LITTLE ROCK, Ark.–A CUToday.info review of the latest merger disclosure forms NCUA requires be provided to members has found a growing number of credit unions offering related compensation packages for management—including one that is to last a decade—often in cases where there remains no distribution of net worth to members.
In this latest CUToday.info report, 22 merger proposals are examined with a review of each of the disclosure/member notification forms that are filed with the agency. We found many forms using nearly identical language (especially by one CU that is currently seeking to merge in two others), payments to management even in cases where their credit unions have been losing money, disclosures that provided long lists of reasons why the board feels a merger is in members’ best interests, and other cases where no reasons were provided.
Below is part one of this two-part review:
No Reason, No Distribution
Merging Credit Union: Little Rock FCU, Mabelvale, Ark.
Assets: $1.3 million
Members: 300
Year Chartered: 1939
Date of Member Vote: June 19
Acquiring Credit Union: TruService Community FCU, Little Rock, Ark.
Assets: $52.4 million
Members: 5,135
In its disclosure to members, Little Rock FCU provides no reason for needing to merge. It uses the template statement and then never fills in the blank, telling members, “The board of directors has concluded the proposed merger is desirable and in the best interests of members because…”
Similarly, its disclosure around net worth leaves the fields blank, but it does note at the time of the member disclosure that its net worth (18.12%) (at time of announcement) is double that of TruService Community FCU’s (8.09%).
“Little Rock FCU will not distribute a portion of its net worth to its members in the merger,” it states. “The board of directors has determined a share adjustment or other distribution of Little Rock FCU’s net worth is unnecessary because Little Rock Federal Credit Unions (sic) assets are insignificant in relation to TruServe Community Federal Credit Union (2%).”
If the deal is approved by members, LRFCU said its president and CEO, Pris Dodson, will receive six months’ salary through Dec. 20, which represents $21,240 in compensation. It said Donna York would receive six months salary of $3,552.
Little Rock FCU posted a loss of $10,580 through March 31, with capital of 16.72%. TruService had net income of $1,058 and net worth of 8.02% as of the same date.
Can’t See the Forrest…Due to Lack of Growth
Merging Credit Union: Forrest County Teachers FCU, Hattiesburg, Miss.
Assets: $190,650
Members: 248
Year Chartered: 1961
Date of Member Vote: June 22
Acquiring Credit Union: CenturyFirst FCU, Hattiesburg, Miss.
Assets: $90.9 million
Members: 11,976
Like a lesson plan, Forrest County Teachers listed six bullet points for reasons members should vote in favor of the merger. Those include:
- Additional products and services, including checking accounts, debit cards, larger loans, access to shared branching, financial counselors, and more.
- More offices.
- Expanded hours (FCTFCU is only open three hours per week.)
- Elimination of the $5 monthly fee to be a member.
‘Difficult to Remain Viable’
“We have been unable to grow the credit union because of the services offered, our size, equity to asset ratio and limited hours of operation make it difficult to remain viable,” the credit union told members.
Forrest County Teachers posted a $2,260 loss and net worth of 4.84% as of the first quarter. CenturyFirst FCU has $415,302 in net income and net worth of 15.61% as of the same date.
The Seasons Have Changed for One CU
Merging Credit Union: Changing Seasons FCU, Hampden, Maine
Assets: $27.9 million
Members: 2,044
Year Chartered: 1966
Date of Member Vote: June 22
Acquiring Credit Union: University FCU, Orono, Maine
Assets: $475 million
Members: 28,867
Changing Seasons FCU told members it needs to merge in order to provide better pricing and services, additional products, enhanced convenience and lower operating costs.
“The merged credit union will also achieve economies of scale which will permit it to better compete in the increasingly competitive financial services industry,” the credit union said.
Changing Seasons FCU posted a $34.027 loss during the first quarter, with net worth of 7.51%. University FCU had
Each Member to Receive $300
Merging Credit Union: Nekoosa Credit Union, Nekoosa, Wis.
Assets: $26.9 million
Members: 1,329
Year Chartered: 1935
Date of Member Vote: June 24
Acquiring Credit Union: Valley Communities CU, Mosinee, Wis.
Assets: $243.8 million
Members: 15,312
Nekoosa CU cited additional products and services, more branches and improved technologies as the reason it needs to combine.
