ALEXANDRIA, Va.–CUToday.info’s latest review of disclosure forms filed by nine credit unions seeking to merge has found two CUs, both of which posted losses over the first six months, seeking to combine; several CUs with capital north of 22% again not distributing any of that net worth to members; just one acquiring CU of more than a billion in assets (a rarity), and one small CU that still operates out of a person’s home and which does business by phone only.
Part II of this newest review of credit union mergers, below, is part of an ongoing series by CUToday.info to provide full coverage and a publication of record for the credit union community, while sharing some interesting history and insights into the disclosures being provided to members, as required by NCUA.
Here is the second-part of this two-part series on CUs seeking to merge. Links to all of CUToday.info’s prior reporting on mergers in 2022 appears at the bottom of this story. Part I can be found here.
Sponsor Changes Drive Merger; High Capital, No Distribution
Merging Credit Union: UTU FCU, Valley View, Ohio
Assets: $1.189 million
Members: 122
Year Founded: 1941
Date of Member Vote: Oct. 17
Acquiring Credit Union: Best Reward FCU, Brook Park, Ohio
Assets: $170.6 million
Members: 11,452
In its disclosure to members, UTU FCU said, “With the offices of SMART and UTUIA moving, more staff of the sponsors are working remotely and the merger is desirable and in the best interests of members because it will expand the list of member services and loan products…especially remote and digital services that are difficult for a credit union of our size to offer.”
Although it noted in its disclosure that as of March 31 it had total net worth of 23.74% ($334,258 of its $1.408 million in assets) that is double that of Best Reward (11.71%), it said it would not be distributing any capital because Best Reward offers multiple branches and the net worth is needed to support current operations and the early termination of service contracts.
But UTU has also been drawing down that capital, reporting a net loss of $8,356 as of June 30.
Staff Leaving, CEO Retiring, So Merger Best Option
Merging Credit Union: SPELC FCU, Lake Charles, La.
Assets: $13.7 million
Members: 1,722
Year Founded: 1956
Date of Member Vote: Oct. 18
Acquiring Credit Union: Southwest Louisiana CU, Lake Charles, La.
Assets: $154.2 million
Members: 16,276
SPELC CU told its membership, “With several staff members leaving and our long-time CEO nearing retirement, the board....unanimously voted to merge into SWLACU, recognizing the financial benefits of one larger credit union versus two smaller credit unions. By merging nonmember-facing expenses such as regulatory fees, surety bond premiums, trade association dues and other insurance coverage, costs will be reduced when compared to what the two individual credit unions would pay.”
SPELC said there will be no capital distribution and no one will be compensated as a result of the merger.
SPELC FCU reported a loss of $18,281 for the first half of 2022, with capital of 7.07% as of June 30. Southwest Louisiana had net income of $1.525 million, with net worth of 13.52%.
A ‘Consolidation of Energies’
Merging Credit Union: Tri-Town Teachers FCU, Westport, Conn.
Assets: $27.9 million
Members: 1,870
Year Founded: 1955
Date of Member Vote: Oct. 20
Acquiring Credit Union: Sound Credit Union, Stamford, Conn.
Assets: $85.4 million
Members: 6,190
In its message to members, Tri-Town Teachers said the merger allows for a “consolidation of energies and resources…to better serve the members in a more secure environment.”
TTTCU also said the merger will provide additional products, better pricing on products and services, and enhanced convenience and access.
In addition, Tri-Town Teachers said three members of its board will have the opportunity to serve on Sound CU’s board to its Emeritus Committee after the merger. And two members of its supervisory committee will have the opportunity to move to Sound CU in the same roles. Plans call for TTTCU CEO Shaun Mee to become EVP with the merged institution and for branch employees to remain in place. The disclosure documents said Mee could see as much as a $25,500 increase in compensation as a result of the move.
There are no plans for any net worth distribution.
Tri-Town Teachers posted a loss of $13,487 in the year’s first six months, with capital of 7.46%. Sound CU’s balance sheet was a little more, well, sound, showing net income of $22,643 for the first half of the year, with capital at 8.82%.
Merging CUs Both Post Losses, But Have Capital Cushion
Merging Credit Union: Baker’s FCU, Omaha, Neb.
Assets: $10.1 million
Members: 989
Year Founded: 1980
Date of Member Vote: Oct. 24
Acquiring Credit Union: Heartland Area FCU, Omaha, Neb.
Assets: $22.4 million
Members: 1,473
In its brief listing of reasons to merge, Baker’s CU said the merger will offer “increased services such as wider access to ATMS, as well as first mortgage loans…Members will also gain an additional location for walk-in and drive-in member services.”
Baker’s CU said there will be no capital distribution and no compensation paid as a result of the merger.
Baker’s Credit Union had negative net income of $23,992 as of June 30, with capital of 10.5%. Heartland Area FCU reported a loss of $88,852 over the first six months of the year, with capital of 22.62%.
Links to Prior Reporting
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
June 28
Aug. 11
Aug. 10
Aug. 9
Sept. 6
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