PALM COAST, Fla.–The latest review of credit unions seeking to merge finds nearly all are below $10 million in assets (just two are between $40-$100 million in assets), and again uncovers CUs unable to find new managers, saying they simply can’t afford new technology (two of the CUs don’t have websites) and, in one case, offering a pretty unique formula for how it determined net worth should not be returned to members.
Below is part one of a two-part series this week in CUToday.info offering a comprehensive overview of the newest 18 credit unions saying they need to merge, for a variety of reasons (although most are pretty common by now).
And Miles to Go Before…We Merge
Merging Credit Union: Miles City FCU, Miles City, Mont.
Assets: $4.29 million
Members: 393
Date Founded: 1952
Date of Member Vote: June 22
Acquiring Credit Union: Valley Financial CU, Billings, Mont.
Assets: $452.9 million
Members: 36,188
In its statement to members, Miles City FCU said it needs to merge because of the rising costs of staffing, technology and regulation have “made it very difficult for financial institutions the size of Miles City FCU to be sustainable in the long run.”
MFFCU said there are no plans to distribute any net worth to members.
Miles Financial posted a loss of $3,803 as of March 31, with capital of 12.58%, while Valley Financial reported $1.045 million in net income and 11.53% as of the same date.
Can’t Find Replacement for Manager
Merging Credit Union: S E L H FCU, Mandeville, La.
Assets: $4.41 million
Members: 923
Date Founded: 1955
Date of Member Vote: June 23
Acquiring Credit Union: St. Tammany FCU, Slidell, La.
Assets: $40.29 million
Members: 6,684
S E L H FCU’s board said the merger is the only option, as it cannot find a replacement for its retiring manager, while St. Tammany FCU can also offer more products and services. In addition, STFCU is also low-income designed and has a similar FOM, the CU said.
S E L H FCU posted a $7,339 loss through the first quarter with net worth of 7.84%. St. Tammany FCU has $119,613 in first quarter net income and net worth of 14.31%.
Will Distribute Some of 30% Capital
Merging Credit Union: N.G.P.L. Employees CU, St. Charles, Iowa
Assets: $2.57 million
Members: 266
Date Founded: 1958
Date of Member Vote: June 26
Acquiring Credit Union: Midland Credit Union, Urbandale, Iowa
Assets: $77.9 million
Members: 4,822
In its statement to members, NGPL Employees Credit Union said it has “experienced declining membership and erosion of loan portfolio over the last couple of years. A merger will allow NGPL Employees Credit Union members to enjoy additional products and services that the credit union has not been able to offer due to limited staff, time, money and resources.
If the merger is approved, NGPL Employees said it will close its one location, but also plans to distribute a portion of net worth to members in the form of a .50% bonus dividend on share balances as of Dec. 31, 2022.
In addition, as part of the proposed combination, NFPL ECU said its manager, Erin Goering, will serve as a business development officer for 25 hours/week for a period of not less than two months nor more than three months with Midland CU.
NGPL ECU reported $7,848 in net income for the first quarter, with net worth at a whopping 31.68%. Midland CU reported $117,106 in net income, with capital at 10.11%.
One of 2 CUs Being Absorbed by AAFCU
Merging Credit Union: Harrison FCU, Colorado Springs, Colo.
Assets: $16.5 million
Members: 1,312
Date Founded: 1957
Date of Member Vote: June 26
Acquiring Credit Union: Academy FCU, Colorado Springs, Colo.
Assets: $925.4 million
Members: 47,676
Harrison FCU is one of two small credit unions that has asked its members to approve a merger into Air Academy FCU.
“Harrison’s small size and limited resources have prevented us from offering members a full range of financial services and a robust online banking experience,” the credit union told its membership in explaining why it needs to merge. “The merger into Air Academy brings Harrison members expanded access to financial products and services and added convenience for a better banking experience.
After outlining those additional products and offerings,” HFCU added, “The merger will benefit Air Academy in that it will bring to the continuing credit union a dedicated and loyal membership.”
Harrison FCU said there will be no capital distribution, given its 6.7% net worth ratio as of March 31. For Q1, it showed $27,839 in net income. Air Academy FCU had $306,911 in net income, with capital at 7.53%.
Single-Sponsor CU Has Singular Problem: No Growth
Merging Credit Union: McKesson FCU, Stratford, Conn.
Assets: $31.4 million
Members: 2,667
Date Founded: 1936
Date of Member Vote: June 29
Acquiring Credit Union: Sikorsky Financial CU, Stratford, Conn.
Assets: $1.136 billion
Members: 59,048
McKesson FCU’s board told the members the CU has been “challenged by increased resources demanded for security, technology, regulation and compliance. In addition, due to its small size, McKesson FCU has not been able to enhance or offer services requested by its membership. Furthermore, McKesson FCU has a membership originating from Select Employer (sic) Groups that have reduced or curtailed operations limiting McKesson FCU’s ability to grow.”
The merger will allow MFCU to offer a wide variety of new services, as well as access to seven branches, the credit union said.
