ALEXANDRIA, Va.–Fifteen more credit union merger proposals have been filed with NCUA, according to the newest review by CUToday.info, with those seeking to combine listing the typical reasons for making the move, including crushing regulatory costs, as well as some unusual reasons, as well.
Not surprisingly, many of those looking to end their charters are small, but more surprising is that a number are merging into other CUs that are, relatively speaking, on the smaller side themselves. Only a few of the CUs merging announced their intention to return capital to members.
In one almost emotional plea, one credit union told its members it has found itself at a “standstill” for years with a declining and aging membership and an inability to invest in the kinds of electronic services younger people want.
In another case, a smaller CU appears to be merging into a larger partner that clearly needs its net worth. And in one case a member has expressed opposition to a merger.
Comprehensive Review
CUToday.info has been comprehensively reporting on every merger disclosure form filed with NCUA, which requires credit unions to inform members of the reasons they believe they need to merge, plans for any return of capital, whether any members of senior management or the board will receive merger-related compensation, how members can offer feedback on mergers, and when the vote will take place.
This publication’s most recent update on CU mergers in 2022 can be found here and here.
This is the first of a two-part series examining the latest merger announcements:
The Merger Proposals
Four Reasons for Merging
Merging Credit Union: Coventry Teachers FCU, Coventry, R.I.
Assets: $3.086 million
Members: 636
Acquiring Credit Union: Navigent Credit Union, Smithfield, R.I.
Assets: $3.2 billion
Members: 126, 647
Date of Member Vote: June 10
Coventry Teachers told its members the merger is in their best interests for four reasons:
- Increased regulatory burden
- The desire to offer additional products and services that require increased staff expertise
- The ability to leverage operating efficiencies and lower certain costs through a combined institution
- The need for greater convenience and access for members.
CTFCU reported a net loss of $4,636 on March 30, with net worth of 17.80%. Navigent CU posted $8.949 million in net income and net worth of 9.86%. Coventry Teachers said it will not be distributing any net worth, nor will any merger-related compensation be paid out. It said its current office will remain open “for a limited amount of time,”
Members Express Some Opposition
Merging Credit Union: Menlo Survey FCU, Menlo Park, Calif.
Assets: $75.6 million
Members: 2,747
Acquiring Credit Union: SRI FCU, Menlo Park, Calif.
Assets: $139.1 million
Members: 3,323
Date of Member Vote: June 10
Menlo Survey FCU said in its disclosure to members they will benefit from the merger via additional products, such as fixed-term emergency loans and numerous other loan types; a Medallion Stamp Program; additional types of savings programs; better pricing, expanded branch availability, and more. There will also be improved economies of scale, MSFCU said.
MSFCU said four of its board members will have the opportunity to serve on the SRIFCU board, and its other three board members will be able to serve on an advisory committee.
Menlo Survey said there will be no share distribution due to costs related to early contract termination fees and depreciation, and because SRIFCU pays higher dividends. MSUFCU said its main office at Moffett Field will remain open, while its lone branch—open only one day per week—will close.
What One Member Said
In the section of the NCUA site on mergers that allows members to offer comment, one member wrote, “ I am voting NO on this proposed merger for a variety of reasons. For openers, I was quite frankly SHOCKED to receive the official notice in the mail this past week – there had been no prior indication that this major decision was even in the works, let alone on its final path. Second, the comment period and final decision date are on an extremely short schedule. What’s the rush? Third, this feels like a larger credit union (which I’ve never heard of before) wanting to gobble up a smaller one. I have been more than very content with the Menlo Survey Federal Credit Union since I became a member in 1976 while still in college…
“The balance sheet provided as of February 28, 2022 shows our credit union continues to remain strong. The Menlo Survey Federal Credit Union has been, for me, like having a neighborhood financial institution and I would like to see it remain so. We do not need to be merged into a larger financial institution. We’ve seen too many times how such mergers have contributed to the detriment of the member experience…”
The Financials
As of the first quarter, Menlo Survey reported $73,305 in net income during the first quarter with net worth of 13.42%. SRI FCU reported net income of $208,355 as of Q1, with net worth of 9.28%
MSFCU’s disclosure form did not indicate any plans for a distribution of capital to members or merger-related compensation/employment for management.
Seeking Efficiencies
Merging Credit Union: WyoChem FCU, Green River, Wyo.
Assets: $31.1 million
Members: 2,511
Acquiring Credit Union: WyHy FCU, Cheyenne, Wyo.
Assets: $319.7 million
Members: 18,257
Date of Member Vote: June 10
In explaining why it believes it needs to merge, WyoChem FCU told members the combination will offer them better pricing and services, additional products, enhanced convenience, and lower operating costs to due efficiencies of scale.
