Vermont Mountains - Hero

Merging to Improve Our Impact on Vermonters

VSECU and New England Federal Credit Union (NEFCU) are proposing to merge into one credit union to better serve our members and Vermonters, pending approval from regulators and VSECU members later this fall. As two member-owned, not-for-profit financial cooperatives that have been serving Vermonters for over 135 years combined, we believe that together, we will be better and can do more to improve the quality of life for our members, employees, and communities.

For now, it is business as usual. We will continue to engage with our members throughout this months-long process and share information so you can make an informed decision when it is time for the Special Meeting and member vote.

Timeline of proposed merger approval process

The Merger Approval Process

The proposed merger with NEFCU is a months-long process that VSECU members will ultimately vote on this fall. See the timeline for approving the proposed merger, including what has happened to date and what to expect next in the journey.

See the voting process

The WHY behind the proposed merger

BETTER TOGETHER: We are building a stronger co-op

Both VSECU and NEFCU have a long history of Vermonters helping Vermonters by joining and participating in our credit unions. When more members come together to save, we have more deposits to fund loans. The interest income generated from those loans is used to pay savers through dividends and savings rates. The more members who pool their resources together in our financial cooperative, the better we can recirculate wealth and the stronger we are for the benefit of each other.

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TRUE TO VERMONT: We are keeping banking local in Vermont

Combining our resources will help protect and preserve our Vermont-based cooperative movement and accelerate financial inclusion for more Vermonters. Together, VSECU and NEFCU can provide the same level of service as the growing number of outside competitors, big banks, and financial technology companies that are winning over some of our members and exporting our Vermont dollars and decisions out of state.

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LEADING FROM THE FUTURE: We are investing in our future generations

As part of our mission to serve all Vermonters, we need to focus not just on the present, but look five, 10, and 20 years ahead with foresight and visionary leadership. We have a vibrant membership and, in this uncertain and rapidly changing world, need to secure our collective financial strength and sustainability to ensure we can serve our members for the unforeseeable future. We are building on a legacy to make sure your children and grandchildren will enjoy the benefits of banking with a financial co-op, while keeping people and families connected, here in Vermont.

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ENRICHING QUALITY OF LIFE: We will be the very best for our members

Together, we will realize scale and capacity that will fuel our ability to do more than we would be able to do on our own. We strive for excellence, listen to member feedback, and know where we fall short of providing exceptional customer service and helping our members achieve financial independence. Increased capital, additional employees, and a more diverse membership, product suite, and balance sheet, will allow us to invest in you with great rates, low fees, more branches, better digital capabilities, and better and more responsive customer service.

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Read more about how the proposed merger will benefit our members:

The goal is to expand access to more products and services and adopt the best-priced products and services from each credit union where possible. As one example, the proposed merger would allow us to reduce overdraft fees from $28 to $14, which is NEFCU’s current fee structure.

Our members would have access to eight more branches around the state, without the cost of construction or leasing space and shoring up financial resources for potential future branches in other areas.

This ever-growing threat requires more and more resources to ensure our members’ information is protected. Blending resources will provide greater investments in security and protect our members’ information.

With the labor shortage, the proposed merger would give us 460 employees and increase our capacity to provide more individual attention to our members’ banking needs.

We would continue to provide our existing and unique services such as green lending and expand new services offered by NEFCU such as their robust and various mortgage products.

We would have access to an additional $113 million available in business lending capacity to support small Vermont businesses and our local economy.

We would be able to make the substantial and consistent investments needed to improve our digital banking services and stay ahead of member expectations for a seamless and safe online and app experience.

Amid Vermont’s competitive and evolving banking landscape, the proposed merger would help ensure that we remain locally operated and able to serve current and future generations of Vermonters.

More information about the proposed merger

We want to make sure our members have the most accurate, up-to-date information. We will continue to provide resources with more details about the proposed merger as we go through the regulatory and approval process.

Read about past member forums

We hosted a series of in-person forums for members to learn more about the proposed merger with NEFCU. We’re sharing the common themes that emerged from the questions and thoughts that members shared with VSECU Board Members and senior leaders at each forum. We also hope to schedule a virtual forum that our members will be able to join from anywhere.

