingent on regulatory approval by the NCUA, which is expected to take three to five months. Following that, an affirmative majority vote by members of VSECU is also required. Pending both approvals, in late 2022 or early 2023, the credit unions will merge under the legal entity of New England Federal Credit Union.
The boards have agreed on a new governance structure. I will remain as Chief Executive Officer and Rob Miller from VSECU will serve as President and Chief Operating Officer. We have also agreed to retain all employees.
Our two credit unions share the essential core value of enhancing members’ prosperity. We firmly believe that combining resources will help accomplish this by elevating the level of service we provide to you. In addition, the merger will give statewide access to our integrated branch network, as well as to VSECU’s successful sustainable energy loans and other offerings. Importantly, combining will better enable us to introduce new services that we believe members will demand in the future. Doing so will help us compete effectively with the larger banks that exist here or are moving into the Vermont market. And we will remain a Vermont-based, member-owned cooperative!
We do not expect that you will see any changes for several months. NCUA insurance coverage rules remain unchanged for those who are members of both credit unions until the merger is complete. As we plan our future integration, we will communicate how this may impact you.
We are strongly committed to make any changes as seamlessly as possible and to the ultimate purpose of delivering the greatest value to you in reaching your financial goals. We welcome your questions and will answer specific inquiries on our website, NEFCU.com, or in our Call Center at 800.400.8790.
John J. Dwyer Jr.
President and CEO
New England Federal Credit Union