BROOKFIELD, Wis.–In this, the second of a two-part series that reviews the very latest disclosure forms filed with NCUA by credit unions seeking to merge, more examples can be found of credit unions offering related compensation packages to their management, including one that is to last a decade—and often in cases where the CU has been losing money and/or there is no distribution of net worth to members.
In this latest CUToday.info report, 22 merger proposals are examined with a review of each of the disclosure/member notification forms that are filed with the agency. We found many forms using nearly identical language (especially by one CU that is currently seeking to merge in two others), payments to management even in cases where their credit unions have been losing money, disclosures that provided long lists of reasons why the board feels a merger is in members’ best interests, and other cases where no reasons were provided.
Part one in this two-part series can be found here.
Here is part two:
Merger Would Cross State Lines, Offers Long Pay Package for CEO
Merging Credit Union: Enterprise CU, Brookfield, Wis.
Assets: $34.2 million
Members: 3,343
Year Chartered: 1935
Date of Member Vote: July 25
Acquiring Credit Union: Credit Union 1, Rantoul, Ill.
Assets: $1.68 billion
Members: 121,051
In explaining why it needs to merge with a CU 220 miles south in Illinois, Enterprise Credit Union said the proposed merger is in members’ best interests because “Credit Union 1 operates with the technology and systems that align with our members’ needs. Their internal core values align with our own and give us confidence our membership will experience a much-needed upgrade in the quality of service we are unable to provide in this economic environment…”
ECU said it will not distribute net worth because Credit Union 1 offers a “host of updated services and options…that we are unable to provide in this economic environment.”
Merger-Related Comp Deal
If the merger is approved, ECU President and CEO Jeff Bashaw is to receive a bonus of $100,000 at the close of the merger, along with post-merger employment with Credit Union 1 that will include an increase in his current total compensation by $38,000 for a minimum of 10 years, unless terminated for cause.
In addition, Enterprise CU’s CFO will retire after the merger but to “ensure a smooth transition” will be paid a one-time retention and severance bonus of $110,000, the credit union said.
Enterprise CU reported $54,331 in net income as of the first quarter, with net worth of 10.14%. Credit Union 1 had $2.04 million in net income and capital of 9.22% as of the same date.
Enterprise CU is one of two credit unions currently seeking to merge into Credit Union 1.
Combination Would Create $7 Billion Credit Union; 5 Execs to Get Merger-Related Comp
Merging Credit Union: Member One CU, Roanoke, Va.
Assets: $1.72 billion
Members: 152,175
Year Chartered: 1940
Date of Member Vote: July 30
Acquiring Credit Union: Virginia CU, North Chesterfield, Va.
Assets: $5.2 billion
Members: 329,888
In explaining why it needs to merge, Member One provided a list of bullet points that includes more member access, expanded products and services, the ability to be “more responsive to evolving financial needs,” enhanced electronic banking, more branches, the “same knowledgeable, friendly employees,” “ongoing commitment to community impact at the local level,” and the addition of two members of the Member One board to the VCU board, along with one other member serving on the associate board of directors.
Merger-Related Compensation
Several Member One executives will see merger-related compensation, the CU said, including:
- President/CEO Frank Carter, who will become senior executive business advisor to VCU and who will receive a one-time retention bonus of $250,000 if he remains with the CU through the merger’s effective date
- Senior Executive VP Jean Hopsteller, who will become senior RVP and merger integration executive, and who is to receive $95,000 if she remains with the continuing credit union for 18 months after the merger
- EVP/CFO Alan Wade, who will become an EVP and who will receive a $82,000 retention bonus if he remains with the continuing CU through Dec. 31, 2025
- EVP Tim Rowe, who will become EVP-market president and who will receive a retention bonus of $80,000 if he is with VCU for 18 months after the merger
- CIO Jeff Wieczorek who will continue on as CIO and who will receive a one-time retention bonus of $68,000 if he is with VCU 18 months after the merger date.
Member One FCU had $2.145 million in net income in the first three quarters of this year, and capital of 9.31%. Virginia CU had $4.961 million in net income and capital of 10.69% as of March 31.
Small CU Says It Can’t Find a New Manager
Merging Credit Union: Rediform FCU, Niagara Falls, N.Y.
Assets: $11.2 million
Members: 1.928
Year Chartered: 1936
Date of Member Vote: July 30
Acquiring Credit Union: Encompass Niagara FCU, Niagara Falls, N.Y.
Assets: $14.8 million
Members: 1,267
Rediform FCU was brief in giving its reasons for seeking to merge, noting, “…the manager is well past retirement age and the credit union has been unsuccessful in hiring a new manager.” It also cited expanded products and services, as well as a drive-through as among the benefits of merging.
RFCU said it does plan to distribute a portion of its net worth if the combination is approved by members, with plans calling for a 4% bonus dividend to be paid out.
