INDIANAPOLIS–A review of newest half-dozen disclosure forms by credit unions proposing to merge finds some of the usual reasons being cited, but also one case of a board of an acquiring CU apparently deciding if the CU it is merging in will return any capital to members, a CU being acquired that had double the net income of the acquiring CU (even though the former is half the size of the latter) and just one CU returning any of its net worth to its owners.
The update is being provided as part of CUToday.info’s objective to be the publication of record on the issue of CU mergers and what members are being told about the combinations.
Below is a recap of the latest mergers, what’s being told to members, and the financial performance of all parties involved.
Earlier reviews of merger applications can be found here and here.
No Longer Have the Mettle for It
Merging Credit Union: Sheet Metal Workers FCU, Indianapolis
Assets: $9.092 million
Members: 1.212
Acquiring Credit Union: Hoosier United CU, Indianapolis
Assets: $29.4 million
Members: 2,666
Sheet Metal Workers FCU cited three primary reasons for seeking to merge:
- Core System Conversion. SMWFCU said the data processor it uses has been sold and it will need to convert by Dec. 31. The costs to purchase a new system and combined with a tripling of related monthly costs makes this an “unattainable solution because our net income has diminished due to low investment yields and low member loan demand.”
- Improved Member Access. SMWFCU said the merger will give its members access to two more branches, shared branching, and numerous electronic channels.
- Similar FOM. SMWFCU told members Hoosier United serves another labor union and is familiar with its members’ needs. It added it will also be given representation on the HUCU board, which is adding two seats.
The credit union said it will not be distributing any net worth and indicated there will be no merger-related compensation paid out to management or the board.
At the end of Q1, SMWFCU reported net income of $47, with net worth of 8.21%. Hoosier United CU reported $5,480 in net income and net worth of 7.77% as of the same date.
The member vote is scheduled for July 11.
Acquiring CU’s Board Decides on Other CU’s Payout
Merging Credit Union: IMECO FCU, South Bend, Ind.
Assets: $12 million
Members: 918
Acquiring Credit Union: Policemen’s FCU, South Bend, Ind.
Assets: $77 million
Members: 4,907
In its notice to members, IMECO cited digital transformation, regulatory compliance and increasing cybercriminal threats among the reasons it has looked to merge.
“We have explored a wide range of options, including collaborating with like institutions to consolidate key support functions, maintaining the current course alone, or merging with a local, strong and proven performer,” IMECO FCU said. “While there are some benefits with each option only one meets the full range of our objectives: growth of membership, expansion of product offerings, infusion of investment and IT cybersecurity, improved staffing, training and enhanced community service, and superior software enhancement.”
In explaining that it will not be paying out any of its net worth to members, IMECO FCU told members, “because Policemen's Federal Credit Union is a healthy, financially sound credit union, the Policemen's Federal Credit Union board of directors believes the amount a member has on deposit at IMECO Federal Credit Union before the merger will result in equal amount on deposit at Policemen Federal Credit Union after the merger and that no adjustment in the accounts of any member will be required.”
IMECO FCU, which said the merger will not result in any layoffs, indicated no merger-related compensation would be paid to the management or board.
IMECO FCU reported a loss of $27,411 as of March 30, with capital of 9.74%. Policemen’s FCU reported net income of $58 for the first quarter, with net worth of 13.16%.
A member vote is scheduled for July 13.
Thinking a Decade or Two Ahead
Merging Credit Union: Pine Tree Community FCU, Grangeville, Idaho
Assets: $81 million
Members: 4,228
Acquiring Credit Union: Cottonwood Community FCU, Cottonwood, Idaho
Assets: $155.5 million
Members: 5,649
In its notice to members Pine Tree Community FCU said the merger is desirable because “it makes us more efficient and puts us in a stronger position to compete over the next 10 to 20 years.”
Pine Tree Community posted $134,335 in net income during the first quarter, with net worth of 8.32%. Cottonwood Community showed $329,431 in net income and net worth of 15.39% as of the same date.
A member vote is scheduled for July 16.
Can’t Offer Desired Services
Merging Credit Union: Jostens Employees CU, Owatonna, Minn.
Assets: $1.064 million
Members: 307
Acquiring Credit Union: Home Town FCU, Owatonna, Minn.
Assets: $255.7 million
Members: 21,526
Jostens Employees CU said it needed to merge because the combination will provide more products and services than it can currently provide. JECU said its main office will close, but that Home Town FCU has four branches that provide more access, plus 17 surcharge-free ATMs.
JECU posted $159 in net income as of March 30, with net worth of a whopping 33.80%.
The credit union said it will not be distributing any of its high net worth and indicated there will also be no merger-related compensation paid out to management or the board.
Home Town FCU reported $487,571 in net income as of the first quarter, with capital of 9.08%.
A member vote is scheduled for July 18.
One Tenth the Size, Double the Net Income
Merging Credit Union: St. Francis FCU, Greenville, S.C.
Assets: $11 million
Members: 1,906
Acquiring Credit Union: Caro FCU, Columbia, S.C.
Assets: $112.2 million
Members: 6,132
St. Francis FCU told its members the merger is “mutually beneficial, that Caro CU can offer a “more robust product set,” and that Caro also offers two branches, shared branching and ATM access.
St. Francis FCU said it plans to distribute a portion of its net worth, $250,000, equally to each member, which should be approximately $125.69 per member.
St. Francis FCU had net income of $43,562 during the first quarter, with net worth of 21.12%. Caro CU had net income of $28,152, with capital of 13.93%
A member vote is scheduled for July 19.
‘Difficult’ for One CU
Merging Credit Union: Western Region FCU, Cleveland
Assets: $16.9 million
Members: 2,092
Acquiring Credit Union: Best Reward FCU, Brook Park, Ohio
Assets: $175.8 million
Members: 11,735
In its statement to members, Western Region FCU said the merger will expand the list of member services and loan products available, especially remote and digital services that are “difficult for a credit union of our size to offer.”
WRFCU posted a loss of $19,227 as of the first quarter, with net worth of 11.60%. Best Reward FCU also posted a loss during Q1, at -$83,401. Best Reward had a capital ratio of 11.71% as of march 30.
WRFCU reported no plans to distribute any capital to members or pay any merger-related compensation to management or the board.
A member vote is scheduled for Aug. 4.
Has Everyone But You Heard the News?
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com