The credit union, which said its main office will remain open after the merger, as will its one branch, said there are no plans for any capital distribution due to costs related to the merger.
Its disclosure form did not indicate any compensation related to the merger for management or the board.
WyoChem reported $128,256 in net income during the first quarter, with capital of 7.24%. WyHy FCU posted $391,395 in net income, with net worth of 11.45%.
All About Members’ ‘Value’
Merging Credit Union: Piscataway Township Employees FCU, Piscataway, N.J.
Assets: $1.89 million
Members: 314
Acquiring Credit Union: Affinity FCU, Basking Ridge, N.J.
Assets: $3.88 billion
Members: 209,729
Date of Member Vote: June 13
“The board of directors has concluded that the proposed merger is desirable and in the best interests of members…given increased competition in the marketplace and with the limited resources, personnel and technology…(the CU should) move forward with a merger with Affinity Federal Credit Union,” PTEFCU told members in its disclosure form.
PTEFCU said there would be no distribution of capital or share adjustment because it “recognized the membership’s need for current and future services, products and offerings that far exceed their ability to deliver. Therefore, a major reason for this merger is not about distribution of net worth, but total member value…”
Piscataway Township Employees had $2,728 in net income in Q1, with net worth of 15.36%. Affinity FCU had $6.32 million in first quarter net income with net worth of 8.97%.
Special Dividend to be Paid in Massachusetts
Merging Credit Union: Holyoke Postal CU, Holyoke, Mass.
Assets: $2.85 million
Members: 232
Acquiring Credit Union: Holyoke CU, Holyoke, Mass.
Assets: $250.2 million
Members: 21,675
Date of Member Vote: June 14
Holyoke Postal told its member that Holyoke CU is larger and financially strong and the merger experience will be a “smooth transition.” It further said its merger partner shares the same values and commitments to members, that it was finding it difficult to pay for technology, compliance and security, and that its limited assets limited the products and services it could offer.
The merger will also add three branches, online and mobile banking, debit cards and more, HPCU said.
With net worth of 24.5% (vs. 9.45% at Holyoke CU), Holyoke Postal said it will pay a special dividend of 2% on share balances as of June 30, 2021.
“The board of directors has determined that this special dividend is appropriate considering the costs and expenses associated with the merger and because members stand to benefit from the increased products, services and locations offered by Holyoke Credit Union,” Holyoke Postal told its members.
HPCU did not indicate any merger-related compensation for board members or management.
Holyoke Postal CU had a $3,136 loss in the first quarter. Holyoke CU reported $820,885 in net income during the same time period.
Looking to be ‘Viable’
Merging Credit Union: IUPAT D.C. 21 FCU, Philadelphia
Assets: $1.8 million
Members: 267
Acquiring Credit Union: Philadelphia FCU, Philadelphia
Assets: $1.695 billion
Members: 122,655
Date of Member Vote: June 15
IUPAT D.C., founded in 1983, told its members it is small and has limited resources and that Philadelphia FCU is a “viable” credit union. It said there are no plans for any distribution of net worth.
IUPAT D.C. 21 had $340 in net income during Q1, with capital of 9.21%. Philadelphia Federal posted $5.049 million in first quarter net income, with capital of 12.45% as of March 30.
Looking for Profitability in Colorado
Merging Credit Union: FCI FCU, Littleton, Colo.
Assets: $3.88 million
Members: 522
Acquiring Credit Union: Foothills CU, Wheat Ridge, Colo.
Assets: $143.1 million
Members: 10,250
Date of Member Vote: June 18
FCI FCU, which serves employees of the federal correctional institution, said the merger will provide its members with three full-service branches, as well as new products and services that include first and second mortgages, MMAs, CDSs, shared branches, improved mobile banking and more.
There will be no distribution of net worth and there are no plans for board or management compensation related to the merger, FCI FCU said.
FCI FCU posted negative net income of $28,634 as of March 30, with net worth of 14.76%. Foothills CU also posted a loss in Q1, in its case $271,889, with 8.45% capital.
Reg Costs Create ‘Inability to Survive’
Merging Credit Union: Community Regional CU, Kingston, Penn.
Assets: $22 million
Members: 2,107
Acquiring Credit Union: Choice One Community FCU, Plains Township, Penn.
Assets: $126.1 million
Members: 10,957
Date of Member Vote: June 21
Community Regional told its members it “fears the inability to continue to survive under the regulatory costs and burdens in today’s environment. Along with the financial instability, by merging, the board is also offering its members more services (than are) available today.”
The credit union posted $24,927 in net income for Q1, with 8.92% capital. Choice One reported $136,872 in net income, with capital of 7.09%.
CRCU said there would be no distribution of capital. But CEO Debora Mozal will become COO of the merged institution and will see s 23% increase in salary and benefits valued at $117,000.
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