While the list of Madison-area credit unions has grown to include Alliant Credit Union, serving mainly Alliant Energy employees and their families, it shrank by two because of mergers over the past year.
Educational Employees Credit Union, Janesville, became part of Summit Credit Union, Madison; while Municipal Credit Union, Beloit, combined with Parker Community Credit Union, Janesville.
According to the Wisconsin Department of Financial Institutions, in 2015, 12 Wisconsin credit union mergers took effect; so far in 2016, there have been five mergers, and CTK Credit Union in Milwaukee was shut down.
Those numbers are not unusual, either for Wisconsin or nationwide. But viewed over time, they show a sharp reduction in the number of state-chartered credit unions: In 2010, there were 223; by the end of 2015, there were 150, down by one-third in just five years.
Over the same period, though, Wisconsin credit union members rose from 2.19 million to 2.61 million and assets climbed from $20.7 billion to $28.8 billion, both records, DFI reports show.
Credit union mergers are not a new trend; they’ve been going on since the late 1960s or early 1970s, said George Hofheimer, chief knowledge officer at Filene Research Institute, a Madison nonprofit think tank.
“Quite simply, it’s just harder to comply with all the regulations at the smaller institutions,” Hofheimer said.
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“Similarly, demands from consumers are increasing every day,” he said, for services such as 24-hour call centers, multi-purpose websites and mobile banking. “All of these things cost lots of money.”
A report from the Illinois Credit Union League says credit unions across the U.S. have been merging “at an average rate of one per business day since 2000.” Reasons cited include declining profit margins; growing regulatory burdens; aging senior managers; limited staff; and competition.
At WEA Credit Union in Madison, CEO Mark Schrimpf calls it “a sad trend.”
Schrimpf said WEA Credit Union is financially healthy but might consider consolidation “if the right opportunity would present itself.
“The cost of continually improving and offering new services is difficult for the smaller credit unions. A merger with a larger credit union that already has those services ... could be appealing, he said.
A report by CUNA Mutual Group, Madison, shows in the 12 months that ended in April 2016, the number of credit unions nationwide dropped by 304, compared with 267 lost in the previous 12-month period.
But mergers are not necessarily bad, said Filene’s Hofheimer. “It’s actually good for consumers, going from a smaller institution that’s struggling to keep up with these changes. ... The average consumer benefits from better rates, better products and better services,” he said.