We held the first of our member forums on Tuesday, May 10, at the Vermont College of Fine Arts in Montpelier. 29 people attended to hear remarks from VSECU CEO Rob Miller, NEFCU CEO John Dwyer, and VSECU Board Members before asking questions about the proposed merger. Between the questions posed and stories shared by many long-time members, we heard a few common themes:

  1. Our members feel connected to our staff: So are we! That’s why we made sure every employee will keep their job and current salary as part of the merger.
  2. Our members have an emotional connection to our VSECU name: VSECU, NEFCU, and a brand consultant have started evaluating an appropriate name for our combined credit union. We expect to announce before the vote whether the name will remain NEFCU or change, based on market research and member feedback.
  3. There is confusion about the voting process: Pending regulatory approval in three to four months, we will call a Special Meeting in October or November for all 70,000+ members to be able to vote on the proposed merger. Between now and then, our goal is to provide all the information you need to feel fully informed by the time you vote.
  4. Members are concerned about service disruption: We are working with NEFCU to explore the best way to integrate our services and minimize disruption for our combined membership. While we don’t have answers yet to questions like, “Will my account number be the same?” we will share these details with you as we make decisions over the next few months.
  5. Members are curious why we need to merge for future sustainability: Our Board has been examining this for years as the industry grows more competitive, products and services require greater investment, and our membership has aged and growth has declined with Vermont’s population. In short, we are merging with NEFCU to keep our credit union local, relevant, and an alternative to traditional banks for generations to come.

Read more about our Montpelier forum in the May 25 article published by The Bridge.

On Wednesday, May 25, we held one of two member forums at the Chaffee Art Center in Rutland. After remarks from VSECU CEO Rob Miller, Board Member Spencer Newman, and NEFCU Chief Marketing and Retail Officer Bill Smith, members shared their concerns and asked questions. Most members in attendance shared that they were long-time members of the credit union. A few common themes emerged during the forum:

  1. Our members fear losing what they love about VSECU—local community connection and familiar faces: As part of the merger agreement, every employee will keep their job and current salary, so you will continue to see the same faces you’ve grown to love. And our commitment to local communities is deepening with the merger, particularly in Chittenden County, where NEFCU has a strong presence.
  2. Members wanted to understand the voting process for the merger: Pending regulatory approval in three to four months, we will call a Special Meeting in October or November for all 72,000+ members to be able to vote on the proposed merger.Between now and then, our goal is to provide all the information you need to feel fully informed by the time you vote.
  3. Members were curious about the risk profile of NEFCUs mortgage lending in Detroit: NEFCU’s mortgage portfolio is stable with a default rate lower than VSECU’s, which is already lower than industry standards.
  4. Members wondered how the merger will affect the accumulated capital of the credit union and how capital of the merged organization will support member benefit: NEFCU has a higher capital ratio than VSECU and when merged, the combined capital ratio will be greater than VSECU’s. This means a larger “savings account” for the credit union to weather disruptions (such as COVID or a recession) or use to invest in new products and services that members are asking for. In a combined credit union, higher efficiencies of scale will improve the member return on investments.

On Wednesday, May 25, we held one of two member forums at the Fairbanks Museum & Planetarium in St. Johnsbury. Senior Vice President Marketing & Business Development Officer Yvonne Garand made opening remarks, touching on the four key benefits of the proposed merger: Building a stronger co-op together, preserving local banking in Vermont, investing in the sustainability of our future, and enhancing our ability to improve the lives of our members and Vermonters.

NEFCU CEO John Dwyer spoke about NEFCU’s history as a Vermont-based institution that originated with IBM employees from the Essex, Vermont plant. He shared that NEFCU has a rich history in serving Vermonters as approximately 84% of their members have a Vermont residence. He also shared that NEFCU is a top mortgage lender of all financial institutions domiciled in Vermont and spoke about how NEFCU is focused on creating affordable housing in Vermont

Both executives and VSECU Board Members Michael Hogan and George Sales answered questions from members. The members in attendance shared their length of membership and talked about what drew them to VSECU and their experiences as members. Community support and impact, and green energy loan programs were the most cited reasons expressed for choosing VSECU. Members expressed an interest in maintaining impact in both areas post-merger. The following themes arose out of the evening’s conversation:

