FARGO, N.D.– The newest review of the disclosure forms credit unions must provide to their members when they are seeking to merge finds some of the typical reasons being cited—such as “improved products and services”—but also CUs saying board members have moved away, citing a data processing conversion and an inability to find people to oversee the transition; CUs with high capital both paying and not paying out distributions, and one CU paying our more than $900,000 in compensation to five executives (plus undisclosed amounts in SERPs) as part of the merger.
In all, CUToday.info’s latest update on merger applications filed with NCUA finds 24 such proposed CU combinations, which will be reported in three parts this week.
Here is part one:
A ‘Member-Focused Posture’ Cited as USCU Seeks to Merge
Merging Credit Union: Freedom Community CU, Fargo, N.D.
Assets: $30.39 million
Members: 2,404
Date Chartered: 1954
Member Vote: Nov. 2
Acquiring Credit Union: United Savings CU, Fargo, N.D.
Assets: $94.7 million
Members: 5,649
In its statement to members, the board of Freedom Community CU said the merger is in members’ best interests “because of the member-focused posture and stability of United Savings Credit Union, as well as the additional product and service offerings it will bring to the membership.”
FCCU said its two branches will continue to operate and will join the four locations of United Savings CU. Freedom Community also noted its Visa card offers reward points, while United Savings’ does not, something it said will be “remedied at conversion via regulatory and vendor guidance.”
Freedom Community CU reported $92,043 in net income through the first three quarters, with net worth of 8.77%. United Savings posted $449,752 in net income as of Sept. 30, with capital at 12.77%.
The ‘Reality is Credit Unions are Shrinking,’ Says 1 Church-Based CU
Merging Credit Union: Mt. Carmel Church FCU, Houston
Assets: $4.6 million
Members: 705
Date Chartered: 1954
Member Vote: Nov. 5
Acquiring Credit Union: Shell FCU, Deer Park, Texas
Assets: $1.8 billion
Members: 144,722
“The board of directors has concluded that the proposed merger is desirable and in the best interest of members due to Mount Carmel Church FCU's small size and limited resources that has prevented us from being able to offer members a full range of financial services or a robust digital banking experience,” the credit union told members. “In addition, increased regulatory compliance and cyber crime has been burdensome.
“The reality is the number of credit unions in America is shrinking. The ever increasing competition for financial services continues to create challenges for small credit unions,” the CU’s statement continued. “A strategic merger with Shell Federal Credit Union, a local and financially strong credit union, will result in a larger organization with anticipated improved economies of scale, providing opportunities to return more member value with better rates and expanded products and services.”
MCCFCU said it plans to distribute a bonus dividend of $76,000 if the merger is approved. It also said it will close its one office.
Merger-Related Compensation
Mt. Carmel Church FCU said it will pay two people merger-related compensation:
- Manager Stephanie Martin, who will be paid a bonus of $28,173 for her 36 years of service and who will also be paid $60,000 as part of her contract during the merger process.
- Assistant manager Rebecca Mould, who will also be paid a bonus of $28,173 for her 30 years of service, plus a salary of $47,882 while with Shell FCU.
Mt. Carmel Church FCU posted a $95,271 loss through Sept. 30, with capital of 18.21%. Shell FCU’s $15.9 million in net income as of the same date is four times the asset size of the CU it is acquiring. It also reported 11.45% in capital as of Sept. 30.
Bus Ride Comes to An End in Virginia
Merging Credit Union: Virginia Trailways FCU, Charlottesville, Va.
Assets: $2.018 million
Members: 525
Date Chartered: 1949
Member Vote: Nov. 13
Acquiring Credit Union: Virginia Credit Union, North Chesterfield, Va.
Assets: $5.17 billion
Members: 325,784
The board of Virginia Trailways told member a merger will provide operational cost savings, “ultimately enhancing value,” and the “opportunity to achieve more positive impact and value, including:
- Increased member access via a larger branch network
- More products and services
- Enhanced electronic banking products.
VTFCU said both of its branches will close if the merger is approved.
Two people will also receive merger-related compensation:
- Manager Lynn Kirby will work as a consultant and receive a one-time retention bonus of $7,500, with a maximum comp increase of 19.3% over current compensation
- Buffy Blackwell will work in the contact center or as a teller and receive a one-time retention bonus of $5,000, with a maximum comp increase of up to 52%.
Virginia Trailways reported a loss of $24,265 as of Sept. 30, with capital at 5.57%. Virginia CU posted $19.85 million in net income with capital of 10.81% as of the same date.
Detailed Financial Statements Offered by One Small CU
Merging Credit Union: Airco FCU, Pasadena, Calif.
Assets: $9.045 million
Members: 994
Date Chartered: 1957
Member Vote: Nov. 14
Acquiring Credit Union: Arrowhead Central CU, Rancho Cucamonga, Calif.
Assets: $2.46 billion
Members: 199,372
Airco FCU provided one of the most detailed financial statements to members as part of any CU that is going through a merger, said a combination with Arrowhead Central will benefit members by providing more products and services, 19 branches plus shared branching, mobile banking and more.
Airco FCU said none of its employees will be retained if the merger is approved.