McKesson FCU said it does plan to distribute approximately $30,000 as a bonus dividend based on Q4 2022 dividends paid, plus an additional dividend will be paid to member accounts as of Sept. 30, 2023.
If approved, there will also be merger-related compensation paid to four MFCU employees, the disclosure documents show, including: CEO Gary Hultgren, $111,018; Operations Manager Barbara Loose, $13,057.69; MSR Mary Beth Detuzzi, $9,068.55, and MSR Merri Stephens, $6,780.14.
McKesson FCU posted $10,412 in Q1 net income, with net worth of 9.51%. Sikorsky Financial reported $3.049 million in net income and capital of 11.02%.
‘Limited Budget’ Limits Future
Merging Credit Union: Local 461 FCU, Macon, Ga.
Assets: $1.224 million
Members: 535
Date Founded: 1973
Date of Member Vote: June 30
Acquiring Credit Union: Brosnan Yard FCU, Macon, Ga.
Assets: $3.695 million
Members: 881
Local 461 FCU told its members, succinctly, “…the proposed merger is desirable and in the best interests of members because our limited budget cannot sustain long term growth and Brosnan Yard offers similar services with increased opportunities for our members.
Local 461 said its main office will remain open after the merger, should it be approved.
The credit union said there will be no distribution of capital, but that its manager, Marci Barton, will receive severance pay and accrued leave of $30,150.
Local 461 FCU reported $491 in net income for the first quarter, with capital at 15.52%. Brosnan Yard FCU posted $12,721 in net income and net worth of 13.90% as of the same date.
Already Using Acquiring CU’s Facilities
Merging Credit Union: Beulah FCU, Massapequa, N.Y.
Assets: $63,204
Members: 75
Date Founded: 2007
Date of Member Vote: July 6
Acquiring Credit Union: Consumers FCU, Brookland, N.Y.
Assets: $81.5 million
Members: 2,754
In its disclosure to members, Beulah was brief, saying the merger was in their best interests because the continuing credit union would be able to offer a “full range of banking products and services.” There are no plans for any net worth distribution, and BFCU said its main office is already closed but that members can use Consumer FCU’s two locations, plus four shared branches.
Beulah FCU reported $0 in net income for the first quarter, with net worth of 16.40%.
CFCU posted $35,902 in net income, with net worth of 13.07% as of Q1.
One-Time Dividend for Members; Bonuses for Employees
Merging Credit Union: Midwest Community CU, Sioux City, Iowa
Assets: $44.8 million
Members: 3,124
Date Founded: 1955
Date of Member Vote: July 6
Acquiring Credit Union: Siouxland FCU, South Sioux City, Neb.
Assets: $263.4 million
Members: 22,538
Midwest Community CU said the merger will help it “achieve greater positive member, employee and community impact and value. It cited additional products and services, increased access (including going to six branches from one), the “same knowledgeable, friendly employees,” an institution “more responsive to evolving financial needs,” and “continuing credit union leadership.”
According to its message to members MCCU President/CEO paddy Friedrichsen will remain with the continuing credit union through her retirement in December, with SFCU President/CEO Joel Steenhoven to be CEO of the combined credit union.
Midwest Community said if the merger is approved it will pay a one-time distribution of 4.7% on the average daily balance of member shares during 2022.
Merger related compensation will include a $8,937.50 pay increase for Friedrichsen and one—time retention bonus of $21,450 if she remains with the continuing credit union through system and employee integration. In addition, all MCCU employees will receive a $2,000 “stay bonus” in Q1 2023 plus a $4,000 stay bonus for Friedrichsen. All MCCU employees other than Friedrichsen who remain employees with Siouxland FCU will participate in a bonus pool equal to 3% of their salary at the time of payment.
The credit union said the other MCCU employees may receive maximum potential severance if terminated without cause within 24 months (declines monthly) that is in addition to that listed above:
- Head Teller Tammy Larson: $85,280
- ACH Clerk Sidney McNaughton: $84,240
- Fraud Specialist Aby Coronado: $84,032
- CSR Alfreda Anaya: $72,800
Midwest Community reported $49,405 in net income through March 31 with capital at 7%. Siouxland FCU posted $446,423 in net income with net worth of 12.72% as of the same date.
Inability to Find New Manager Cited
Merging Credit Union: I W U FCU, Bloomington, Ind.
Assets: $2.3 million
Members: 177
Date Founded: 1966
Date of Member Vote: July 11
Acquiring Credit Union: Illinois State CU, Normal, Ill.
Assets: $207 million
Members: 17,162
The board of IWUFCU, which serves Illinois Wesleyan University, offered four reasons for needing to merge:
- The membership base has steadily declined with little likelihood of reversing
- Active members have reduced frequency of borrowing and profitability
- There has been difficulty in replacing the single manager
- Illinois State CU offers more products, services and higher dividend rates
IWUFCU posted a $9,021 loss for the first quarter, with capital at 17.43 (there are no plans for a capital distribution). Illinois State CU reported Q1 net income of $700,047 and net worth of 10.73%.
Earlier Reports
For additional information on other CUToday.info reports on mergers in credit unions, go here: January 20, Feb. 8, Feb. 9, and March 20.