ALEXANDRIA, Va.–If there is a consistent theme among the 10 latest credit unions to announce merger plans, it is many had negative net income through the end of the third quarter.
A second theme: Many are smaller, with all the CUs that will be acquired--should members approve--having less than $100 million in assets. In one case, a merger between two tiny CUs will result in a CU of less than $350,000 in assets, with the acquiring credit union having posted just $8 in net income as of Sept. 30.
As CUToday.info has reported as part of this ongoing series that seeks to provide a record of every credit union merger, the reasons members are being given for the merger will sound familiar, including inability to provide e-services, retiring managers, and difficulty recruiting volunteers.
Below is a look at the credit unions that have announced plans to combine:
‘Impossible to Provide More Services’
Merging Credit Union: IBEW Community FCU, Beaumont, Texas
Assets: $17.485 million
Members: 1,770
Year Chartered: 1971
Date of Member Vote: Dec. 12
Acquiring Credit Union: Wellspring FCU, Bridge City, Texas
Assets: $64.4 million
Members: 6,779
“With only $18 million in assets had having just 1,762 members, it is impossible for our credit union to open additional branches and provide additional services that our members want and deserve,” IBEW Community FCU’s board said in its disclosure to members. “We are unable to enjoy economies of scale at our present size. While we are still financially sound, we operated at a loss for the year 2021 and a significantly larger loss as of June 30, 2022. Our current CEO after serving for almost 10 years, has decided to retire and we were unable to find a replacement.”
The merger, IBEWCFCU said, will provide members with a host of new services. It said there will be no capital distribution.
IBEW Community reported a loss of $45,914 as of Sept. 30, with capital at 7.80%. Wellspring FCU had income of $288,664 and capital of 8.92% as of the same date.
A Shared Value of ‘Thrift Among Educators’
Merging Credit Union: H&H FCU, Stinnett, Texas
Assets: $47.8 million
Members: 3,114
Year Chartered: 1963
Date of Member Vote: Dec. 13
Acquiring Credit Union: Education Credit Union, Amarillo, Texas
Assets: $425.1 million
Members: 32,684
In its statement to members, H&H FCU said the merger will provide members with an “enhanced array of innovative financial products and services while providing membership in a strong institution with solid financial capital.” In addition, the CU said, H&H and Education First have a rich history that overlaps, including to promote thrift among educators and students.
If the merger is approved, an H&H board member will join the ECU board, while two H&H volunteers will join ECU’s advisory board.
H&H FCU said it does plan to pay a member dividend of $284,762.25, which represents 3.14% of its net worth as of Aug. 31. The payout will be based on each members’ share account balance as of Dec. 31. No merger-related compensation will be paid to anyone, it added.
H&H FCU also said both of its branches will remain open following the merger.
H&H FCU reported negative net income of $33,347 as of Sept. 30, with net worth of 19.01%. ECU posted net income of $2.417 million, with net worth of 11.24% as of the same date.
Members to Gain ‘Significant Value’
Merging Credit Union: HTM Area CU, Troy, Ohio
Assets: $33.2 million
Members: 3,530
Year Chartered: 2003
Date of Member Vote: Dec. 14
Acquiring Credit Union: Superior Credit Union, Lima, Ohio
Assets: $1.4 billion
Members: 99,077
In a brief statement, the board of HTM Area CU said the merger is desirable due to improved products and services, better interest rates, access to a full service mortgage program, wealth management services, insurance and real estate brokerage services, and access to additional branches. It added there would be no distribution of net worth because Superior Credit Union is “a very well-capitalized credit union and our members will be gaining significant value as a result of the merger.”
HTM Area CU lost $112,353 through Sept. 30, with capital of 15.15%. Superior CU reported $7.46 million in net income, with net worth of 13.31% as of the same date.
For First Time, Members Would be Offered Checking
Merging Credit Union: Rheem Arkansas FCU, Ft. Smith, Ark.
Assets: $4.44 million
Members: 1,121
Year Chartered: 1987
Date of Member Vote: Dec. 15
Acquiring Credit Union: Arkansas FCU, Little Rock, Ark.
Assets: $2.086 billion
Members: 140,967
Rheem Arkansas FCU told its members that by merging members will be offered new products and services that include checking accounts, debit cards and new loans; expanded hours, and access to online and mobile banking.
The CU said there will be no share distribution.
Rheem Arkansas reported a loss of $39,127 as of Sept. 30, with capital at 11.32%. Arkansas FCU reported $23.8 million in net income and net worth of 9.66% as of the same date.
‘Significant Economies of Scale’ Cited
Merging Credit Union: Parkway FCU, Redford, Mich.
Assets: $26.4 million
Members: 2,177
Year Chartered: 1947
Date of Member Vote: Dec. 19
Acquiring Credit Union: Michigan Columbus FCU, Livonia, Mich.
Assets: $62.9 million
Members: 4,315
Parkway FCU’s board told its members the merger will allow it to better serve the “financial needs of the membership and strengthen the financial position of the credit union to ensure long-term sustainability, improving our ability to compete with larger financial institutions.” It also cited “expanded products and services” and “significant economies of scale” that would result from the merger.
PFCU said it will not distribute any net worth, and that its two branches will remain open.
Parkway Federal reported a loss of $296,344 as of the end of the third quarter, with capital of 7.26%. Michigan Columbus reported $241,260 in net income, with capital of 10.14%.
