MOBILE, Ala.–In its newest installment, CUToday.info’s industry-leading and ongoing updates on mergers in credit unions finds one merging CU with double the net income of the acquiring CU, two CUs representing $105 million in total assets merging into the same CU (and using the same language in their messages to members), and one CU with approximately $4,400 in capital per member saying there will be no net worth distribution as part of its planned merger.
In all, some 13 CUs are profiled in this latest overview of credit union mergers and what members are being told, including CUs citing sponsorship closings and the usual lack of any succession planning for retiring managers and board members.
Below is part one of a two-part series.
Wider Variety of Products, Services, Access Are Cited
Merging Credit Union: Progressive FCU, Mobile, Ala.
Assets: $6.84 million
Members: 669
Year Chartered: 1956
Date of Member Vote: Sept. 28
Acquiring Credit Union: Azalea City Credit Union, Mobile, Ala.
Assets: $36.2 million
Members: 4,453
Progressive FCU’s board told members it needs to merge because Azalea offers a “wide array of products and services” it currently doesn’t offer, including ATMs, electronic banking and chip cards. It also offers more branches, including shared branches, PFCU said.
Progressive FCU posted $6,284 in net income as of mid-year, with capital of 16.50%. The CU said it does not plan to distribute any of the net worth as part of the merger. Azalea City FCU had $358,461 in net income and net worth of 16.09% as of the same date.
Even With Capital at 14%, ‘Capital Concerns’ Cited; Manager to Retire
Merging Credit Union: McIntosh Chemical FCU, McIntosh, Ala.
Assets: $28.82 million
Members: 2,463
Year Chartered: 1962
Date of Member Vote: Sept. 28
Acquiring Credit Union: Alabama ONE FCU, Tuscaloosa, Ala.
Assets: $1.008 billion
Members: 80,380
“Merging Credit Union seeks approval of the merger to address capital concerns (its capital is 14.13% as of mid-year) product/service limitations, and succession planning of its CEO and its board volunteers,” McIntosh Chemical FCU told its members. “Merging Credit Union believes its members, employees and community will be better served by the Continuing Credit Union with products, service, technology and commitment to rural banking.”
The credit union then listed nearly a dozen services members would gain as a result of the merger, as well as Alabama ONE’s field of membership as reasons to merge.
MCFCU said Alabama ONE “is authorized to provide a merger dividend of up to $1,000,000 paid to MCFCU members approximately 60 days after the merger close date.
McIntosh Chemical had $54,066 in net income as of June 30. Alabama One posted $3.226 million in net income at mid-year, with capital of 9.34%.
Can’t Stem the Blues
Merging Credit Union: Bluestem Community Credit Union, El Dorado, Kan.
Assets: $11.681 million
Members: 1,385
Year Chartered: 1935
Date of Member Vote: Oct. 5
Acquiring Credit Union: Ark Valley Credit Union, Arkansas City, Kan.
Assets: $46.9-million
Members: 8,562
In its message to members, Bluestem Community FCU said briefly, “The board of directors has concluded the proposed merger is desirable and in the best interest of the members because it will provide additional service and locations to better serve them.”
As of the end of Q2, Bluestem Community had $43,901 in net income to go with capital of 9.30%, while Ark Valley CU had $268,821 in net income and capital of 11.74%.
Reverse Snowbird: Florida CU Headed to New Jersey; Bonus to be Paid
Merging Credit Union: Rutherford Postal District Employees FCU, Vero Beach, Fla.
Assets: $5.465 million
Members: 330
Year Chartered: 1937
Date of Member Vote: Oct. 6
Acquiring Credit Union: Greater Alliance FCU, Paramus, N.J.
Assets: $236.8 million
Members: 22,059
In an odd announcement, Vero Beach, Fla.-based Rutherford Postal District Employees FCU is planning to shutter its lone office in Florida as part of a merger with New Jersey-based Greater Alliance FCU, saying the latter offers three branches near where the majority of its members live.
In addition, RPDEFCU told its membership the merger is desirable due to the expanded products and services to be offered, along with a remote delivery via a digital banking suite.
RPDEFCU said if the merger is approved it plans to return 10% of its net worth to members in the form of a 1% one-time bonus on members’ share savings accounts’ average in May of this year.
Rutherford Postal reported a loss of $171 as of June 30, with capital at 10.56%. Greater Alliance had net income of $600,032 and capital of 9.34% as of the same date.
A Pearl in Search of More Energy
Merging Credit Union: Pearl District FCU, Tulsa, Okla.
Assets: $12.24 million
Members: 1,333
Year Chartered: 1951
Date of Member Vote: Oct. 18
Acquiring Credit Union: Energy One FCU, Tulsa, Okla.
Assets: $268.6-million
Members: 17,742
Like most other CUs seeking to merge, Pearl District FCU told members the combination would provide them with improved products and services, and that joining together would mean retaining “their member-first philosophy” and make the credit union “better positioned to serve members into the future.”
PDFCU said there are no plans to distribute any capital, but that two of its employees would see merger-related compensation, including:
- President Linda Curtis, who would receive $804,000 in retirement-related comp
- Manager Dawn Miller, who would receive a $6,000 salary increase
Pearl District FCU posted a $275,565 loss at mid-year, with capital of 9.9%. Energy One FCU had $652,925 in mid-year net income, with capital of 11.01%.
CU to be Acquired Has Double the Net Income of Acquiring CU
Merging Credit Union: Porter FCU, Denver
Assets: $22.3-million
Members: 1,618
Year Chartered: 1963
Date of Member Vote: Oct. 20
Acquiring Credit Union: Columbine FCU, Centennial, Colo.
Assets: $64.4 million
Members: 6,993
A merger with Columbine FCU, said the Porter FCU board in its message to members, “will provide Porter members with a full-service branch location...” and will also “provide Porter members with new products and services, such as a credit card program, in-house HELOC program, active access to mortgage and member business lending services,” and more.
Porter FCU added, “The merger will benefit Columbine in that it will bring to the continuing credit union a dedicated and loyal membership.”
As of June 30, Porter FCU posted $103,935 in net income, with capital at 17.95% (it said it will not be distributing any capital to members as a result of the merger). While three times the asset size of the credit union it is acquiring, Columbine FCU had half the net income at $59,721 as of mid-year, with capital of 8.03%.
CU Says It Can’t Survive Closure of Sponsor
Merging Credit Union: Trouvaille FCU, Philadelphia
Assets: $2.716 million
Members: 905
Year Chartered: 1984
Date of Member Vote:
Acquiring Credit Union: American Heritage FCU, Philadelphia
Assets: $4.66 billion
Members: 296,589
Trouvaille FCU said it needs to merge due to the loss of its primary sponsor company “without which it cannot survive on their own due to the increases in salary expense and benefits. The continuing burden of regulatory compliance has become increasingly difficult to meet the necessary requirements and is creating the managerial and financial challenges. Additionally, the manager is retiring effective Dec. 31, 2023. This will leave the credit union with no staff for daily operations. Another major dilemma is Trouvaille experienced 13.5% negative membership growth rate in 2022.”
In seeking a merger partner, TFCU’s board said it sought a CU in a strong capital position that is involved in the community and serves low income and underserved communities.”
Trouvaille FCU had $7,571 in net income as of June 30, with capital of 12.07%. American Heritage had net income of $19.55 million and capital of 8.39% as of the same date.
Part 2 in this series will appear tomorrow.
For additional information on other CUToday.info reports on mergers in credit unions, go here: January 20, Feb. 8, Feb. 9, March 20, June 20, June 22.
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