Nekoosa CU, which will distribute net worth in the event the merger is approved, with each eligible member to receive $300, reported a loss of $23,174 and capital of 15.05% as of March 31. Valley Communities CU had $446.611 in net income to go with capital of 12.14%.
Payouts for Management in Deal That Would Create Billion-Dollar CU
Merging Credit Union: Anoka Hennepin CU, Coon Rapids, Minn.
Assets: $284.8 million
Members: 18,625
Year Chartered: 1963
Date of Member Vote: June 27
Acquiring Credit Union: Topline Financial Credit Union, Maple Grove, Minn.
Assets: $836.8 million
Members: 51,186
Anoka Hennepin Credit Union’s board told members the tie-up will provide a wider range of products and services and will help achieve “economies of scale to help it to better compete in the increasingly competitive financial services industry.”
It will also expand its service footprint to 15 contiguous counties and provide members with more branches, including shared branch access, AHCU said.
Bonuses, Payments to Management
A number of people will be paid additional compensation should the merger be approved, Anoka Hennepin disclosed to its members. Four people—SVP/General Counsel Theresa Tostengard, CIO Rick Gonnerman, and CFO Martin Waligora will receive retention bonuses of $75,000 each, while VP-Lending Chris Olsen will receive $35,000.
In addition, CEO Jeff Clausin will receive 18 months salary and benefits of approximately $427,250 after the date of the merger, and he is to retain use of a vehicle he currently uses for personal use.
Claussen, Tostengard, Waligora and Gonnerman will also receive benefits from extended sick leave in amounts ranging from $14,134 to $23,042.
AHCU reported $12,145 in net income for Q1 2024, with net worth of 8.54%. Topline Financial posted $1.474 million in net income, with net worth of 9.03% as of March 31.
‘Facing Challenges’ in Being Self-Reliant
Merging Credit Union: Ukrainian Selfreliance New England, Wethersfield, Conn.
Assets: $45.2 million
Members: 3,219
Year Chartered: 1959
Date of Member Vote: June 30
Acquiring Credit Union: Selfreliance FCU, Chicago
Assets: $1.236 billion
Members: 39,488
In its message to members, Ukrainian Selfreliance New England said, “As a small credit union with limited resources, USNEFCU has faced challenges in keeping up with technological advancements and providing the full spectrum of services…Over the last 20 years, USNEFCU assets have grown modestly (only $15 million), and it has experienced losses in a significant number of financial periods. Despite its best efforts, USNEFCU has struggled to attract and retain HR talent and its community support budget has been constrained.”
A merger, the board told members, will allow for a “much-needed upgrade in the quality of service we are able to provide.” In addition, USNEFCU said, it believes there is a synergy with Selfreliance FCU, and the merger will provide access to new ATMs, products and services and technologies, not to mention economies of scale.
‘Support Fund’ to be Created
Selfreliance FCU will establish a “New England Community Support and Local Marketing Fund” as part of the merger, the disclosure says. The goal of that is to “support the community initiatives and bolster marketing efforts within the New England region.”
According to its disclosure, the New England Fund will be managed by a New England Advisory Committee and by the continuing CU’s president and CEO. An annual budget of $75,000 has been established for the fund.
USNEFCU said its CEO, George Stachiw, will receive a $40,000 bonus for remaining with the continuing CU for one year. Four other executives will receive between $9,000 and $9,500.
Ukrainian Selfreliance reported $52,355 in net income during Q1, to go with net worth of 9.47%. Selfreliance FCU had net income of $814,312 and net worth of 11.36% as of the same date.
A CU Called Multipli Opts for the Opposite
Merging Credit Union: Multipli Credit Union, Springfield, Mo.
Assets: $184.3 million
Members: 10,431
Year Chartered: 1934
Date of Member Vote: July 1
Acquiring Credit Union: River Region Community FCU, Jefferson City, Mo.
Assets: $520.6 million
Members: 31,032
A merger will allow it to provide better pricing and services, additional products, enhanced convenience and lower operating costs, along with the efficiencies needed to better compete, Multipli CU told members.
MCU said if the merger is approved, it will distribute a portion of its net worth to members in the amount of $1.95 million, with a minimum of $100 per member and a maximum of $1,000.