Rediform FCU posted a $25,360 loss for the first quarter, with net worth of 15.16%. Encompass Niagara had $112,929 in net income and net worth of 11.24% as of the same date.
No More Joy to be Had in West Virginia
Merging Credit Union: Joy Employees FCU, Bluefield, W.V.
Assets: $679,828
Members: 151
Year Chartered: 1969
Date of Member Vote: Aug. 2
Acquiring Credit Union: National Employees FCU, Bluefield, W.V.
Assets: $14.1 million
Members: 2.897
In its brief statement to members on why there would be more joy in a merger, Joy Employees FCU said “National CU offers the members the ability to use online banking and the access of being open five days a week, also offer, Debit Cards, Also access Bill Pay online.”
It further said Manager Jerry Gallogly and Secretary Sylvia Roten will each be offered severance of $1,500 if the combo is given the OK.
Joy Employees reported $324 in net income for the first quarter, with net worth at a whopping 39.71% (it said there will be no distribution). National Employees FCU posted a $945 loss in the first quarter, with net worth of 11.81%.
Church’s Declining Membership Cited in Merger
Merging Credit Union: Christ the King Parish FCU, Kansas City, Kan.
Assets: $1.285 million
Members: 398
Year Chartered: 1952
Date of Member Vote: Aug. 5
Acquiring Credit Union: Midwest Regional FCU, Kansas City, Kan.
Assets: $72.73 million
Members: 5,894
“The board of directors has concluded that the proposed merger is desirable and in the best interests of members because of the decline of membership the credit union and the Parish of Christ the King Church,” the credit union told members, adding the merger will also lead to the closure of its branch.
It also listed 16 bullet-points showing new services it said will be available through MRCU.
Christ the King Parish FCU lost $8,550 during Q1, with net worth at 13.78%, while Midwest Regional FCU had $127,176 in net income and net worth of 8.90% as of March 31.
CU Struggling With Profitability, Net Worth Seeks to Partner; 2 Execs to Receive Merger-Related Payments
Merging Credit Union: Eastpointe Community CU, Eastpointe, Mich.
Assets: $11.4-millioin
Members: 1,407
Year Chartered: 1950
Date of Member Vote: Aug. 6
Acquiring Credit Union: FreeStar Financial CU, Clinton Township, Mich.
Assets: $328.8 million
Members: 21,611
“…Like many small credit unions across the country we are faced with the challenges of securing the necessary resources to remain competitive and provide our members with the services they deserve now and in the future,” Eastpointe CCU told members, noting it is financially strong, but adding, “…With investment yields at all-time lows is further reducing our margins needed to operate safely into the future. Also coupled with our limited resources in todays highly regulated, technologically advanced environment, Eastpointe Community Credit Union would not be able to provide our members with the level of service and benefits that FreeStar Financia Credit Union, a much larger institution, can provide our members.”
If the merger is approved, ECCU said President/CEO Theresa Hing will receive an increase in base compensation and retirement benefits of $13,440 annually and $240,000, respectively, while COO Dave Lafayette will be paid a retention bonus of $25,000.
Eastpointe Community CU posted a $10,803 loss for the first quarter, with net worth of 6.08%. FreeStar Financial had $127,390 in net income and net worth of 9.15% as of March 31.
Will Not be Bourns Again: Struggling With Profitability, BEFCU Seeks to Combine; 5 Execs to Get Payments
Merging Credit Union: Bourns Employees FCU, Riverside, Calif.
Assets: $65 million
Members: 5,156
Year Chartered: 1966
Date of Member Vote: Aug. 9
Acquiring Credit Union: Arrowhead Central CU, Rancho Cucamonga, Calif.
Assets: $2.418 billion
Members: 207,175
Bourns Employees FCU, which provided a full spreadsheet showing its assets and liabilities, pointed to more products and services, 19 branches, enhanced ATMs, a call center, investment services and more as reasons members should vote in favor of merging.
It said five members of management will receive compensation related to the merger, including:
- CEO Edward Casanova: $110,813 in retention bonus and PTO payout
- Finance and Operations Manager Renee Byrom: $44,495 in salary adjustment, retention bonus and PTO payout
- Mortgage Lending Manager Le My Hoang: $28,889 in salary adjustment, retention bonus and PTO payout
- Branch Manager Mary Kassel: $34,071 salary adjustment, retention bonus and PTO payout
- Member Service and Consumer Loan Supervisor Christina Gallegos, $25,152 salary adjustment, retention bonus and PTO payout
BEFCU posted a $168,372 loss as of Q1 (following a loss of $463,092 for year-end 2023), with net worth of 9.82%. Arrowhead Central had $4.1 million in net income and net worth of 10.93% as of the first quarter.
Life to be Lived No More in Michigan
Merging Credit Union: Live Life FCU, Fraser, Mich.
Assets: $77 million
Members: 1,057
Year Chartered: 1952
Date of Member Vote: Aug. 15
Acquiring Credit Union: Credit Union 1, Rantoul, Ill.
