Midwest Financial Credit Union acquisition results in layoffs of Ann Arbor staff
The Dearborn-based credit union that took over Ann Arbor-based Midwest Financial Credit Union in October has laid off between 10 and 15 ex-Midwest employees, sources said.
DFCU Financial, Michigan's largest credit union with more than $3 billion in assets, had indicated that it would not cut any former Midwest Financial employees after the merger.
"We're going to need all those folks," DFCU CEO Mark Shobe told AnnArbor.com in June, adding that "we intend to expand, not contract, in Ann Arbor."
A spokeswoman for DFCU declined to discuss personnel changes that resulted because of the merger. Midwest had about 70 employees when DFCU acquired the credit union.
"We don't comment on employment issues and some restructuring is common when a merger occurs," said Kim Ward, DFCU's public relations director, in an e-mail.
Layoffs occurred among Midwest's executive leadership and its private banking unit. Some workers were offered demotions and others took severance packages, sources said. It was unclear how many Midwest employees chose to stay with the company but with different positions.
DFCU said last month that it had 530 employees and more than 219,000 members. MidWest had 18,000 members and four branches.
DFCU is maintaining Midwest's branches and did not conduct layoffs among bank staff who interact with customers.
The merger was viewed as an opportunity for DFCU to expand its membership base into the Ann Arbor market.
Ward, in an e-mail Friday, said DFCU is poised to announce "some exciting developments on the horizon for members and the community early next year."
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
A2K
Mon, Nov 22, 2010 : 11:35 a.m.
Companies always say there won't be any layoffs with a merger...but there always are. They likely say there won't be any layoffs to: 1. Keep employees from messing around with company assets. 2. Keep everyone working at 100% until the axe falls. 3. Good PR/public opinion. Case in point: MCARE being sold to BCBS...only 15% of employees there got jobs with BC, the rest had to scrounge elsewhere - but there was lots of sunny/happy press-releases saying the opposite.
AlphaAlpha
Sun, Nov 21, 2010 : 6:53 p.m.
Thank you YpsiLivin, for the additional details. Makes sense. As an aside, and as you likely know (but many don't) already, if more people moved their money from the huge banks to local banks, the benefits would be felt individually, and throughout the community.
YpsiLivin
Sun, Nov 21, 2010 : 5:49 p.m.
Barb, Shobe never said there would be no layoffs. He said "We're going to need all those folks," referring only to the branch and operations staff, and he probably said that in response to a question about whether existing Midwest branches would be closed. He never said "We'll need every employee Midwest has on the payroll right now." Executive positions are never sacred, and it's silly to think that there would be no administrative layoffs in a merger. I could be wrong, but I bet the Midwest executives saw the writing on the wall long before they got laid off. (Given that Midwest was burning about $1M per quarter, I would suspect that some executives were already considering the relative brightness of their futures with Midwest...) "To the victor go the spoils." In this case, Midwest (at less than 10% of the size of DFCU) got absorbed so it's only reasonable to think that the Midwest executives would bear the brunt of the reductions. In fact, I wouldn't be surprised to hear of more reductions once the merger is complete.
Barb
Sun, Nov 21, 2010 : 1:54 p.m.
Of course there was no promise. But that doesn't help those who read that statement as he intended it at the time, which was to sound like there would be no layoffs. He was in spin mode. Still, I feel for those who lost their job. He gave them hope he shouldn't have.
YpsiLivin
Sun, Nov 21, 2010 : 1:39 p.m.
AlphaAlpha, To put DCFU CEO Mark Shobe's comment into context, the article you quote actually said: "Unclear, he said, is how staffing or branch operations could be impacted by the move. No layoffs or closings have been announced. "We're going to need all those folks," Shobe told AnnArbor.com. "... We intend to expand, not contract, in Ann Arbor." In June, when the potential merger was announced, Shobe stated that: 1. The impact of the merger on the staffing and branches was UNCLEAR. 2. As of that time, no layoffs or closings had been announced. (But there was no promise that none would occur.) 3. When Shobe said "We're going to need all those folks" he was referring to branch operations staff, not executives. Losses of more than $1M per quarter for four straight quarters pretty much sums up how things were going at Midwest: not too good. Midwest couldn't afford to keep losing money, and if the choice comes down to voluntary merger versus involuntary shutdown, the voluntary merger looks pretty good, given the fact that a voluntary merger preserved all the branches and all of the operational staff, doesn't it? Earlier this year and in 2009, Midwest had a three-star (adequate) Bauer rating. It now has a four-star (excellent) Bauer rating and DFCU has a five-star (superior) rating. Where would you rather have your money?
Do not taunt Happy Fun Ball
Sun, Nov 21, 2010 : 10:57 a.m.
Not a great bank/credit union. No real lose here.
AlphaAlpha
Sun, Nov 21, 2010 : 10:23 a.m.
Certainly mergers have job reduction potential. However, when job losses are prefaced with statements like this: ""We're going to need all those folks," DFCU CEO Mark Shobe told AnnArbor.com in June, adding that "we intend to expand, not contract, in Ann Arbor."" one can't help but wonder what is happening, or feel deceived. Mr. Bomey, perhaps Mr. Shobe will have a comment?
johnnya2
Sun, Nov 21, 2010 : 10:16 a.m.
It is only logical that there would be some people lost. Many were offered demotions, but decided against staying. How is that a bad thing for DFCU. DFCU has n existing infrastructure that does not need redundancies. Thhey already have IT staff, executive level people, marketing people. The area they promised not to cut was directly related to SERVICE. They have met that promise. DFCU does not owe anybody anything.
YpsiLivin
Sun, Nov 21, 2010 : 9:14 a.m.
a2doc, Certain executive positions are redundant after any merger. Following a merger, does an organization work with two CEOs? Two CFOs? Two COOs? Nope. DCFU didn't promise "no layoffs;" it promised no layoffs of branch personnel. For its part, Midwest encouraged its members to vote for the merger, and the membership did; over 92% said yes. Presumably, the management of Midwest did so knowing that some of the Midwest executive group would be let go. Mergers make sense if they result in an overall smaller administrative structure and a bigger organization. That's what happened. If it makes you feel any better, had the merger not occurred, there would have been many more layoffs at Midwest, and branch personnel and locations would not have been spared.
a2doc
Sun, Nov 21, 2010 : 8:36 a.m.
Yes, they used that freedom to lie. They laid off banking staff in Ann Arbor with hardly any notice. Very cynical. What's the next exciting news? Are they closing a branch??!
God Loves Us All
Sun, Nov 21, 2010 : 6:59 a.m.
So they do what they need to do. God bless America let freedom ring.