ALEXANDRIA, Va.–With more than 30 credit unions having recently filed paperwork with NCUA announcing plans to merge, CUToday.info here provides part II in a three-part series examining mergers. It is an examination that again finds both wide disparities (what members are being told and who is paying out net worth) and commonalities (CUs using near identical disclosure language, citing inabilities to find new managers and board members, and lamentations that technology has gotten too expansive).
As noted in part I, the review has also found several CUs seeking to merge in multiple other CUs at once, combo’s in which the merging and acquiring CUs are both losing money, and several examples of credit unions reaching across state lines and even the country with merger partners.
Given the number of credit unions seeking to merge, CUToday.info—which has been providing the only ongoing, comprehensive review of CU mergers--has broken its analysis and review into the three parts.
Below is a look at the second cohort of CUs being featured as part of this latest update on the state of credit union mergers and disclosures to members, which NCUA requires of any credit union seeking to combine with another.
CU Being Merged Out is More Profitable Than Acquirer
Merging Credit Union: Tri Boro FCU, Munhall, Penn.
Assets: $117.5 million
Members: 8,311
Year Chartered: 1935
Date of Member Vote: Nov. 22
Acquiring Credit Union: OMEGA FCU, Wexford, Penn.
Assets: $148 million
Members: 13,430
Members of Tri Boro FCU were told by the board the merger is desirable because of “the current economy, current rate environment, years of limited growth, a lack of volunteers and replacement employees.”
“The lack of resources affects our ability to invest in and offer the latest in technological offerings we believe our members want and deserve,” the CU said. “The combined resources will provide a greater network of branches and ATMs to serve the needs of our membership.”
Although the credit union notes in its disclosure forms that it has a higher net worth ratio than OMEGA FCU, it said it will not pay out any special dividend. It said its two offices will remain open after the merger.
Tri Boro posted $249,137 in net income over the year’s first two quarters, with net worth of 12.64%. Although larger in assets, OMEGA FCU’s mid-year call report show it posted considerably less net income than Tri Boro, $85,837. Its net worth ratio was 8.23% as of mid-year.
Very Small CU Reaches End of Road
Merging Credit Union: TBC FCU, Richmond, Va.
Assets: $120,105
Members: 112
Year Chartered: 1998
Date of Member Vote: Nov. 27
Acquiring Credit Union: Peoples Advantage FCU, Petersburg, Va.
Assets: $99.4 million
Members: 10,290
TBC FCU told members that simply, the merger is in their best interests because it “will offer members of TBC FCU access to more services and products.”
The credit union said it will not distribute a portion of its net worth because of “pending expenses that will erode it and added value for the membership.”
TBC FCU reported $120 in net income as of June 30, with net worth of 19.86%. Peoples Advantage had $561,785 in net income at mid-year, with capital of 21%.
Economies of Scale are Cited
Merging Credit Union: Tallahassee-Leon FCU, Tallahassee, Fla.
Assets: $79.4-million
Members: 5,963
Year Chartered: 1936
Date of Member Vote: Nov. 28
Acquiring Credit Union: Central Credit Union of Florida, Pensacola, Fla.
Assets: $239.4 million
Members: 16,977
The board of Tallahassee-Leon FCU told members the merger is in their best interests because a merged credit union will offer additional economies of scale that will increase financial strength and stability, offer enhanced product service lines to all members, an offer additional locations.
TLFCU said that although its net worth is higher than that of Central CU, it will not be paying out any of those funds because of the relative asset sizes of the two credit unions, the significantly expanded locations, access methods and benefits available following the merger, the “likely costs” to be incurred by Central CU as the result of termination of contracts and “transition of our members to Central Credit Union of Florida’s services.”
It said its main office and several branches will remain open for “the foreseeable future.”
Tallahassee-Leon posted $150,429 in net income during the first half of the year, with capital of 11.17%. CCU of Florida had $827,247 in net income and capital of 8.49% as of the same date.
‘Merging Dividend’ to be Paid
Merging Credit Union: Armstrong Associates FCU, Byram, Miss.
Assets: $2.991 million
Members: 344
Year Chartered: 1956
Date of Member Vote: Nov. 28
Acquiring Credit Union: Jackson Area FCU
Assets: $112.3-million
Members: 14,155
Armstrong Associates FCU’s board said it needs to merge as the result of the liquidation of its sponsor organization. But the merger will also provide members with new and expanded services, increased convenience and distribution channels, expanded deposit and loan options, electronic access, shared branches and more, it said.
