One of the first priorities for Polish National Credit Union following its merger with Westfield River Federal Credit Union will be to find a new facility in Westfield to which it can relocate. The existing branch (pictured above), which is too small for the expanded services Polish National hopes to offer in the community.

A merger was not part of the original discussion. When Jim Gardner, president and CEO of Chicopee-based Polish National Credit Union, had his first casual conversation with leaders of Westfield River Federal Credit Union, the topic didn’t even come up. Gardner said it was a meeting set up to facilitate Polish National’s first attempt to reach out to smaller credit unions by offering assistance and services.

Less than three weeks ago, however, the $340 million-asset Polish National Credit Union received approval from state regulators to merge with Westfield River Federal Credit Union, a small institution with less than $20 million in assets that was struggling prior to the deal. By the end of January, the combined entity plans to have all of its data and records merged.

But it all began back in September 2004. Gardner said his credit union had realized it had the ability and resources to package and sell services related to technology, marketing and compliance aspects of the business that are difficult for smaller credit unions with limited resources to tackle.

“That was basically how our merger started,” said Ann Crum, manager of the former Westfield River Credit Union, which now will operate as a branch of Polish National. “Now we see them as being able to bring to our members all the things that we couldn’t do.”

“They were going through some painful decisions,” said Gardner. “They knew their future was unsure. The board [at Westfield River] made a decision they were not going to continue [on their own].”

In early 2005, Polish National received a phone call that started the ball rolling on merger discussions. Westfield River began looking for the best suitor for a merger in the spring of last year. Within months the company turned to Polish National, which is the 17th largest credit union in the state in terms of assets, choosing it over a handful of other credit unions with which a merger might have been possible.

“It began more or less with them [Westfield River] coming to us. They felt the best merger partner would be [Polish National],” said Gardner.

“It is a partnership,” said Crum. “The fact that they wanted to work with us in a partnership made it feel right.”

The papers finalizing the agreement between the two credit unions were signed on Dec. 27. The old office of the Westfield River Federal Credit Union in Westfield will now be known as the Westfield River branch of Polish National.

But one of the crucial changes Polish Nation plans to make is the branch site.

According to Gardner, the under-banked town is an ideal spot in which to expand and the community is hungry for additional financial services options. But the building in which Westfield River was based is not suitable to address the needs of the community, he said.

“Their facility was part of the problem,” said Gardner. “In this case – the cost to get a new site – it probably would have been quite a drain on their resources.”

“We have a lovely little office, but we are bursting at the seams,” said Crum.

The building does not provide ample parking or a dive-up window. There also is no automated teller machine available on site – Westfield River, in fact, has no ATMs at all. Gardner said he will start looking for a better location for the branch at the end of the month, after the merger is complete. He said he is unsure how long he will need to search before moving the new branch to a more ideal location in Westfield.

‘Head Start’
“Sometimes that [suitable facilities] becomes a challenge that smaller institutions can’t overcome,” said Rob Kimmett, senior vice president of marketing for the Massachusetts Credit Union League.

He said the number of credit unions has been shrinking by about 3 percent per year over the past couple of years, in large part due to new challenges for smaller institutions in the areas of technology and regulatory compliance.

According to Kimmett mergers within the industry are a good thing. The consumers reap the ultimate benefit, having more financial services and products available to them, he said. Kimmett also points out there are no financial incentives for credit unions to merge such as exist with banks.

“I think what you are seeing here is a good thing for the consumer,” said Kimmett. “I think it’s exciting. There is so much positive going forward.”

There are about seven or eight credit union mergers per year in Massachusetts, said Kimmett. He also said if a credit union is not in a suitable space, offering financial services to consumers can be much more difficult.

However, the town of Westfield, with approximately 40,000 residents, is a prime spot for growing financial institutions. There are two other small credit unions operating in Westfield, each with about $1 million in assets, according to Kimmett.

“In Westfield proper there is not too much,” he said.

Gardner expects other financial institutions will see opportunity in Westfield and competition may increase in the future, but for now Polish National can begin its tenure in the community on more solid footing than if it had simply started a new branch there. Gardner said Westfield was an area in which Polish National was looking to expand into even before the merger.

“It [the existing membership base of Westfield River] gives us a head start in that community,” he said.

Westfield River had not been providing its customers with online banking options, something that will now be available thanks to the merger. The merger will also make available to former Westfield River members an array of deposit and loan products that previously were not of offered. And under Polish National the branch will be able to originate more loans that it was able to as an independent credit union, Gardner said.

Polish national is a community credit union in Western Massachusetts that will easily be able to absorb the members of Westfield River, a credit union for teachers and municipal employees. The staff in Westfield also is expected to remain intact, said Gardner.

“This merger is the first of its kind for us,” said Gardner. “It also could have worked into a good working relationship [even if a merger had not resulted].”

Gardner said his credit union still plans to offer resources and services to smaller credit unions in the future now that the institution better understands the needs of smaller credit unions and how to package its products. Since credit unions do not operate in the same competitive arena as banks, it could make sense for the industry. Polish national would sell certain services such as marketing and technical assistance to credit unions at a rate they could afford, said Gardner.

“We certainly have the capability to help out smaller credit unions. It’s in the incubation stage. We have only had this capability for about a year. We try to be good citizens,” Gardner said.

Kimmett said looking out for fellow credit unions and sometimes sharing or offering resources is part of the credit union culture.

“It is certainly not uncommon to have these sharing notions,” said Kimmett.

“That’s really what credit unions are all about or what they should be about,” said Crum, who has been working in the industry for more than 35 years.