Merger of Vermont’s 2 largest credit unions encounters opposition

Led by its former CEO and two former directors, some Vermont State Employees Credit Union members have rallied in opposition of the credit union’s planned merger with New England Federal Credit Union.

“We believe independence is better than a merger — much better,” said a letter signed by Steven D. Post, former VSECU CEO; M. Jerome Diamond, former VSECU director and board chair; and Kimberly B. Cheney, former VSECU director and board chair. Cheney and Diamond are also former Vermont attorneys general.

“We are calling on ALL MEMBERS to Make change simply by voting: Join us in the effort to preserve VSECU: by first defeating this merger proposal and then by helping to elect and hire new leadership,” the letter concluded. 

Asked about the group’s opposition to merger, Post stressed disbelief that bigger always means better.

“We’re opposed to (the merger) because VSECU was built over the years with a specific focus, a laser focus really on Vermont and Vermonters,” he said. “We can’t understand why that idea and strategy would be abandoned by merging into NEFCU.”

“I still haven’t seen any argument that really highlights specific reasons this is a good idea other than bigger is better and then the economy-of-scale dynamic,” Post said, adding that VSECU is already a strong organization.

In February, NEFCU and VSECU — the largest and second-largest credit unions operating in Vermont, respectively — announced their plans to merge, calling the decision an opportunity to “amplify our like-minded mission and commitment to help people financially succeed.” 

The move, which requires regulatory and member approval, could be finalized by early 2023, according to the organizations. 

Credit unions, like banks, take deposits, offer mortgages and car loans, and provide other financial services. But unlike banks, credit unions are nonprofit, run by their member-owners. As a result, they typically offer lower interest rates on loans, fewer fees and operate locally or regionally. 

“The wonderful part about credit unions is that we are financial cooperatives. In this case, our members will get a voice. They’ll get to exercise that voice and vote,” VSECU CEO Rob Miller said. “I completely honor and respect that process.”

Asked if the merger with NEFCU would weaken VSECU’s commitment to serving Vermonters, Miller argued otherwise.

“We’re both Vermont-focused institutions. We will continue to be Vermont-focused institutions,” Miller said.

“Even though our name is New England Federal Credit Union, our origin is here in Vermont, with the IBM plant,” NEFCU CEO John Dwyer said. 

“I actually would agree with some of the opposition leaders in that Vermont State is a very strong organization — I’ve competed with them for three decades,” Dwyer said. 

Although “merger” is the legal term for the joinder, both CEOs stressed that they see the move as a decision between equals. 

The new credit union would operate under the NEFCU name. According to Dwyer, VSECU would maintain five board members, and NEFCU would have six. 

Those opposing the merger are asking like-minded credit union members to voice their concerns at the annual VSECU virtual meeting at 5:30 p.m. March 30.

“This will be our first chance to hear from the board. The board has really been silent,” Post said. 

The CEOs of VSECU and NEFCU say they feel confident the merger will proceed. 

“It’s not that often that you see two strong Vermont institutions come together to become stronger for Vermont and Vermonters,” Dwyer said. “That really excites me because we really have a unique opportunity here to do some really good work.”

After the regulatory process, VSECU members must vote to approve the merger. Pending regulatory approval, that vote likely would take place this fall, according to Miller.