ELMA, N.Y.–The newest review by CUToday.info of the latest plans filed with NCUA for mergers and the disclosure statements required to be provided to members has found, among other things:
- Two billion-dollar CUs saying they are too small to compete
- A higher-than-usual number of CUs saying they can’t find new managers (one admits to a lack of succession planning)
- One CU that says it lacks a permanent home
- One CU saying members should vote for the merger because it is basically already underway
- Several CUs announcing net worth distributions (and one CU with capital north of 30% not doing so)
- A couple of credit unions approaching 100 years in operation that will be shuttering if the mergers are approved
Below is Part I of CUToday.info’s review of the latest merger applications and announcements filed with NCUA.
Manager’s Retirement Has 1 CU Seeking a Good Neighbor
Merging Credit Union: ICS FCU, Elma, N.Y.
Assets: $1.966 million
Members: 361
Year Chartered: 1963
Date of Member Vote: March 15
Acquiring Credit Union: Good Neighbors Credit Union, Depew, N.Y.
Assets: $89 million
Members: 9,348
In its statement to members, ICS FCU said the reason it is seeking to merge is simply “expansion of member services and manager’s retirement.”
ICS FCU said its office inside Iroquois Central Schools will remain open.
At year-end 2022, ICS FCU reported a loss of $85, with capital of 7.85%. Good Neighbors CU posted net income of $534,516 and net worth of 9.27%.
‘Can’t Find Affordable, Qualified Manager’; Capital to be Distributed
Merging Credit Union: State Highway Credit Union, Union Gap, Wash.
Assets: $31.7 million
Members: 1,547
Year Chartered: 1938
Date of Member Vote: March 15
Acquiring Credit Union: Washington State Employees CU, Olympia, Wash.
Assets: $4.93 billion
Members: 297,253
In explaining why it needs to merge, SHCU said its CEO is retiring and “finding an affordable, qualified candidate in a tight labor market would be difficult. Additional challenges facing SHCU include market volatility, increased competition, declining membership and loans, complex compliance requirements, ever-changing technology and keeping pace with cybersecurity needs.”
State Highway CU added, “SHCU has strong reserves earned from its conservative business model, which allows a merger decision on terms favorable to SHCU and its members. The board and CEO researched potential merger partners and selected WSECU because of their alignment with SHCU’s member focus and core values.”
SHCU said it will pay a special merger-related dividend if the combination is approved based on the member’s preceding one-year average monthly balances, and will be calculated in a tiered amount, estimated to be: 50% of the first $3,000 of such average monthly balances, plus an amount anticipated to be between 1% and 2% of the member’s average monthly balances in excess of $2,000 for the one-year period preceding the record date.
SHCU estimated the cost of the payout will be $1.6 million.
SHCU reported $54,145 in net income for 2022, with capital of 17.78%. WSECU posted $17,371,822 in net income with capital of 9.03%.
Members, Management to Get Payouts
Merging Credit Union: Public Transportation FCU, Gardena, Calif.
Assets: $67.9-million
Members: 6,712
Year Chartered: 1939
Date of Member Vote: March 18
Acquiring Credit Union: Credit Union of Southern California, Anaheim
Assets: $2.58 billion
Members: 146,990
In its statement to members, the board of PacTrans FCU said the merger would offer additional products and services, including Apple Pay and Zelle, a wider variety of loan products, wealth management services, and increased member access via more branches and ATMs.
It further said an advisory committee made up of current members of the PTFCU board will be formed to provide assistance with “post-merger integration and related issues,” while current PTFCU President/CEO Susan Conjurski will becoming VP-strategic initiatives with CU SoCal.
The merger is somewhat unique, in that Conjurski leads both PacTrans FCU and Printing Industries CU, both of which are seeking to merge with Credit Union of Southern California.
PacTrans said all employees will retain their jobs, and that its main office will also remain open through the end of its lease term in March 2026, if not longer.
In addition, PTFCU said that if the merger is approved, approximately $2.210 million will be distributed so that each eligible member can expect to receive an adjustment equal to 4% of their share balance as of June 30, 2022.