All 3 Employees Plan to Retire; Payouts Announced
Merging Credit Union: Marathon Republic FCU, Texas City, Texas
Assets: $8.5 million
Members: 1,122
Year Chartered: 1938
Date of Member Vote: Dec. 19
Acquiring Credit Union: Gulf Shore FCU, Texas City, Texas
Assets: $15.225 million
Members: 1,574
In its message to its membership, Marathon Republic FCU provided no reason for merging, leaving the space blank in the document it filed with NCUA. Later in the document, however, it does state members will gain a variety of services, including mobile check deposit, real-time banking and bill pay, as a result of the merger.
MRFCU, which is located approximately one mile from GSFCU, said it will close its one branch.
While no net worth distribution is planned, Marathon Republic said three employees would receive merger-related compensation. All three plan to retire, according to the CU, which said the retirement decisions were made prior to the merger announcement.
Manager Judy Boles will receive an early payout of retirement benefits of $112,517; Loan Officer Laura Massey will receive an early payout of $93,466, and teller Kim Haas will receive an early payout of $46,485.
MRFCU reported a loss of $8,796 as of Sept. 30, with capital of 11.99%. Gulf Shore FCU posted $23,250 in net income with capital of 8.28% as of the same date.
Lower Operating Costs 1 Reason for Merger
Merging Credit Union: Solutions FCU, Elmira, N.Y.
Assets: $37.8 million
Members: 3,604
Year Chartered: 1952
Date of Member Vote: Dec. 23
Acquiring Credit Union: Guthrie Community FCU, Sayre, Penn.
Assets: $103.2 million
Members: 7,416
In its notice to members, the board of Solutions FCU said the merger is in the members’ best interests because it will offer better pricing, improved products and services, more branches and more opportunities for employees. It will also create economies of scale and lower operating costs that will help it to be more competitive, the CU said.
SFCU said there will be no capital distribution, in part due to the “uncertainty of the current COVID-19 pandemic (and because) the differences in the probably asset/share ratios will not result in a material increase in the continuing credit union’s net worth ratio.”
As of Sept. 30, Solutions FCU reported net income of $201,132, with net worth of 9.20%. Guthrie Community posted $620,140 in net income, with net worth of 11.02%.
For One CU, the Dow Will Be Down Permanently
Merging Credit Union: Dow Jones Employees FCU, Monmouth Junction, N.J.
Assets: $12.7 million
Members: 828
Year Chartered: 1983
Date of Member Vote: Dec. 23
Acquiring Credit Union: Central Jersey FCU, Woodbridge, N.J.
Assets: $95.5 million
Members: 6,265
Dow Jones Employees FCU told its members it needs to merge because it is “unable to provide the services its members need. The credit union is currently unable to support operations for the long term. CJFCU is able to provide debit and credit cards, all types of lending products, and a full suite of online banking services…”
DJEFCU said it will distribute a portion of its net worth to members if the merger is approved. The dividend will be for $150,000 and will be computed by dividing that amount in total shares as of Sept. 30 and converted into APR for December, in addition to the regular dividend.
Dow Jones Employees reported a loss of $61,841 as of the end of the third quarter, with capital at 12.40%. Central Jersey FCU showed $441,528 in net income as of the same date, with capital at 7.06%.
End of the Road for Binsy
Merging Credit Union: Binsy FCU, Memphis, Tenn.
Assets: $1.7 million
Members: 421
Year Chartered:
Date of Member Vote: Dec. 30
Acquiring Credit Union: Southern Security FCU, Collierville, Tenn.
Assets: $234.6 million
Members: 20,351
Binsy FCU told the membership its board has “concluded that the proposed merger is desirable and in the best interests of members because of the retirement of (a) tenured manager and benefits of additional services and financial stability.”
There are no plans for any net worth distribution.
Binsy FCU reported a loss of $2,890, with capital at 14.35%, as of Sept. 30. Southern Security posted $688,743 in net income with net worth of 8.96% as of the same date.
Two Tiny CUs to Create One Tiny CU
Merging Credit Union: Shiloh Baptist FCU, Waukegan, Ill.
Assets: $80,056
Members: 138
Year Chartered: 1963
Date of Member Vote: Dec. 30
Acquiring Credit Union: Gideon FCU, Waukegan, Ill.
Assets: $259,104
Members: 300
Shiloh Baptist cut to the chase in explaining its reasons for seeking to merge, telling members it has seen a steady decrease in assets and loans, has had negative earnings difficulties in finding volunteers.
The credit union said it does plan to distribute a portion of its net worth in the form of a dividend, but it provided no details in its disclosure form.
Shiloh Baptist reported a loss of $1,084 and net worth of 6.08% as of Sept. 30. Gideon FCU reported $8 in net income as of Sept. 30, with capital of 10.80%.
Jan. 12
March 16
April 26
https://www.cutoday.info/Fresh-Today/What-Review-of-Latest-CU-Merger-Proposals-Reveals-Part-I
April 27
https://www.cutoday.info/Fresh-Today/What-Review-of-Latest-CU-Merger-Proposals-Reveals-Part-II
May 17
May 18
June 8
https://www.cutoday.info/Fresh-Today/Here-s-What-Latest-Disclosure-Forms-on-Proposed-CU-Mergers-Reveal
June 28
https://www.cutoday.info/Fresh-Today/A-Deceased-CEO-A-Big-Staff-Departure-No-Payout-Despite-High-Capital-A-We-Like-Them-Partner-Here-s-the-Latest-on-8-Proposed-CU-Mergers
Aug. 11
Aug. 10
https://www.cutoday.info/Fresh-Today/Challenges-Very-Difficult-to-Overcome-on-Our-Own-What-CUs-are-Saying-About-Mergers-Part-II
Aug. 9
Oct. 24
Oct. 25
Oct. 26