In addition, it said its one employee would now have access to group health, paid time off and more benefits. AAFCU said one of its members will join the JAFCU board in a non-voting role.
Armstrong Associates FCU said it plans to distribute a portion of its net worth to members, based on share balances as of June 7. It will pay a “merging dividend” of 2.75%.
Armstrong Federal posted net income of $6,814 as of June 30, with capital of 17.89%. JAFCU had net income of $265,099 and net worth of 9.86% as of the same date.
Peach State As Acquirer, Part I
Merging Credit Union: Abbeville Community FCU, Abbeville, S.C.
Assets: $12.691 million
Members: 1,711
Year Chartered: 1971
Date of Member Vote: Nov. 28
Acquiring Credit Union: Peach State FCU, Lawrenceville, Ga.
Assets: $832.7 million
Members: 63,446
Abbeville Community FCU, one of two CUs seeking to merge into Peach State FCU almost simultaneously, said the merger will help it to grow and remain “highly competitive in today’s marketplace”; will ensure greater member value, increase products and services, provide competitive loan and deposit rates, and offer 24 additional branch locations.
The reasons cited by ACFCU for merging are identical to the reasons also being cited by Pickens FCU, which is also seeking to merge into Peach State.
ACFCU said it will not distribute any net worth, citing costs related to the merger and the “value of the increased and expanded products and services to be offered by Peach State.”
On its third quarter call report, Abbeville Community showed $37,938 in net income, with capital at 12.12%. Peach State FCU posted $3.4 million in net income and capital of 7.44% as of June 30.
Peach State as Acquirer, Part II
Merging Credit Union: Pickens FCU, Pickens, S.C.
Assets: $26.078 million
Members: 2,782
Year Chartered: 1961
Date of Member Vote: Nov. 29
Acquiring Credit Union: Peach State
Assets: $832.7 million
Members: 64,446
Pickens FCU, one of two CUs seeking to merge into Peach State FCU almost simultaneously, said in language that is identical to that cited by Abbeville Community FCU (see above) that it is seeking to merge because the move will help it to grow and remain “highly competitive in today’s marketplace”; will ensure greater member value, increase products and services, provide competitive loan and deposit rates, and offer 24 additional branch locations.
Despite capital of more than 15%, Pickens FCU also said it will not distribute any net worth, again using language identical to that cited by Abbeville Community FCU.
PFCU posted net income of $51,831, with net worth of 15.03% as of mid-year. Peach State FCU posted $3.4 million in net income and capital of 7.44% as of June 30.
Dividend to Be Paid, But Both CUs in Merger Lost Money
Merging Credit Union: Dakota Telco CU, Fargo, N.D.
Assets: $20.925 million
Members: 747
Year Chartered: 1936
Date of Member Vote: Nov. 29
Acquiring Credit Union: United Savings CU, Fargo, N.D.
Assets: $83.335 million
Members: 5,184
In its statement to its members, the Dakota Telco CU board said the merger is desirable because “our membership has been declining for many years and our current membership is less than 740. United Savings Credit Union is a local credit union that will continue to service Dakota Telco FCU members…and also with many additional services Dakota Telco FCU is unable to provide.”
DTFCU said it will distribute some of its net worth as a bonus dividend equal to approximately 5.8% of share balances as of June 30.
In addition, the credit union said there will be merger-related compensation paid to two people: Board Member Eric Gjerdevig, who will be paid “additional dividends” of $14,501, and Office Manager Mary Hilde, who will be paid “additional dividends and an employee bonus” of $70,544.
Dakota Telco reported a net loss of $29,384 as of mid-year, with capital at 10.40%. United Savings CU also reported red numbers as of mid-year, showing a $1,115 loss, with capital at 13.42%.
Despite Fanfare, CU Seeking to Merge Just 3 Years After Opening
Merging Credit Union: Maine Harvest FCU, Unity, Maine
Assets: $2.766 million
Members: 83
Year Chartered: 2019
Date of Member Vote: Nov. 29
Acquiring Credit Union: Five County Credit Union, Bath, Maine
Assets: $375.8 million
Members: 28,978
As CUToday.info reported here, Maine Harvest FCU was launched with great fanfare in 2019 after five years of work to get its charter. It was organized to serve the employees and roughly 13,000 members of the Maine Organic Farmers and Gardeners Association and the Maine Farmland Trust, but the credit union reported a large loss as of mid-year.
