PASADENA, Calif.–A member objects to a CEO pay raise. A combination that crosses state lines. “Theresa,” the Woman Who Runs Everything is Retiring. Here’s Part II of CUToday.info’s latest review of merger proposals and what’s being disclosed to members. Part I can be found here.
Acquiring CU is Unprofitable; 1 Member Objects to Pay Raise
Merging Credit Union: Pasadena Service FCU, Pasadena, Calif.
Assets: $155.9 million
Members: 11,607
Year Chartered: 1936
Date of Member Vote: Feb. 22
Acquiring Credit Union:Pasadena FCU, Pasadena, Calif.
Assets: $271.3-million
Members: 13,951
In California, a smaller, more profitable and better capitalized CU is seeking to merge into a larger, unprofitable and less capitalized CU.
While that isn’t addressed in the disclosure provided to members, the board of Pasadena Service FCU said it is finding it “hard to compete in today's highly regulated, high-tech environment. The cost of technology and regulations have made it difficult for the credit union to provide its members with all of the products and services that larger credit unions and other financial institutions can provide.”
Pasadena FCU will be able to provide those offerings and more, according to PSFCU.
No payout of net worth is planned if the merger is approved, but PSFCU’s president and CEO, James Chang, will receive an increase in annual salary of $86,254 and interim compensation in the amount of $7,864 per month, the credit union said.
In the comment section, one member objected to the compensation boost, asking, “Who gets a raise that size? I am sure someone has to pay for salary increases. I am also pretty sure the member will (be) paying for them.”
The same member also objected to any potential changes in member account numbers.
Pasadena Service FCU reported $1.5 million in net income for the first nine months of 2023, with capital at 10.13%. Pasadena FCU reported a loss of $98,535 through Sept. 30, with capital of 8.21%.
‘Economic Conditions’ Are Cited
Merging Credit Union: Galveston Schools Employees FCU, Galveston, Texas
Assets: $2.7 million
Members: 954
Year Chartered: 1951
Date of Member Vote: Feb. 24
Acquiring Credit Union:Coastal Community FCU, Galveston, Texas
Assets: $93.4 million
Members: 15,245
In its message to members, Galveston School Employees said the merger would provide more products and services it is unable to due to “economic conditions.”
GSEFCU posted an $18,472 loss through Q3 of 2023, with capital at 9.85%. Coastal Community posted $1.3 million in net income to go with net worth of 9.86% as of the same date.
Merger Crosses State Lines, Involves $275M CU
Merging Credit Union: Aventa Credit Union, Colorado Springs, Colo.
Assets: $274.6 million
Members: 34,571
Year Chartered:
Date of Member Vote: Feb. 26
Acquiring Credit Union:Blue FCU, Cheyenne, Wyo.
Assets: $1.89 billion
Members: 120,472
In explaining to members why it would be beneficial to merge, Aventa CU cited:
- Expanded products and services and “modern” digital banking services
- Scale and impact, which it said will lead to lower loan rates, higher deposit rates, lower and fewer and lower service charges, and “broader community outreach”
- An expanded brand, ATM and ITM network
- Personalized service, with ACU noting Blue FCU has made it a priority to expand the availability of bilingual or multilingual employees
- Community involvement
Aventa CU said its CEO would join the management team of Blue FCU.
Citing costs related to the merger, Aventa CU said there would be no net worth distribution.
Three people will be receiving pay increases related to the merger, according to the disclosure documents. They include:
- Legal Counsel Patrick Harrigan, who will see a compensation increase of $39,946
- CFO Sarah Henderson, who will see a comp increase of $31,013
- CPO Melissa Noble, who will see a comp increase of $35,000.
As of Sept. 30, 2023, Blue FCU reported $4.6-million in net income, with net worth of 8.28%. Aventa CU posted a loss of $551,989 as of the same date, with net worth of 8.03%.
‘Theresa,’ Who Runs All Aspects of One CU, is Retiring
Merging Credit Union: I.C. FCU, Indiana, Penn.
Assets: $2.85 million
Members: 846
Year Chartered: 1985
Date of Member Vote:
Acquiring Credit Union:Priority First FCU, Du Bois, Penn.
Assets: $131 million
Members: 13,380
A relatively new CU, having been founded in the mid-1980s, I.C. FCU told members that “over the years it has become more and more difficult to stay on top of new technology and advances while still providing the financial services needed by our members. Additionally, after 23 years of dedicated service to the credit union, Theresa, our longtime manager will be retiring. As you know, Theresa runs all aspects of our operations and finding a replacement who can handle this workload for the compensation we can offer would be a monumental task.”
