SAN ANTONIO–The loss of sponsors, legacy core systems, a letter from an acquiring CU and a CU paying out more than $1 million to five top executives can be found in this final part of a three-part series in CUToday.info featuring the latest credit unions seeking to merge, their reasons for doing so and what kinds of payouts are being made (if any) to members and management.
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. Part 1 can be found here, part II is here.
Loss of Sponsor, Legacy Core System Cited as Reasons for Merger
Merging Credit Union: G.P.M. FCU, San Antonio
Assets: $1.13 million
Members: 152
Date Chartered: 1970
Member Vote: Dec. 19
Acquiring Credit Union: Texas Associations of Professionals FCU, San Antonio, Texas
Assets: $33.1 million
Members: 1,517
G.P.M. FCU said it will be losing its sponsorship from GMP Life (which stands for Government Personnel Mutual Life Insurance Co.) at the end of 2023. In addition, it said it currently has a legacy data processing system and that merging will provide it with “modernized conveniences” that would benefit members.
The credit union plans to distribute $75,000 of its net worth among members to be divided equally if the merger is approved, the credit unions said. It also plans to keep its branch open during the completion of the merger before closing it.
G.P.M. FCU had net income of $12,662 and a whopping capital ratio of 38.17% as of Sept. 30. TAPFCU had $65,049 in net income and net worth of 13.83% as of the same date.
One Last Visit in the Form of a Bonus Dividend
Merging Credit Union: Our Sunday Visitor Employees FCU, Huntington, Ind.
Assets: $3.41 million
Members: 551
Date Chartered: 1968
Member Vote: Dec. 18
Acquiring Credit Union: Community Link FCU, Huntington, Ind.
Assets: $28 million
Members: 2,717
“The board has concluded the proposed merger is desirable…because we can expand our brand and team member network, enhance our services and create greater value for our members and community,” OSVEFCU said.
Our Sunday Visitor Employees FCU said it plans to distribute a 3% bonus dividend on share accounts, or $75,000 in total, if the merger is approved.
It further said Manager Don Rentschler will receive a one-time retirement payment of $21,000 as a result of the merger.
OSVEFCU had net income of $6,964 and capital of 13.48% as of Sept. 30, while Community Link FCU had $108,060 in net income and a net worth ratio of 13.34% as of the same date.
In Unusual Move, Members of CU With Capital of 29% Get Merger Disclosure from Acquiring CU
Merging Credit Union: Lubbock Telco FCU, Lubbock, Texas
Assets: $5.56 million
Members: 501
Date Chartered: 1940
Member Vote: Dec. 27
Acquiring Credit Union: Texas Tech FCU, Lubbock, Texas
Assets: $385.3 million
Members: 33,576
Although the member vote isn’t until Dec. 27, the disclosure statement to members of Lubbock Telco FCU actually appears under letterhead of Texas Tech FCU and is signed by its CEO, Chris Hutson, and its board president, Kevin Pauwels.
“As the CEO of TTCU, I want to personally invite you to our membership and let you know what to expect if the merger is approved by your membership,” wrote Hutson.
Among the things LTFCCU members can expect if the combo is OK’d, according to Hutson, is a bonus dividend of 4% to be paid on Dec. 31, the opportunity to finance or refinance a vehicle and get a $200 bonus, discounts on closing costs on mortgages, a bonus on new checking accounts during a promotional period, and a “welcome packet.”
The statement also includes an extensive comparison of products and services, showing TTCU has considerably more offerings.
In addition, according to the disclosure, two people at Lubbock Telco will receive merger-related compensation: Manager Stacy Rogers, a retirement package of $63,087; and Assistant Manager Tammy Owens, a retirement package of $56,598.
Lubbock Telco reported $41,000 in net income on its Q3 call report to go with 29.19% in capital.
With Capital Below 4%, Alabama CU Seeks to Merge
Merging Credit Union: Tuscaloosa County CU, Tuscaloosa, Ala.
Assets: $11.8 million
Members: 1,428
Date Chartered: 1959
Member Vote: Dec. 27
Acquiring Credit Union: Alabama Credt Union, Tuscaloosa, Ala.
