ZACHARY, La.–A one-of-a-kind infographic explaining reasons for merging; a CU reaching more than 1,000 miles south to enter a new state; a CEO’s whose merger-related comp package is nearly 10% of the CU’s asset size. All of that and more can be found in CUToday.info’s latest review of merger disclosures filed with NCUA by credit unions seeking to combine.
Below is what that review has found. Reports to date in 2024 on mergers in credit unions can be found here and here.
A One-of-a-Kind Infographic on Merger
Merging Credit Union: Allied Plastics FCU, Zachary, La.
Assets: $21.2 million
Members: 1,661
Year Chartered: 1957
Date of Member Vote: March 19
Acquiring Credit Union: GP Louisiana FCU, Zachary, La.
Assets: $47 million
Members: 4,505
In a one-of-a-kind disclosure to its members, Allied Plastics FCU offered a graphic indicating nine different areas where the merger will benefit members. The same piece also included a QR code for members to use if they wished to submit a comment to NCUA.
“(The merger) will allow us to share our people and resources, providing members with additional products, services and locations while still maintaining the same culture of service and values you are accustomed to,” APFCU told members. “Patterning with GPLAFCU will better support and strengthen the credit union after its recent challenges, such as losing sponsor support and our only branch, staffing turnover and an ever-changing economy.”
Allied Plastics said two of its board members would join the board of the merged institution, if the combo is approved.
At year-end 2023, Allied Plastics FCU reported $226,014 in net income, with net worth of 17.62% (it did not indicate any capital distribution is planned). GP Louisiana FCU posted $603,576 in net income and capital of 12.71% as of the same date.
City & Police FCU Looks to Stay Alive
Merging Credit Union: City & Police FCU, Jacksonville, Fla.
Assets: $110.7 million
Members: 6,621
Year Chartered: 1935
Date of Member Vote: March 26
Acquiring Credit Union: Alive Credit Union, Jacksonville, Fla.
Assets: $171.5 million
Members: 13,675
In a city in which two other large credit unions are in the process of merging (VyStar and 121 Financial), City & Police FCU said it also needs to combine and told members the benefits include branch expansion, increased staff development opportunities, better scale to be used to invest in technology, cost savings due to efficiencies, alignment in fields of membership, shared values and more.
“This merger will allow both Alive and City & Police to each grow through the addition of a financially stable credit union with a solid membership base, additional offices and qualified personnel,” the credit union told members.
CEO Compensation
City & Police said the merger will lead to merger-related compensation for its president and CEO, Aaron Logue, whose salary will increase by $50,000 annually and who will be eligible for a one-time signing bonus of $15,000. Logue will become CEO of the merged institution and will enter into a split-dollar life insurance arrangement to be owned by the continuing credit union with death benefits of $821,826 to be paid to his designated beneficiaries, minus certain deductions, the credit union said. In the event of Logue’s termination without case or within nine months following a change in control of the continuing credit union, Logue is to be paid a cash severance equal to one year’s base salary of approximately $175,000 the statement said.
Additional Compensation
Four others are eligible for merger-related compensation if terminated within the first six months following the merger for any reason other than for cause and are to be paid amounts ranging from $13,932 to $34,632, respectively.
City & Police reported $522,290 in net income for 2023, with capital of 8.60%. Alive CU had $700,803 in net income and net worth of 13.11% at year-end.
CEO’s Compensation Package About 9% of CU’s Asset Size
Merging Credit Union: Financial Access FCU, Bradenton, Fla.
Assets: $35.1 million
Members: 2,587
Year Chartered: 1958
Date of Member Vote: April 2
Acquiring Credit Union: Credit Union 1, Rantoul, Ill.
Assets: $1.7 billion
Members: 125,000
Illinois-based Credit Union 1 is looking to expand into another state via merger, this time with a proposed combination with Financial Plus Credit Union, located 1,128 miles south in Bradenton, Fla.
