LONE STAR, Texas–Ten more credit unions have announced they are seeking member approval for mergers, and are citing limited resources, financial losses, retirements and other reasons for seeking to combine.
Just one of the CUs plans to distribute net worth, while two said there will be payouts to management related to the merger.
Here is an overview of the most recent merger announcements:
Similar ‘Roots’ in East Texas
In Lone Star, Texas, North East Texas Credit Union said it is seeking to merge into East Texas Longview, Texas-based East Texas Professional Credit Union. A member vote on the merger is set for April 28.
The $201-million North East Texas CU cited more than a dozen new products and services available through the $962.4-million East Texas Professional CU, including programs for minors, first-time auto loan program, home equity lines of credit, a free shred day and a flu shot clinic, as well as higher deposit rates and lower loan rates.
The credit unions said no jobs would be lost as the result of the merger.
“The two credit unions have many similarities with native East Texas roots, rural memberships, and dedication to high touch, high service levels throughout their branch network,” the credit unions said on their disclosure form to members.
North East Texas CU, which has 14,401 members, reported $1.36 million in net income at year-end 2021, with net worth of 10.44%.
East Texas Professional, which has approximately 78,500 members, reported $12.5-million in net income and 17.53% net worth.
In its disclosure forms, NETCU did not indicate any plans for a distribution of net worth to members or payments to management/board as a result of the merger.
Double the Capital, But No Distribution Planned
In Clute, Texas, the $46.1-million Brazosport Teachers FCU is seeking to dock with the $107.7-million, Houston-based Space City Credit Union.
In its disclosure form filed with NCUA, BTFCU cited expanded product and service offerings, including an enhanced mobile banking solution and shared branching, as well as economies of scale, a greater ability to market and promote, enhanced information security, and an ongoing voice in the merged credit union—all of its board members will join Space City’s board if the merger is approved—as reasons for seeking the combination.
BTFCU, which has approximately 3,700 members, reported net income of $410,444 at year-end 2021, with net worth of 18.05%. Space City, which has approximately 8,900 members, reported $779,719 in net income and net worth of 9.17%.
While Brazosport Teachers FCU has nearly double the net worth of Space City CU, the credit union’s disclosure form said there are no plans to distribute some of the capital back to members because “both credit unions have similar dollar amounts of net worth” and that “historically Space City Credit Union distributes capital back to its members in the form of dividend bonuses and year-end interest refunds, lower fees, and more products and services…It is a long-standing philosophy of space city credit union to give back as much as possible to the membership while carrying enough net worth to satisfy policy and regulations.”
BTFCU further said there will be no merger-related financial agreements with management and that CEO Donna Butterfras is set to retire on Dec. 31 and will receive her normal compensation on that date.
A vote on the merger is scheduled for April 27.
Smaller CU’s Charter Will be Survivor
In Farmington, Mich., the $324-million LOC FCU said it is seeking to merge into the $137-million MemberFocus Community CU in Dearborn, Mich. A member vote is scheduled for April 26.
LOC FCU will be the surviving brand and its CEO, Stephen Grech, will lead the combined organization, according to its disclosure, which said the deal will also provide members with more branches and products and services as the result of economies of scale.
In its disclosure to members, LOC FCU said it believes the merger is in the best long-term interests of the credit union because it will be able to convert to a Michigan state charter and its “more favorable” field of membership rules.
The credit unions said there will be no reductions in staff and that there will be no distribution of net worth.
LOC FCU, which has approximately 23,000 members, reported net income of $2.046 million at year-end 2021, with net worth of 8.09% at year-end. MemberFocus CU reported net income of $588,704 and net worth of 9.55% as of the same date.
Loss of Sponsor, Retirements are Cited
In Pittsburgh, the $17.2-million Consumer 1st FCU said it is seeking to merge into the $207.3-million Century Heritage FCU, also based in Pittsburgh.
Consumer 1st said it is seeking to merge because it lost its original core sponsor, GSK, it has suffered from a lack of loan growth and seen financial losses, and it will be able to offer more products and services to members.
Moreover, the CU said, both its CEO and treasurer have announced plans to retire by year-end. “recruiting a replacement CEO will be difficult given (the) declining membership and financial status of the credit union.” It also cited difficulty in finding new volunteers for the board of directors and supervisory committee.
There are no plans for any net worth distribution.
Consumers 1st reported a net loss of $127,243 and net worth of 18.49% at year end. Century Heritage posted net income of $591,708 and net worth of 9.47% as of the same date.
‘Limited Resources’ Drive Decision
In California, the $3.66-million South San Francisco City Employees FCU is looking to merge with the $1.9-billion Financial Partners Credit Union, located 390 miles to the south in Downey, Calif.
A member vote is scheduled for April 22.
In its disclosure form, South San Francisco EFCU said it is seeking to merge because it has “limited resources to furnish many additional services that we believe our current members and potential members want and deserve.”
The credit union said it conducted a lengthy search for the best merger partner and that Financial Partners credit union was selected because it has a “full menu of services conveniently delivered in person and electronically.”
Plans call for retaining the existing SSFEFCU office. Financial Partners also has an existing office in South San Francisco.
South San Francisco, which has approximately 400 members, reported a net loss of $73,242 at year-end 2021, with net worth of 7.08%. Financial Partners, which has approximately 86,000 members, showed net income of $11.69-million and net worth of 8.20% at year-end.