Airco Federal posted $125,213 in losses through the third quarter, with net worth at 15.15% (it did not indicate there would be any capital distribution). Arrowhead Central had $7.075 million in net income and capital of 10.5% as of Q3.
Lack of Volunteers, Hiring Challenges Cited in Merger Plan; Bonus to be Paid
Merging Credit Union: Mt. Lebanon FCU, Pittsburgh
Assets: $8.827 million
Members: 529
Date Chartered: 1936
Member Vote: Nov. 15
Acquiring Credit Union: OMEGA FCU, Wexford, Penn.
Assets: $139.9 million
Members: 13,458
According to Mt. Lebanon FCU, a merger will “increase stability in the current economy and current rate environment.”
But that isn’t the only challenge. The CU told members it has also suffered from:
- A lack of volunteers and hiring challenges
- Years of limited growth, which has led to a lack of resources to invest in technology and offices
A merger, said MLFCU, will increase services, expand branch access, provide mobile and home banking, and make more ATMs available.
Mt. Lebanon FCU said its current office will remain open.
If the merger is approved, MLFCVU said it will pay a bonus dividend of 5% for the third quarter.
Mt. Lebanon FCU reported a loss of $84,141 through the first nine months of 2023, with capital at 22.93%. OMEGA FCU had $1.523 million in net income and capital of 10.38% as of Sept. 30.
It’s Gotten ‘Hard to Compete,’ Says Michigan CU
Merging Credit Union: Parkside CU, Westland, Mich.
Assets: $169.8 million
Members: 13,591
Date Chartered: 1953
Member Vote: Nov. 15
Acquiring Credit Union: TRUE Community CU, Jackson, Mich.
Assets: $713.4 million
Members: 66,057
Parkside CU’s board said the merger is in the best interests of members because it has become “hard to compete in today’s highly regulated, high-tech environment,” and the larger CU will provide expanded options for members. It also cited regulations as a challenge, saying its board has “contemplated” finding a merger partner for some time.”
There will be no capital distribution to members, but Parkside CU said two people will receive merger-related compensation:
- President/CEO Janet Thompson will see an increase of $53,749
- EVP/Chief Strategy Officer Heather Colonius will see a $31,880.93 pay increase.
Both are due to the “proportion to the size of the continuing credit union,” PCU said.
Parkside Credit Union posted $918,315 in net income as of Sept. 30, with capital at 13.81%. TRUE Community has $4 million in net income and capital of 10.99% as of the same date.
A Tiny CU Looks for a Brighter View
Merging Credit Union: United Methodist of Mississippi FCU, Booneville, Miss.
Assets: $559,711
Members: 270
Date Chartered: 1961
Member Vote: Nov. 17
Acquiring Credit Union: Brightview FCU, Ridgeland, Miss.
Assets: $37.2 million
Members: 5,003
United Methodist of Mississippi FCU was brief in its message to members on why they should vote in favor of merging, saying they would get “better pricing and services, additional products, enhanced convenience and account access, and lower operating costs.”
As of Sept. 30, UMMFCU posted a loss of $5,460, with capital of 7.70%. The view was brighter at Brightview FCU, which showed $463,323 in net income and capital of 14.28% as of the same date.
Elevator Comes to a Stop, But First, A Distribution
Merging Credit Union: Elevator FCU, Olive Branch, Miss.
Assets: $16.29 million
Members: 1,688
Date Chartered: 1967
Member Vote: Nov. 18
Acquiring Credit Union: Century First FCU, Hattiesburg, Miss.
Assets: $74.1 million
Members: 9,737
Elevator FCU told members it is looking to make its last stop because a merger will allow it to offer additional products, services and locations. In all, it provided a list of 20 such products and services that members will get as a result of the merger.
But it also cited other reasons, including:
- “In recent years, the majority of the current board members have moved to locations that are so distant from the credit union office that it is impractical to travel to the office of the credit union to attend meetings and for other reasons that may occasionally arise.”
- “None of the current board members are currently employed by the sponsoring company of the credit union and it has become difficult to find prospective board members when board vacancies arrive.”
- “The current board secretary and the board treasurer are of advanced age and there is not a succession plan in place. The credit union staff consists of only two full-time employees. Therefore, the credit union is not able to take on expanded loan options and services, which members desire, such as share drafts, mobile app, electronic banking, debit cards, credit cards, online bill payment services, IRAs, and other services.”
Capital Distribution Planned
If the merger is approved, Elevator CU said it plans to pay out a merger-related dividend of $1.467 million to its 1,685 members. That will be distributed as a 25% rebate on loan interest aid during 2022, and a 10% dividend on share balances as of June 30.
EFCU said its current office will remain open.
According to the credit union’s disclosure statement, two people will receive retention bonuses as part of the merger: Manager Pamela Collier will receive $25,000, while Members Services Rep Polly Hooper will receive $5,000.
Elevator FCU reported $110,697 in net income for Q3, with capital of 20.18%. CenturyFirst had $1.169 million in net income and capital of 14.05% as of the same date.
Earlier Reports
For additional information on other CUToday.info reports on mergers in credit unions, go here: January 20, Feb. 8, Feb. 9, March 20, June 20, June 22, Sept. 12 and Sept. 13.