  1. Members appreciated the transparency and information sharing, expressing that it was helpful for them to understand more about the proposed merger: Thank you! This is a complex and emotional topic for our members so there is a lot to share.
  2. Members indicated that they chose VSECU for a reason and the hope is that the reasons they chose VSECU will not fall by the wayside: Our objective is to take the best of what each credit union offers under one roof.
  3. Members expressed their preference for local service, whether it be in mortgage servicing, solar lending, or community support: We will continue to be a local and member-owned credit union as a combined entity. This is one reason behind the proposed merger! To protect local banking in Vermont as more out-of-state banks enter the state.
  4. Several questions surfaced related to specific financial details such as assets under management, the percentage of mortgages that are sold versus retained, and context around accumulated capital: Combined we will be a $3.1 billion credit union. Both credit unions service all mortgages and will continue to do so. Approximately 20% of mortgage loans are sold, though we retain servicing, to protect against balance sheet risk. And capital is the accumulated savings over time, like a rainy day or cookie jar savings, that is used to protect the credit union or to make investments to better serve members. NEFCU has more capital than VSECU and together we will be combining our capital.

On Wednesday, June 8, we held one of two member forums at the Bennington Museum in Bennington, Vermont. Senior Vice President Marketing & Business Development Officer Yvonne Garand made opening remarks, touching on the four key benefits of the proposed merger: Building a stronger co-op together, preserving local banking in Vermont, investing in the sustainability of our future, and enhancing our ability to improve the lives of our members and Vermonters. NEFCU CEO John Dwyer spoke about NEFCU’s history as a Vermont-based institution that originated with IBM employees from the Essex, Vermont plant.

Executive leaders from VSECU, Board Members Janet Hollner and Julie Lineberger, and NEFCU CEO John Dwyer answered questions from members. Here are the themes that arose during discussion:

  1. The most common theme centered around positive interactions members have had with specific people at the Bennington branch: Members said they did not want to lose those experiences with the merger. They wanted to ensure that employees would be protected. As part of the merger agreement, every employee will keep their job and current salary, so you will continue to see the same faces you’ve grown to love.
  2. Members shared their experiences of VSECU’s merger with PMH Credit Union in 2014, which those present agreed was a positive experience: We love to hear this. Our intent is that the proposed merger will be just as positive an experience for members.
  3. Members wondered about the differences between state and federal charters and why we’ve opted to adopt a federal charter: Both boards agreed that merging into a federal charter presented greater opportunities for future sustainability.
  4. Members asked if the merger agreement would be made public: This is a common question. We can’t share a copy of the merger agreement publicly, as it contains confidential business information regarding both credit unions. Once the National Credit Union Administration (NCUA) approves the application, we will share several disclosures publicly.
  5. Members wanted to know if our environmental focus would change: No! Our commitment to the environment was one of the things that NEFCU found most attractive and our agreement with them ensures that we will not lose that focus.
  6. One member commented that we would be bigger as a merged entity, noting that we would be big enough to compete yet still small enough to be agile: That is the hope! With the banking industry growing and innovating quickly, the merger should help us keep pace while staying local and community-focused.

On Wednesday, June 8, we held one of two member forums at the Echo Center in Burlington, Vermont. After remarks from VSECU, CEO Rob Miller; NEFCU Chief Financial Officer, Sue Leonard; and VSECU Board Vice Chair, Michael Hogan; members shared their concerns and asked questions that were answered by the presenters. In addition to the above, Board Members in attendance included Colin Owyang, Stephanie Munier, and Owen Milne. Most members shared that they were long-time members of the credit union. Themes that arose most often during the forum included the following:

  1. Members were concerned with the loss of products and services that members value: After the merger, we will go through an integration period, during with we will choose which aspects of each product or service will best serve the members, but the merger is an opportunity to provide additional products and services, not to reduce our offerings.
  2. Members wanted to understand the voting process for the merger: We have submitted the merger application to the National Credit Union Administration (NCUA) and are waiting for their approval. Once approved, the membership will have an opportunity to vote on the merger. We expect to hold the vote in the fall, but timing will depend on NCUA’s timeline. Members will receive a Notice of Special Meeting with information about the merger and a ballot. Members will be able to vote online, by paper ballot, or in person at the Special Meeting.
  3. Members asked if they would need to get new checks and change their account numbers: As we evaluate our core systems to determine the best option for the membership, we will discover how these changes will impact members and will communicate with members to ensure a smooth transition.
  4. Members were curious how NEFCU merged with a credit union in Detroit: Growth at NEFCU is a strategic priority (as it is for most all credit unions). NEFCU let their federal regulator know that they would be interested in considering merger opportunities. As part of a program to make merger matches to help stabilize and strengthen the credit union sector, their regulator brought the Detroit credit union into a conversation with NEFCU. The merger made sense for NEFCU and the Detroit-based credit union. Today, Direct Financial is a division of NEFCU serving approximately 3,500 members in the Detroit area.
  5. Members expressed support for the strengthening of the cooperative sector with the merger and applauded it as “a good match:” Thank you! We agree wholeheartedly.