Financial Plus’ board told members the merger is desirable because “Credit Union 1 operates with the technology and systems that align with our members’ needs. Their internal core values align with our own and give us confidence our membership will experience a much-needed upgrade in the quality of service we are unable to provide in this economic environment. We believe a synergy exists between the two credit unions and this partnership will benefit all involved.”
Although it has net worth of nearly 20%, Financial Plus said it will not distribute any net worth to its members because they are being offered a “host of updated services and options with Credit Union 1 that we are unable to provide in this economic environment.”
Financial Plus additionally told members they will benefit from an expanded branch network, but of the 18 branch locations listed, 17 are out of state, with locations in Illinois, Indiana, Nevada and Georgia. The lone Florida branch is FAFCU’s current location in Bradenton.
Merger-Related Compensation
According to the disclosures filed with NCUA, Sherod Haliburton, president and CEO of Financial Access FCU, will be paid a merger bonus of $125,000, including $25,000 at the completion of the merger and $25,000 over each of the following four years. He will also be offered a post-merger employment with Credit Union 1 of $200,000 for a minimum of eight years, and, due to the change in control, his existing split-dollar life insurance plan will vest with a value of $1.5 million.
The total value of those payments is $3.225 million (9% of the credit union’s current asset size).
At year-end 2023, Credit Union 1 reported $9.857 million in net income, with net worth of 9.23%. Financial Access FCU had $138,146 in net income, with net worth of 19.49%.
A Healthcare CU Says Combination is the Cure
Merging Credit Union: Allied Healthcare FCU, Long Beach, Calif.
Assets: $71.98 million
Members: 5,026
Year Chartered: 1956
Date of Member Vote: April 10
Acquiring Credit Union: Southland CU, Los Alamitos, Calif.
Assets: $1.15 billion
Members: 64,822
Two California credit unions that are about 14 miles apart are seeking to combine.
In telling its members why it is seeking to merge, Allied Healthcare FCU cited:
- Additional products and services, such as “enhanced digital banking, checking and savings products, relationship rewards” and more.
- Increased member access and convenience through “state of the art online platforms” and a “highly-rated mobile banking app…” There will also be 12 branches available to members, plus shared branches. “The continuing credit union intends to maintain Allied Healthcare FCU’s four existing locations, subject to sound business practices as well as safety and soundness concerns for the continuing credit union,” the statement added.
- Volunteer representation, with two members of the AHFCU board or supervisory committee having an “opportunity” to serve on the Southland CU board as well as two opportunities to serve on an advisory board.
- Continued leadership representation, with AHFCU CEO Monica Lopez to become SVP with Southland.
- The same knowledge and friendly employees.
- “More responsive to evolving financial need” due to Southland’s larger asset size.
Allied Healthcare FCU said certain employees would be offered retention bonuses to remain with the CU post-merger, based on years of service.
Merger-Related Compensation
Three members of management will also be offered merger-related compensation, according to the disclosure to members, including:
- President/CEO Monica Lopez, who will become SVP-administration at Southland Credit Union and who will see an annualized salary increase of $87,500.
- Loan Manager Georgina Duenas, who is to join Southland CU on an “at-will basis” for 12 months after the merger. If Duenas is not retained, she is to receive a one-time severance of $16,153.85, in addition to a one-time incentive bonus of $600 if still with the credit union six months after the merger.
- Lead MSR Jose Medina, who will also serve on an “at-will basis” for 12 months and who will be eligible to receive a severance payment of $48,000, plus a one-time retention bonus of $2,000.
Allied Healthcare said no net worth distribution is planned.
At year-end 2023, Allied Healthcare FCU reported $826,513 in net income, with capital of 11.60%. Southland Credit Union posted $4.016 million in net income, with net worth of 8.77% as of the same date.
Paradise Valley, Where the Grass is Green…With a Merger
Merging Credit Union: Paradise Valley FCU, National City, Calif.