ICFCU said Priority First FCU, with its five branches, shares in its beliefs “on what a credit union should be.” It also offers an expanded product and service lineup, I.C. FCU said, and shares a common data processor.
IC FCU posted a net loss of $54,741 through Sept. 30, with net worth of 11.33%. Priority First had net income of $2 million, with net worth of 10.21% as of the same date.
Why 1 CU Says It Needs to Cross the River
Merging Credit Union: FCI FCU, Texarkana, Texas
Assets: $5.6 million
Members: 1,000
Year Chartered: 1940
Date of Member Vote: March 7
Acquiring Credit Union:Red River Employees FCU, Texarkana, Texas
Assets: $1.38 billion
Members: 117,763
FCI FCU cut to the chase in listing the reasons it says it needs to merge, providing a bullet list that included:
- Restricted FOM
- Lending constraints
- Losses in net income
- Erosion of capital and net worth
- Decline in share deposits and growth
- Increased operational cost
The benefits of the merger, it said, include:
- Wider (breadth) of products and services
- Increase in share rates
- Larger loan base and products
- Innovative technology-based solutions
- Online and mobile enhancement
- Expanded hours of operations
- Additional branch locations
FCI FCU lost $76,045 through Sept. 30, with net worth of 10.76%. Red River Employees FCU had $15.1 million in net income and capital of 13.12% as of the same date.
CU Pitches a ‘Win, Win, Win’
Merging Credit Union: The Municipal FCU, Sioux City, Iowa
Assets: $22.6 million
Members: 2,256
Year Chartered: 1938
Date of Member Vote: March 7
Acquiring Credit Union:Premier Credit Union, Des Moines, Iowa
Assets: $309.1 million
Members: 18,253
Municipal FCU told members the merger benefits them, employees and the board.
“The staff will benefit from increased employee benefits. Additionally, the staff will have a more focused scope of work. The members will benefit from more products, services and further dedicated staff. The credit union and board will benefit from the enhanced policies, procedures, and risk mitigation. As the financial industry landscape continues to transform, so do the challenges for small credit unions.”
The Municipal FCU had net income of $273,992 through Sept. 30, to go with net worth of 11.81%. As of the same date, Premier CU posted $762,016 in net income and net worth of 8.22%.
Where 1 CU Sees a Healthier Future
Merging Credit Union: Northeastern Connecticut Healthcare CU, Putnam, Conn.
Assets: $10.1 million
Members: 1,704
Year Chartered: 1965
Date of Member Vote: March 13
Acquiring Credit Union:America’s First Network CU, East Hartford, Conn.
Assets: $74.7 million
Members: 6,906
Northeastern Connecticut Healthcare CU’s board said it needs to merge to maintain brand awareness (it will operate as a division of America’s First Network CU), to maintain staffing and its location, to continue personalized service, to provide a core system that enables members to have additional services, to offer additional branches and more competitive rates, and to reduce operating expenses.
NCHCU had $44,438 in net income through Q3, with capital of 14.81% (it will not be distributing any net worth). AFNCU had $451,332 in net income and net worth of 11.01% as of the same date.
Payout for Management at CU That’s Posting Losses
Merging Credit Union: Central Coast FCU, Seaside, Calif.
Assets: $177.5 million
Members: 15,112
Year Chartered: 1961
Date of Member Vote: March 13
Acquiring Credit Union:Wescom Central CU, Pasadena, Calif.
Assets: $5.88 billion
Members: 227,345
The merger will “allow for a consolidation of energies and resources of the two credit unions to better serve members in a competitive and secure environment,” said Central Coast CU in its message to members.
Central Coast CU, which is headquartered approximately 350 miles north of Wescom Credit Union, went on to cite as other benefits of merging additional products and services, increased access, the fact one of its board members will serve on the Wescom board after the merger (with five others to be part of an advisory board), the fact its CEO, Leinette Limtiaco, will become VP of branch operations for the Central Coast region, community support and the ability to be “more responsive to evolving financial needs.”
Merger-Related Compensation
Central Coast said five members of management will see compensation related to the merger, including:
- CEO Leinette Limtiaco. Under the terms of a three-year contract, Limtiaco is to see an annualized salary increase of $136,000, and will be eligible to receive a severance opportunity of up to $280,000 if the continuing credit union terminates her employment without cause during the term of the employment agreement.
- VP-Member Engagement Larry Hartman. Hartman is to be employed on an “at-will” basis with an annualized salary increase of $9,000. He will also be eligible to receive a severance opportunity of $82,500 if he if “voluntarily terminates employment during a limited period of time after the merger.”
- Human Resources Manager Lori Miller. Miller is to serve as an at-will employee with an annualized salary increase of $23,495.50. She will also be eligible to receive a severance opportunity of $64,302.25 if she if “voluntarily terminates employment during a limited period of time after the merger.”