Live Life FCU, which has $77 million in assets despite having just over 1,000 members, uses the same language in its disclosure to members as does Enterprise Credit Union in Brookfield, Wis., which is also seeking to merge into Credit Union 1.
“Credit Union 1 operates with the technology and systems that align with our members’ needs,” LLFCU said, using identical language to that of ECU. “Their internal core values align with our own and give us confidence our membership will experience a much-needed upgrade in the quality of service we are unable to provide in this economic environment…”
Similarly, Live Life FCU said it won’t distribute any net worth because its ratio is lower than that of Credit Union 1 and because the acquiring CU will offer members a “host of updated services and options with Credit Union 1 that we are unable to provide in this economic environment.”
It pointed to 16 branches that will become available to LLFCU members, 15 of which are state and the 16th being the current LLFCU location.
Merger-Related Compensation
If the merger is approved, LLFCU President and CEO Karla Haglund will be given a $33,000 increase in annual compensation and a one-time merger bonus of $75,000, while EVP/COO Traoney Harris will receive an annual pay increase of $32,000 and a one-time merger bonus of $10,000.
Live Life FCU posted a $213,384 loss for Q1 (after a $231,344 loss at year-end 2023), with net worth of 6.95%. Credit Union 1 had $2.04 million in net income and capital of 9.22% as of March 31.
For Whom the Merger Bell Tolls
Merging Credit Union: Rockford Bell CU, Loves Park, Ill.
Assets: $39.3 million
Members: 3,462
Year Chartered: 1935
Date of Member Vote: Aug. 19
Acquiring Credit Union: Consumers Credit Union, Lake Forest, Ill.
Assets: $3.5-billion
Members: 222,889
Rockford Bell CU told members a merger will provide “stronger safety and soundness,” access to more branches, additional products and service, expanded hours and digital services, better technology, increased efficiencies of scale and an increased talent pool.
It also noted RBCU’s president and CEO, John Hansen, is retiring. It added that no net worth distribution is planned due to merger-related expenses, additional branches and “greater career-pathing” for RBCU employees.
Rockford Bell CU had $4,679 in Q1 net income, with net worth of 12.79%. Consumers Credit Union had $3.37 million in net income and net worth of 9.15% as of March 31.
Shipbuilders CU Seeks a Port; 4 Execs to Receive Payouts
Merging Credit Union: Shipbuilders CU, Manitowac, Wis.
Assets: $120.1 million
Members: 10,627
Year Chartered: 1938
Date of Member Vote: Aug. 19
Acquiring Credit Union: Kohler CU, Sheboygan, Wis.
Assets: $627.2 million
Members: 43,738
The merger is desirable, SCU’s board told members, “…because we want to bring members the best value from their credit union while ensuring we continue to grow and thrive.”
It said the merger will create economies of scale and opportunities for employees. Shipbuilders CU added that it shares “common values” with Kohler Credit Union.
It listed eight different product and service areas where the merger will bring benefits.
SCU said it will distribute $3.8 million of its net worth to members should the merger be approved based on a weighted distribution method according to a member’s total deposit and loan accounts.
Payouts to Senior Management
Shipbuilders CU said its CEO, Michael Steimle, has “waived any special compensation” related to the merger, but four other employees would see potential payments, including:
- VP-Operations Mark Seidl, potential severance of $9,135 to $219,264 only if terminated or demoted without cause
- VP-Consumer Lending Sheri Lau, potential severance of $10,674 to $256,176 only if terminated or demoted without cause
- VP-Mortgage and Business Lending Paul Eggert, potential severance of $8,013 to $192,312 only if terminated or demoted without cause
- Marketing Director Teresa Satori, potential severance of $4,441 to $106,584 only if terminated or demoted without cause
Shipbuilders CU had $165,491 in first quarter net income to go with capital of 14.27%. Kohler Credit Union posted $499,499 in net income and net worth of 8.16% as of the same date.
In New York, School Could Soon Be Out
Merging Credit Union: Albion School Employees FCU, Albion, N.Y.
Assets: $2.08 million
Members: 401
Year Chartered: 1963
Date of Member Vote: Sept. 3
Acquiring Credit Union: Cobblestone Country FCU, Albion, N.Y.
Assets: $19.6-million
Members: 2,339
In its disclosure to members, Albion School Employees FCU said the “board of directors has concluded that the proposed merger is desirable and in the best interests of members because…” and then left a blank.
But further down in its statement it listed more products and services, including overdrafts, as well as longer hours, a drive-through, an ATM, online banking and more as benefits from the combination.
Albion School EFCU had $7,113 in Q1 net income and net worth of 18.72%. It plans to pay a merger dividend of 4.7% if members vote in favor of combining.
Cobblestone Country FCU had $98,712 in net income during the first quarter, with net worth of 10.28%.