Assets: $80.1 million
Members: 4,447
Year Chartered: 1957
Date of Member Vote: April 18
Acquiring Credit Union: Nuvision FCU, Huntington Beach, Calif.
Assets: $3.34 billion
Members: 161,179
According to Paradise Valley FCU, which finished in the red for 2023, for its members the merger will “provide significant and lasting benefits and value” via new branches, ATMs, products, services, and technologies, as well as from the “advantage of membership in a larger, stronger, combined credit union that is well-positioned to grow and increase member value over the long term.”
PVFCU, which is approximately 100 miles south of Nuvision FCU, said additional benefits of the merger include continuation of federal deposit insurance, the ongoing employment of its long-time president and CEO, Gerald Schaffner, and lower operating costs due to efficiency of scale that it said will lead to “even greater levels of member service.”
Paradise Valley FCU said it will not distribute any of its net worth due to on-time merger costs. It said its current two branches will remain open “subject to sound business practices as well as safety and soundness concerns for the continuing credit union.”
Payouts to Senior Management
According to the disclosure statement to members, CEO Schaffner will continue to be employed under a three-year employment agreement at his current rate of pay, but he will be offered a onetime retention bonus if he remains employed with the continuing credit union for 90 days, as well as a severance opportunity if Nuvision CU terminates his employment without cause during the term of the employment agreement. Schaffner’s maximum payout would be $183,558.10, according to the credit union.
In addition, Chief HR Officer Eloisita Nash would also be offered a three-year employment contract with similar terms, with a maximum payout of $151,773.60.
Paradise Valley FCU posted a loss of $361,774 for 2023, with capital of 10.36%. Nuvision had $24.6 million in net income and net worth of 10.76% at year-end.
As CUToday.info reported earlier this year, Nuvision FCU is also in the process of merging in the $135-million Cooperative Center FCU in Martinez, Calif.
A Small CU Throws a Hail (St.) Mary’s
Merging Credit Union: Lincoln Sudbury Town Employees FCU, Sudbury, Mass.
Assets: $4 million
Members: 418
Year Chartered: 1962
Date of Member Vote: April 17
Acquiring Credit Union: St. Mary’s Credit Union, Marlborough, Mass.
Assets: $992.8 million
Members: 53,541
In its message to members, Lincoln Sudbury Town Employees FCU said the merger is in their best interests “because culturally St. Mary’s Credit Union is the best fit to serve the members…(who will) be able to take advantage of the continuing credit unions suite of deposit and loan products. They will also be able to use the continuing credit union’s electronic channels, which they do not have today.”
Although it has 16.78% net worth, STEFCU said it will not pay a distribution to members.
The CU also noted its one office will remain open for 30 days post-merger, and it will then provide service through the St. Mary’s locations.
STEFCU reported $67,221 in net income for 2023. St. Mary’s CU had $4.23 million in net income and net worth of 11.31% as of the same date.
In Louisiana, CEO of Small CU Plans to Retire
Merging Credit Union: Piney Hills FCU, Simsboro, La.
Assets: $2.82 million
Members: 368
Year Chartered: 1970
Date of Member Vote: April 18
Acquiring Credit Union: Carter FCU, Springhill, La.
Assets: $721.5 million
Members: 34,633
The board of Piney Hills FCU told members the merger would provide advantages that include 10 additional branches, new products and services, a state of the art mobile and online banking platforms, expanded hours, and “increased resources for community development activities.”
It noted its long-time manager, Shelia Gilmore, plans to retire, but that Charlene Gilmore will continue to be employed by Carter FCU. Gilmore is to be paid a $50,000 retirement bonus, “independent of the merger vote.”
Despite capital of more than 15%, PHFCU said no share distribution is planned because members will benefit from the additional products and branches and that not including a share reduction will help to strengthen the net worth of the continuing credit union…”
Piney Hills FCU posted a $38,437 loss for 2023. Carter FCU had $6.3 million in net income and net worth of 9.46% as of year-end.
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