Member questions and answers

Since the proposed merger was announced, we’ve collected a range of questions from our members. While many details are still undetermined, here are the answers we can provide at this stage in the process.

We weighed our options

The board has been engaged in various sustainable growth discussions and scenarios over the past few years so that VSECU can continue to remain relevant for today and the future. Potential mergers have been part of those discussions, which informed their analysis of this opportunity. After a series of strategic information meetings throughout 2021, followed by a formal two-day strategic retreat, an exploratory conversation between CEOs Robert Miller and John Dwyer began in October of 2021.

Yes. Guided by their fiduciary responsibility to do what is in the best interest of members, the VSECU Board of Directors engaged in extensive conversations, meetings, and presentations with industry experts, legal counsel, and independent consultants.

This decision was not made quickly. The decision to merge with another entity has been a consideration for several years. When this opportunity arose, we were well prepared to undergo a thoughtful process to move forward. There were many meetings, discussions, exchanges of information, and due diligence between our organizations and respective boards, including outside of the regular cadence of board meetings. It became clear in February 2022 that a proposed merger would have a direct benefit on our members.

While size is not the objective, growth and scale are useful. They help provide access to more capital, mitigate balance sheet risk, ensure financial sustainability, and provide the resources required to invest in the products and services that members want. Increased resources enable VSECU to compete with national banks and financial technology companies in an increasingly complex marketplace.

With minimal growth in population, Vermont is aging faster than any other state. Our average member is 52 years of age and focused on saving, with 44% over the age 55 and 25% ages 40 to 54. This imbalance is not good for savers or borrowers in our membership. We need more young members who are in their borrowing years to keep our financial cooperative working for every generation.

The financial marketplace has evolved at an extreme pace in just the last five years. Consumer demand for both in-person branch connection and the latest mobile technologies require significant investments. To capitalize on this trend, big technology companies are partnering with large national banks or financial service providers, investing billions of dollars to deliver products and services from outside Vermont. This competition, combined with an aging and declining population, makes it difficult for smaller banks and credit unions to compete and maintain market share in Vermont. As a result, our annualized member growth has slowed and declined in recent years.

Yes! Pending approval, the VSECU that you know and love will continue to be visible in many ways as we blend the best of our two organizations.

  1. After the close of the merge, we will continue to operate and serve our members under the VSECU name and brand as a division of New England Federal Credit Union, until a determination is made about unifying under one combined identity and name.
  2. We will retain all our employees and maintain all our branch and office locations as part of the merger.
  3. The leadership will be a balanced reflection of both organizations, both at the Board level and on the senior leadership team.
  4. Our green loan products and focus on sustainable banking won’t go anywhere—this strength of ours will be accelerated through complementary products and services provided by NEFCU.
  5. Both NEFCU and VSECU are committed to honoring our long histories as local cooperatives, reflecting our shared Vermont values, and furthering our common mission to empower a better quality of life for our members.

Both Boards jointly committed to evaluate rebranding under a new name as a merged entity. This evaluation will be supported by critical analysis, branding experts, and member feedback, to name a few considerations. We believed that a disciplined process was essential for such an important decision. We’ve started the process and hope to make a determination before VSECU members vote on a merger, allowing them to factor it into their decision. If we do move forward with a new name for our combined credit union, we don’t foresee this being generated until after the merger.

Over the years, the VSECU Board of Directors has explored many strategic initiatives to ensure our sustainable growth for the future. They have discussed opening new branches, joining or forming a credit union service organization (CUSO), expanding outside of Vermont, and potential mergers with both in- and out-of-state credit unions.