In its statement to members, Maine Harvest FCU said the merger would be beneficial because its “mission of lending to farms and food producers will be better preserved with a larger credit union that embraces that mission. From a financial perspective, Maine Harvest FCU’s net worth has declined more rapidly than expected due largely to the collapse of interest rates and delays in in-person marketing (such as the Common Ground Fair) associated with the pandemic. While our equity position remains substantial and adequate, it is not sufficient to absorb additional forecasted losses.”
MHFCU said there will be no share adjustment, as the funds will be “used to support the mission and loan growth of Maine Harvest FCU within the continuing credit union.”
$100, Grant Program
It said its merger agreement does call for the creation of a $100,000 grant program to benefit that mission moving forward by assisting farm and food business borrowers with loan closing costs and to help “address problems associated with environmental/PFAS contamination.”
Maine Harvest FCU said two people will be paid compensation tied to the merger. Chief Lending Officer Patty Duffy will receive $50,000 in a compensation adjustment, plus $6,300 in payout of accrued vacation. “Since MHFCU’s chartering in 2019, the Chief Lending Officer (CLO) salary has been approximately 30% below compensation for similar positions at financial institutions in Maine,” the credit union said, adding that Duffy had voluntarily taken a reduction in compensation in 2021.
CEO Scott Bude will be paid $4,400 in payout of accrued vacation.
According to its June 30 5300, Maine Harvest FCU posted a $162,653 loss, with capital at a whopping 56.91%, some of which is no doubt going to the grant program.
Five County CU had net income of $436,121 as of mid-year, with net worth at 7.93%.
Illinois CU Seeks to Reach Into Georgia
Merging Credit Union: Emory Alliance Credit Union, Decatur, Ga.
Assets: $210.8 million
Members: 17,928
Year Chartered:1968
Date of Member Vote: Nov. 30
Acquiring Credit Union: Credit Union 1, Rantoul, Ill.
Assets: $1.384 billion
Members: 84,596
Emory Alliance told its members a merger is in their best interests because “Credit Union1 operates the technology and systems that align with our members’ needs. Their internal core values give us confidence our membership will experience a much-needed upgrade in quality of service that we are unable to provide in this current economic climate. We believe there are synergies that exists (sic) between the two credit unions and this partnership will benefit the entire membership.”
EACU said there will be no share adjustment because the merger will provide a “host of updated services.”
Emory Alliance reported net income of $502,486 as of mid-year, with capital of 7.30%. Credit Union had $5.976 million in net income, with capital of 9.02% as of the same date.
Tarheel State CU Seeks to Reach Into Golden State
Merging Credit Union: Parsons FCU, Pasadena, Calif.
Assets: $266 million
Members: 8,946
Year Chartered: 1975
Date of Member Vote: Nov. 30
Acquiring Credit Union: Skyla FCU, Charlotte, N.C.
Assets: $1.096 billion
Members: 93,316
Parsons FCU told its members it needs to merge because:
- “Faced with increasing expenses, Parsons is convinced that the economies of scale and the efficiencies of operations that could be realized through a merger with Sklya FCU is in the long-term best interests of its membership going forward.” The CU added that any future growth “would have required a name change along with a significant increase in staffing.”
- Its sponsor company, Parsons Corp., has ceased providing HR support. “…We need to invest in human resource personnel. We also do not have a dedicated training department or employee development area…The continuing entity will allow for greater availability of jobs and upward mobility for employees…”
- There is no overlap in Skyla FCU’s service area. “Additionally, Parsons primary sponsor company has an operation that is within the Skyla FCU service area.”
- Skyla FCU offers a better fee structure.
Parsons FCU said there will be no capital distribution. It added COO Linda Gurule will be the project led for the merger and will receive a retention bonus of $30,000 after completion of the merger.
Parsons FCU reported a loss of $458,092 as of June 30, with capital at 10.88%. Skyla FCU posted $4.551 million in net income at mid-year, with capital at 9.96%.
Prior Reporting
CUToday.info has the most extensive reporting available on credit union mergers. Here are links to earlier reports:
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
https://www.cutoday.info/Fresh-Today/More-Than-30-CUs-Announce-Plans-to-Merge-in-New-CUToday.info-Analysis-Here-s-What-the-First-10-Are-Telling-Members
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