ALEXANDRIA, Va.–CUToday.info’s latest review of disclosure forms filed by nine credit unions seeking to merge has found two CUs, both of which posted losses over the first six months, seeking to combine; several CUs with capital north of 22% again not distributing any of that net worth to members; just one acquiring CU of more than a billion in assets (a rarity), and one small CU that still operates out of a person’s home and which does business by phone only.
Part I of this newest review of credit union mergers, below, is part of an ongoing series by CUToday.info to provide full coverage and a publication of record for the credit union community, while sharing some interesting history and insights into the disclosures being provided to members, as required by NCUA.
Here is the first-part of this two-part series on CUs seeking to merge. Links to all of CUToday.info’s prior reporting on mergers in 2022 appears at the bottom of this story.
Getting ‘Harder to Compete’
Merging Credit Union: Saginaw County Employees CU, Saginaw, Mich.
Assets: $48.6 million
Members: 2,893
Year Founded: 1956
Date of Member Vote: Oct. 11.
Acquiring Credit Union: Consumers Professional Credit Union, Lansing, Mich.
Assets: $95.7 million
Members: 5,374
SCECU told its members that while it is financially strong, it is finding it hard to compete in today’s highly regulated, high tech environment. “The costs 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 can provide. Consumers Professional Credit Union is a larger size organization, is financially strong, offers greater career path opportunities for our employees, a commitment to retain our branches and serve our members along with an offer of representation on its board of directors.”
Saginaw County Employees said there will be no distribution of net worth or share adjustment because a “share in Consumers Professional Credit Union is worth more than a share in Saginaw County Employees Credit Union.”
The credit union did not indicate there would be any merger-related compensation for board members or management.
SCECU reported $83,251 in mid-year net income, with capital of 8.60%. Consumers Professional posted $243,681 in net income and capital of 14.85% as of the same date.
A Detailed Merger Disclosure for Members
Merging Credit Union: PA HealthCare Credit Union, Sewickley, Penn.
Assets: $26.1 million
Members: 2,214
Year Founded: 1973
Date of Member Vote: Oct. 11.
Acquiring Credit Union: Clearview FCU, Moon Township, Penn.
Assets: $1.716 billion
Members: 111,993
In one of the more formally created documents filed with NCUA and provided to members as part of a proposed merger, PA HealthCare’s 17-page document (a copy of which is available in CUToday.info’s The Vault here) says that the “cumulative needs and best interests of the members were the primary goal of the PAHCU board of directors and ultimately making the merger decision. The organization has always focused on how to better provide services for the membership, given the current state of the industry this has become an increasingly difficult challenge. Competition from local and online financial institutions, both banks and other credit unions, as well as changing trends and consumer spending have resulted in a decrease of revenues which ultimately impact the ability for PAHCU to keep pace and develop new products and services lines.”
While its net worth is higher than that of Clearview FCU, PAHCU said there would be no net worth distribution because of the benefit accrued to its members through increased financial center access, new products and services and ongoing efficiencies offsets…
PAHCU said its two branches will remain open “at the time of the merger,” but the disclosure document also lists the locations of other Clearview FCU branches located close by.
The document says the merger is to be completed by Oct. 1. The form does not indicate there will be any compensation for PAHCU management or board.
PA Healthcare reported a loss of $128,350 as of June 30, with capital of 11.96%. Clearview showed $6.036 million in mid-year net income, with capital of 9.27%.
Merger is a Way to ‘Differentiate’ Itself, Virginia CU Says
Merging Credit Union: InFirst FCU, Alexandria, Va.
Assets: $252.3 million
Members: 15,873
Year Founded: 1935
Date of Member Vote: Oct. 11
Acquiring Credit Union: Arlington Community FCU, Falls Church, Va.
Assets: $450.7 million
Members: 23,121
In its statement to members, InFirst FCU said it is seeking to merge due to “growth challenges” related to its field of membership a need to “differentiate itself in a crowded financial service marketplace,” an inability to keep pace with compliance, marketing and technology costs, the ability to gain efficiencies of scale, and finally, the impending retirement of its CEO, Martha Wye.
It also said the merger will give its members higher deposit rates, lower loan rates, lower fees and a robust line of credit cards.
InFirst FCU said there will be no member distribution and that no management or board member will receive any merger-related compensation.
InFirst FCU reported $298,771 in net income as of June 30, with capital of 7.53%. Arlington Community posted net income of $1.377 million at mid-year with capital at 7.62%.
In Washington, A Net Worth Distribution
Merging Credit Union: Tacoma Narrows FCU, Ruston, Wash.
Assets: $8.6 million
Members: 837
Year Founded: 1951
Date of Member Vote: Oct.12
Acquiring Credit Union: Cascade FCU, Kent, Wash.
Assets: $352.6 million
Members: 9,826
Tacoma Narrows told members the merger will achieve operational cost savings and improve the financial strength of the continuing credit union, the addition of three new branches, access to online and mobile banking, expanded home mortgage and commercial real estate offerings and more.
If the merger is approved, TNFCU said it will distribute $150,000 of net worth to members, including a $112,500 dividend to be paid out via a 1.5% bonus on shares, with $37,500 to be paid to borrowers via a refund on 55% of the loan interest they have paid in the first six months of 2022.
In addition, if the merger is completed, Tacoma Narrows said CEO Pat Sherfield employment will be terminated and she will be paid $76,291.42.
If approved, the merger is to close on Nov. 1.
TNFCU lost $45,729 in the year’s first half, reporting capital of 15.27%. Cascade FCU posted $2.169 million in net income through June 30, with capital of 13.58%.
The Home Office IS a Home
Merging Credit Union: Atlantic County NJ Employees FCU, Egg Harbor Township, N.J.
Assets: $2.32 million
Members: 477
Year Founded: 1941
Date of Member Vote: Oct. 14.
Acquiring Credit Union: Jersey Shore FCU, Northfield, N.J.
Assets: $246 million
Members: 14,956
Atlantic County NJ Employees told its members it’s seeking to merge to offer services it currently doesn’t, including in-person, online and mobile services.
“There is only one location, which is a private home, where transactions are done over the phone, with limited hours and supported by two part-time staff members,” the credit union said. Both staff members are planning on retiring shortly and there are no succession plans in place for those employees.
“The Atlantic County New Jersey Employees Federal Credit Union board of directors recognizes its members are looking for additional financial services, such as share draft checking accounts, debit cards, credit cards, share certificates, more loan options, and extended banking hours with multiple locations. The best solution is to merge…”
Despite capital of 25.59%, ACNJECU said there will be no share distribution. Jersey Shore FCU’s mid-year call report shows it could use the capital boost, as it reported capital at 6.75%.
Atlantic County NJ EFCU reported a loss of $3,647 during the first half of this year. Jersey Shore FCU posted net income of $357,057 during the first two quarters.
Links to Prior Reporting
Jan. 12
March 16
April 26
https://www.cutoday.info/Fresh-Today/What-Review-of-Latest-CU-Merger-Proposals-Reveals-Part-I
April 27
https://www.cutoday.info/Fresh-Today/What-Review-of-Latest-CU-Merger-Proposals-Reveals-Part-II
May 17
May 18
June 8
June 28
Aug. 11
Aug. 10
Aug. 9