‘Challenges’ Cited by One Small CU
In Belleville, Mich., the $22-million Unified Communities FCU said it is seeking to merge into the $4-billion Genisys Credit Union in Auburn Hills, Mich. A member vote is set for April 20.
In its member notice, Unified Communities said that like many “small credit unions across the country, it is faced with challenges of securing the necessary resources to remain competitive and provide our members with the services they deserve now and in the future.”
UCFCU said the merger will provide members with more branches and increased hours, improved rates, business accounts, debit rewards and more.
There are no plans to distribute any net worth, but Unified Communities said it will pay its current CEO, Mary Carnarvon LaHousse, who plans to retire within 90 days of the merger, with a projected health insurance benefit of $154,057.03.
Unified Community FCU reported net income of $14,668 at year-end 2021, with net worth of 6.06%.
Genisys Credit Union posted net income of $82.7-million and net worth of 15.15%.
Seeking ‘Economies of Scale’
In Texas, the $505-million People’s Trust FCU in Houston said it plans to merge into the $855-million First Service CU, also Houston, pending a vote by members on April 16.
In its statement to members, People’s Trust said it is seeking the merger because it would allow it to better serve the financial needs of the membership and strengthen the financial position of the credit union, and improve its ability to compete with larger financial institutions. The move will also provide economies of scale and the ability to add branches and expand its FOM, it added.
PTFCU said there is no plan to distribute net worth, as it’s “unnecessary because ownership will be merged into and survive at First Service Credit Union.”
People’s Trust reported net income of $4.2-million and net worth of 10.60% at year-end 2021. First Service CU, which has approximately 68,549 members, posted $11.397-million in net income, with net worth of 10.7% as of the same date.
Crossing the Bridge in Ohio
In the Buckeye State, the $28.2-million Struthers FCU is aiming to merge into the $112-million Bridge Credit Union in Columbus.
In its disclosure to members, SFCU said it is aiming to merge because Bridge CU will be able to offer its members improved access to accounts through improved electronic services and additional branches. It said the acquiring CU also offers better offerings across virtually all products and services.
Plans call for SFCU’s existing office to remain and operate as Struthers CU, a Division of Bridge Credit Union.”
Struthers CU said four MSRs will see pay increases in addition to benefits they do not currently receive.
At year-end 2021, Struthers CU, which has approximately 4,300 members, reported a net loss of $26,611 and net worth of 6.54%. Bridge Credit Union, which has approximately 11,000 members and which was chartered to serve employees of Ohio’s Department of Transportation, reported net income of $1.111 million and net worth of 11.69%.
Management Team to Receive Payouts
In East Syracuse, N.Y., the $134.5-million CORE FCU is asking its members to vote on April 13 and approve a merger into the $1.377-billion CFCU Community Credit Union in Ithaca, N.Y.
In its statement to members, CORE FCU said the merger will offer its members “and enhanced array of innovative financial products and services while providing membership in a strong institution with solid financial capital. In addition, the two credit unions share a culture with educational roots.”
Moreover, CORE FCU said CFCU will continue several of its signature products, services and programs, including its financial literacy programs for students, in-school student-run CUs, scholarship programs and more. Several members of CORE FCU’s board will also be joining CFCU.
CORE said a portion of its net worth will be distributed to each member if the merger is approved. It plans to distribute capital of $2.644 million, which represents 20% of its net worth as of June 30, 2021, with funds distributed on a pro rata basis to both borrowers and savers.
Five members of the CORE management team will also be paid merger-related compensation that includes a retention bonus, estimated paid time off, and retiree health benefits. Those receiving compensation include William Sweeney ($45,209), Lisa Stever ($19,351), Michael Giles ($37,340), Brian McKnight ($16,100) and Melissa Allen ($5,563).
Additional Payments
In addition, CFCU said it will also pay estimated potential severance payments to anyone who has a “qualifying termination event,” meaning fired without cause, or who voluntarily resigns due to receiving a 10% or greater reduction in salary/bonus opportunity or who has a change in primary work location that is outside a 25-mile radius of the employee’s home address. That severance payment, if paid out, would include Sweeney ($83,600), Stever ($43,750), Giles ($27,300), McKnight ($29,900) and Allen ($25,375).
CORE FCU said its main office will remain open and join the nine branches CFCU currently operates.
CORE FCU reported net income of $1.635 million and net worth of 10.42% at year end 2021. CFCU Community, which has approximately 72,000 members, posted net income of $9.1 million and net worth of 12.96% as of the same date.
Values ‘Alignment’ is Cited
In Illinois, the Chicago-based $11.49-million Source One CU is proposing to merge into the $1.226-billion Rantoul-based Credit Union 1. A vote is set for April 12.
In its disclosure to members, Source One CU said Credit Union 1 “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 to quality of service that we are unable to provide in this current economic climate.”
Source 1 said there are no plans to distribute any net worth to members and there will be no layoffs.
The credit union said its CEO is being offered a guaranteed base salary of $95,000 annually for five years, unless he leaves voluntarily, and will also be paid a retention bonus of $75,000 to be paid within 30 days of the successful merger.
SourceOne, which has approximately 1,111 members, reported net income of $65,286 for year-end 2021, with net worth of 12.61%.
Credit Union 1, which has approximately 81,000 members and which shares a name with another Anchorage, Alaska-based CU, reported net income of $13.7-million and net worth of 8.84% as of year end.
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