Multipli CU posted $387,737 in Q1 net income, with capital of 16.87%. RRCFCU had $1.008 million in net income and capital of 9.13% as of March 31.
A 14-Year-Old CU Says Aloha
Merging Credit Union: Oahu FCU, Honolulu
Assets: $54.2 million
Members: 3,325
Year Chartered: 2010
Date of Member Vote: July 6
Acquiring Credit Union: Aloha Pacific FCU, Honolulu
Assets: $1.29 billion
Members: 67,151
Oahu FCU said a merger will allow it to “greatly enhance and expand” service and product offers, while aligning with APFCU, which has “strength and stability and a commitment to the local market.”
Oahu FCU said if members OK the deal it will distribute a portion of its net worth in the form of a bonus dividend equal to approximately 4% of share, share drafts and certificate balances.
Payouts for Management
The combination will also lead to merger-related compensation to six C-suite execs, in each case for years of service, accrued vacation and sick leave, and a special dividend paid on current shares.
Receiving payouts would be:
- General Manager: $161,849
- Assistant Manager: $128,080
- Controller: $104,051
- Operations Manager: $86,567
- Loan Processor II: $51,559
- Senior Teller: $77,593
Oahu FCU posted $73,554 in net income as of March 31, with capital of 12%. APFCU had $770,358 in net income to go with net worth of 10.08% as of the same date.
Little Copper to be Had as CU With Low Net Worth Seeks Combo
Merging Credit Union: Arizona Copper FCU, Kearny, Ariz.
Assets: $15.3 million
Members: 2,218
Year Chartered: 1955
Date of Member Vote: July 9
Acquiring Credit Union: American Southwest CU, Sierra Vista, Ariz.
Assets: $389.7 million
Members: 31,293
In a message to members that is very similar in wording to that of several other disclosure forms filed by credit unions, Arizona Copper FCU said a combination will allow it to provide better pricing and services, additional products, enhanced convenience and lower operating costs that will provide economies of scale to “permit it to better compete in an increasingly competitive financial services industry.”
It also cited American Southwest CU’s “member-first” philosophy, as have several other credit unions.
Merger-Related Compensation
Should members vote in favor, Dan Thurman, CEO of Arizona Copper CU, will be EVP of the continuing credit union and will receive a retention bonus of $11,800 and an increase salary to $118,000 from $83,918, and well as a boost in his 401(k) match, the disclosure form states.
Arizona Copper had a $54,029 loss as of March 31, with very low net worth of 4.59%. American Southwest posted $706,424 in net income and capital of 9.71% as of the same date.
It's ‘Difficult to Compete,’ Says Small CU
Merging Credit Union: Tanner Employees CU, Salt Lake City
Assets: $5.9 million
Members: 814
Year Chartered: 1957
Date of Member Vote: July 18
Acquiring Credit Union: Utah First FCU, Salt Lake City
Assets: $973.5 million
Members: 7,659
“As financial institutions continue to expand in size and complexity, it has become more difficult for a small credit union to compete and to provide services and benefits that members demand,” said TECU’s board.
The merger with UFFCU will provide additional services, including digital offerings, credit cards, mortgages and more, Tanner Employees CU added. It will also provide many more branches.
If approved, TECU President Kevin Louder will receive unused vacation salary of approximately $38,000, the credit union said.
Tanner Employees CU had a $52,907 loss as of Q1, with 15.21% in net worth (it does not plan any distribution).
Utah First has $2.6 million in net income and net worth of 9.68% as of the same date.
Members to Get $150 Payout if Merger Approved
Merging Credit Union: CRMC Employees CU, Douglas, Ga.
Assets: $2.96 million
Members: 1,310
Year Chartered: 1972
Date of Member Vote: July 18
Acquiring Credit Union: Interstate CU, Jesup, Ga.
Assets: $355.1 million
Members: 31,927
CRMC Employees told members they should vote in favor of the merger because it will provide a wider array of financial products and enhance services, as well as improved in-person services, a national ATM network, and electronic products.
It noted Manager Mattie Bivens will also move to Interstate CU as part of the merger.
In addition, with net worth of 20.65%, CRMC Employees CU said it will distribute a portion of its capital to members if the tie-up is approved, with each member to receive $150.
CRMCECU had $12,218 in net income as of March 31. Interstate CU had net income of $861,134 and net worth of 13.75% as of the same date.