- Retail Market Manager-Soledad Elizabeth Ortiz. Ortiz will serve as an at-will employee with an annualized salary increase of $22,070.22. She will also be eligible to receive a severance opportunity of $60,000 if she if “voluntarily terminates employment during a limited period of time after the merger.”
- Accounting Manager Amanda Gibson. Gibson will serve as an at-will employee with an annualized salary increase of $1,499.88. She will also be eligible to receive a severance opportunity of $16,000 if she if “voluntarily terminates employment during a limited period of time after the merger.”
Central Coast reported a net loss of $223,370 as of Sept. 30, with capital of 7.35%. Wescom Central had $21.4 million in net income and net worth of 8.15% as of Q3.
A Long List of Benefits Shared, Merging CU Had Big Losses, Payout for Management
Merging Credit Union: Cooperative Center FCU, Martinez, Calif.
Assets: $134.8 million
Members: 7,966
Year Chartered: 1942
Date of Member Vote: March 14
Acquiring Credit Union:Nuvision FCU, Huntington Beach, Calif.
Assets: $3.27 billion
Members: 160,438
In one of the longer lists provided by a credit union of the benefits a merger will provide, Cooperative Center FCU shared 10 paragraphs of information, including bullet points, of why members should vote yes. The list included specific products, services, and technologies, as well as branches, the creation of an advisory committee of board members, charitable contributions of at least $50,000 annually for three years, and lower operating costs.
Merger-Related Compensation
Five members of the CCFCU management team will see compensation increases as a result of the merger, should it be approved. They include:
- President/CEO Fadhila Holman. Holman is eligible to receive a maximum of $57,534, representing unused accrued vacation and sick time. The CU noted it is not an increase in pay and it has already been accrued by Cooperative Center FCU (which is also true of all those listed below).
- EVP Mark Suacillo. Suacillo will be eligible for a maximum payout of $28,016, reflecting a retention bonus if he remains with the continuing CU for 90 days after system integration and payout of unused accrued vacation time.
- VP-Lending Lindsay Youmans. Youmans will be eligible for a maximum payout of $18,949, reflecting a retention bonus if he remains with the continuing CU for 90 days after system integration and payout of unused accrued vacation time.
- AVP-Marketing & Business Development Linda Meza. Meza will be eligible for a maximum payout of $12,102, reflecting unused accrued vacation time.
- VP-Operations Francesa Ortiz. Ortiz will be eligible for a maximum payout of $18,993, reflecting a retention bonus if he remains with the continuing CU for 90 days after system integration and payout of unused accrued vacation time.
Cooperative Center had a loss of $614,874 as of Sept. 30, with capital of 6.15%. Nuvision posted $14.5 million in net income to go with capital of 10.72% as of the same date.
Merging CUs are 600 Miles Apart; CU Was in Red but Paying Staff Bonuses
Merging Credit Union: GOLD Credit Union, Allentown, Penn.
Assets: $146.8 million
Members: 9,328
Year Chartered: 1937
Date of Member Vote: March 21
Acquiring Credit Union: United FCU, Saint Joseph, Mich.
Assets: $3.89 billion
Members: 186,476
In its message, the board of GOLD Credit Union, which is located 673 miles east of United FCU, told members, “In our last four annual meetings, we have presented and discussed with members the investments GOLD has been making in our infrastructure, technology, products, and services by investing our capital, through expenses that exceeded income, for the benefit of our members and future growth. We provided updates on the additional challenges that we faced (COVID, recession, inflation, rapidly rising fed funds increases and others) that hindered the return to positive income we had forecast.”
GOLD CU listed 10 product and service enhancements, as well as enhanced electronic banking, member access, an investment in the Lehigh Valley of Pennsylvania and community support as other reasons to vote in favor. It said its two offices will remain open and all employees would be retained, with staff receiving retention bonuses of between 20% and 40% of their salaries.
Merger-Related Compensation
GOLD CU said five people will receive merger-related compensation, including:
- CEO Cheryl Bartholomew, a one-time retention bonus of $108,000
- CFO Donna Fogel, a one-time retention bonus of $73,000
- Chief Communications Officer Jennifer Gora, a one-time retention bonus of $50,000.
- VP-Systems Operations Nickolas Armstrong, a one-time retention bonus of $45,000
- VP-Lending Darian Phillips, a one-time retention bonus of $37,000.
It said it would not be paying out any net worth to members.
There was little gold for GOLD CU through the first three quarters of 2023, as it reported a loss of $404,614 to go with capital of 8.71%. United FCU had $21.2 million in net income and net worth of 10.98% as of Sept. 30.
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