Payouts to Management
Members of the PacTrans FCU senior leadership team will also receive merger-related compensation, including:
- CEO Susan Conjurski, who will receive a five-year employment agreement and who will be eligible to receive a one-time retention bonus of $8,000. Conjurski will receive a Supplemental Executive Retirement Plan (SERP with a maximum of $700,000 after five years of employment with CU SoCal, in addition to a separate SERP with a maximum of $300,000 related to the merger of PICU.
- Manager of Administration Teresa Barboz will receive a one-time retention bonus of $7,000 and be eligible for a severance of $19,944.15 if she voluntarily terminates employment within two months of the merger date.
- PTFCU employees will receive a payout of unused accrued sick time prior to the merger date, including Barboza, who will receive $920.60.
PacTrans FCU reported $403,602 in net income at year-end 2022, with net worth of 21.05%. CU SoCal posted $25.9 million in net income for year-end 2022, with capital at 11.12%.
A CU With No Permanent Home is Seeking One
Merging Credit Union: Troy Area School Employees FCU, Troy, Penn.
Assets: $1.2 million
Members: 192
Year Chartered: 1978
Date of Member Vote: March 21
Acquiring Credit Union: First Heritage FCU, Corning, N.Y.
Assets: $684.2 million
Members: 44,529
In its statement to members, Troy Area School Employees FCU said it is seeking to merge due to a recent decline of available potential members at the credit union, the difficulty in finding someone to run and manage the credit union, the continued decline in earnings, and the inability to offer additional products and services.
In addition, TASEFCU said the merger will allow it to provide a host of new services, and further noted, “Currently, Troy Area School EFCU does not have a permanent location and members must call or email to make arrangements to perform transactions. The merger would give TASEFCU access to not only a full suite of online services, but also access to nine branches along with a full-service member contact center covering an 11-county region.”
It also said there would be no net worth distribution as assets during 2022 decreased 25.56% and ROA was a negative .54%, although it closed last year at 18.18% in net worth.
TASEFCU posted a $11,535 loss for 2022. First Heritage reported $4.32 million in net income for last year, with capital at 10.20%.
4 Reasons for Needing to Merge are Cited
Merging Credit Union: Northwest Louisiana FCU, Shreveport
Assets: $10.074 million
Members: 833
Year Chartered: 1975
Date of Member Vote: March 23
Acquiring Credit Union: Red River Employees FCU, Texarkana, Texas
Assets: $1.318 billion
Members: 115,365
The board of Northwest Louisiana FCU cited four reasons for needing to merge:
- Lack of CEO succession planning
- Extensive consumer and commercial products and services offered (by acquiring CU)
- Favorable interest rates on loan and share products (by acquiring CU)
- Enhanced convenience and access with a continually growing branch network of 25 full-service branches, ITM kiosks and more
Despite capital of 30.90%, NLFCU said there would be no share distribution as Red River EFCU offers expanded products and services and interest rate offerings that are “advantageous” to members. The CU said its branches and ATMs would remain operational after the merger. The two credit unions are approximately 74 miles apart.
Northwest Louisiana FCU reported a $56,257 loss for 2022. Red River EFCU posted net income of $23.8 million, with net worth of 12.35% as of Dec. 31.
Manager is Leaving and Deal is Signed
Merging Credit Union: JDMH FCU, Jeannette, Penn.
Assets: $4.59 million
Members: 586
Year Chartered: 1963
Date of Member Vote: March 24
Acquiring Credit Union: Elliott Community FCU, Jeannette, Penn.
Assets: $49.7 million
Members: 7,299
In its statement to members, NDMH FCU said the merger was in their best interests because “the manager will be leaving the end of January 2023 and both credit unions have signed an executive and management services agreement so that Elliott Community FCU will be able to run the MDMH FCU until the merger. Elliott Community FCU has the following services that are not offered by JDMH FCU: Visa credit cards, home equity loans, cash and check-cashing services, and extensive fee-free ATM network, IRA accounts and five locations.”
With a whopping 30.49% net worth, JDMH FCU said it would be distributing a portion of its reserves with a 10% dividend on shares.
JDMH FCU reported a $115,738 loss for year-end 2022. Elliott Community FCU had $93,250 in net income and net worth of 9.43% as of the same date.
Part II in this series will appear tomorrow.
Prior reports on mergers in 2023 can be found:
January 20
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