This is good for members

  • MORE FAVORABLE RATES AND FEES
    The goal is to expand access to more products and services and adopt the best-priced products and services from each credit union where possible. As one example, the proposed merger would allow us to reduce overdraft fees from $28 to $14, which is NEFCU’s current fee structure.
  • GREATER CONVENIENCE
    Our members would immediately have access to eight more branches around the state, without the cost of construction or leasing space and shoring up financial resources for potential future branches in other areas.
  • CYBERSECURITY PROTECTION
    This ever-growing threat requires more and more resources to ensure our members’ information is protected. Blending resources will provide greater investments in security and protect our members’ information.
  • PERSONALIZED SERVICE
    With the labor shortage, the proposed merger would give us 460 employees and increase our capacity to provide more individual attention to our members’ banking needs.
  • NEW (AND FAMILIAR) PRODUCTS AND SERVICES
    We would continue to provide our existing and unique services such as green lending and expand new services offered by NEFCU such as their robust and various mortgage products.
  • MORE SMALL BUSINESS LENDING
    We would have access to an additional $113 million available in business lending capacity to support small Vermont businesses and our local economy.
  • IMPROVED TECHNOLOGY
    We would be able to make the substantial and consistent investments needed to improve our digital banking services and stay ahead of member expectations for a seamless and safe online and app experience.
  • SUSTAINABLE GROWTH
    Amid Vermont’s competitive and evolving banking landscape, the proposed merger would help ensure that we remain locally operated and able to serve current and future generations of Vermonters.

We will remain locally operated and keep our resources concentrated in our communities. The strength from within will allow us to expand and reach more people and underserved communities such as the BIPOC, refugee, low-to-moderate income, and rural communities. Our philanthropic focus is aligned so that we can create more impact to address affordable housing, food scarcity, heat, environmental stewardship, and financial wellness.

While other mergers in Vermont may not be viewed positively by many, the proposed merger with NEFCU would be an exception. It reflects two strong Vermont businesses coming together to strengthen their legacies of improving the lives of all Vermonters, now and for generations to come.

Yes, the field of membership of the merged credit union will allow all Vermonters to be members.

Yes, residents outside of Vermont will be eligible for membership, just as they are able to become members at both VSECU and NEFCU today. This has been an effective strategy to diversify each credit union’s revenue stream and ensure sufficient and sustainable growth. Still, over 84% of both credit unions’ memberships reside in Vermont, and both remain focused on serving all Vermonters. This will continue to be true after the merger is approved and effected.

Just like VSECU, NEFCU is a member-owned financial cooperative. They share, almost verbatim, our mission to empower members’ financial success and improve the quality of life for Vermonters and have been doing so for more than 60 years. Approximately 84% of their 95,000 members have a Vermont address, which is very similar to VSECU (88%).

Just as VSECU supports Vermonters’ essential needs, NEFCU focuses its community impact in the areas of children’s welfare, nursing and science education, financial literacy, and housing, where they recently committed $6 million to help address Vermont’s affordable housing crisis.

It was non-negotiable for VSECU and NEFCU that all employees would keep their jobs and current salaries as part of the proposed merger. In fact, we foresee the creation of new jobs as part of our commitment to the communities and branch market areas that we currently serve.

No. There are no special, merger-related financial arrangements for the CEO or executives. Like all employees at VSECU, they will maintain their current salary and benefits. With VSECU’s strong financial performance and consistent ranking among Vermont’s Best Places to Work, the Board of Directors wanted Miller as President and Chief Operating Officer to help lead the merged credit union alongside NEFCU CEO John Dwyer.

Ultimately, our members will vote and decide

No. VSECU members will decide the outcome by voting on the proposed merger with NEFCU.  This vote is contingent on regulatory approval by the National Credit Union Administration (NCUA), which can take months.

We anticipate a Special Meeting will be noticed to our members in the fall of 2022. Following that, an affirmative majority vote by the members of VSECU is required.

This is the first step of a lengthy process. We are working to make sure that our members are receiving accurate and updated information to be able to make an informed decision when it comes time to vote.

Pending regulatory approval, we will notify all VSECU members by USPS mail and email of the special meeting. We anticipate this will happen sometime early fall.

The proposed merger would be approved by a majority vote of those members who cast a ballot.

Yes! Like our Annual Elections, eligible members will receive voting instructions with the option to cast their vote online or mail in their paper ballot.

VSECU would continue to pursue its mission and vision to help all Vermonters live more prosperous lives—the same pursuit that led us to enter the proposed merger agreement with NEFCU.

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Questions?

We will continue to update this page as we have more information. If you have any further questions or comments, please email [email protected] or call 802-371-5134, and we will respond to your inquiry as soon as possible.

Email the merger response teamOr call us at 802-371-5134