Tuscaloosa County CU cited the usual “full array of financial products and services” and “multiple branches” as the reasons for needing to merge, noting that the acquiring CU is also based in Tuscaloosa.
Tuscaloosa County CU reported a loss of $223,317 through Sept. 30, with capital at an anemic 3.63%.
In Massachusetts, One CU Says It Needs More Scale
Merging Credit Union: Acushnet FCU, Acushet, Mass.
Assets: $28.3 million
Members: 2,311
Date Chartered: 1960
Member Vote: Dec. 29
Acquiring Credit Union: Taunton FCU, Taunton, Mass.
Assets: $341.1 million
Members: 18,509
“To secure and enhance member value, we have been evaluating strategic alternatives to ensure a sustainable future of improved services and product offerings, while achieving the scope and scale that can secure our place in an increasingly challenging marketplace,” Acushnet FCU told members. “We believe success in our market requires continuous investment in systems, security, employees, and our community. We have determined that a merger with a credit union of larger scope, scale and similar culture and commitment to member value is the answer.”
Through Sept. 30, Acushnet FCU had $148,031 in net income, with net worth of 6.90%, while Taunton FCU reported $3.36 million in net income and had capital of 11.4%.
A Star Says it Has No Choice
Merging Credit Union: Star Choice CU, Bloomington, Minn.
Assets: $91.3 million
Members: 6,160
Date Chartered: 1931
Member Vote: Jan. 3, 2024
Acquiring Credit Union: SharePoint CU, Bloomington, Minn.
Assets: $292 million
Members: 21,287
In its statement to members, the board of Star Choice CU said a merger will bring financial strength and sustainability, a broader branch network, will allow it to remain member-owned and locally operated, will provide service and employment continuity, and will offer expanded products and services.
It said it will help achieve scale, as Star Choice CU is struggling with rising rates and a relatively low (7.29%) capital position.
Star Choice lost $201,615 through the first three quarters of 2023, while SharePoint FCU had $539,807 in net income and capital of 12.03%.
A Teachers CU Plans Its Last Class
Merging Credit Union: Otero County Teachers FCU, La Junta, Colo.
Assets: $4.5 million
Members: 854
Date Chartered: 1956
Member Vote: Jan. 4, 2024
Acquiring Credit Union: Fellowship Credit Union, Lamar, Colo.
Assets: $42.5 million
Members: 6,010
Otero County Teachers told members the merger will give it additional services, economies of scale, competitive loan and share products, and access to multiple branches.
OCTFCU had $28,577 in net income through Q3, with capital standing at 7.35%. Fellowship CU had $347,109 in net income, with capital of 9.75%.
From a Parkview to a Clearview: Data Processing Conversion Cited as Reason to Merge
Merging Credit Union: Parkview Community FCU, McKeesport, Penn.
Assets: $59.4 million
Members: 7,916
Date Chartered: 1935
Member Vote: Jan. 4, 2024
Acquiring Credit Union: Clearview FCU, Moon Township, Penn.
Assets: $1.88 billion
Members: 119,261
In one of the most extensive and attractive documents provided to members as part of the merger disclosure process (you can find it here), Parkview Community FCU and Clearview teamed on a document that said a “crucial reason for our merger is due to a forced core data processing conversion and lack of employees to manage the process.”
Moreover, said PCFCU, “It has become increasingly difficult to offer the products and services our membership needs and has come to expect due to the current state of the industry and not being able to replace retiring or departing employees.”
PCFCU cited the benefits of more locations, as well.
Parkview Community had $784,190 in net income as of Sept. 30, with capital of 11.63% (it said it would not be returning any net worth due to the “benefit accrued to PCFCU’s members through increased location access, new products and services, and ongoing efficiencies”).
Clearview FCU posted $11.5 million in net income and had capital of 9/71% as of the same date.
More Than $900,000 Being Paid in Bonuses, Plus Additional Funds in SERPs, Being Paid Out to 5 Executives
Merging Credit Union: 121 Financial CU, Jacksonville, Fla.
Assets: $709.8 million
Members: 50,012
Date Chartered: 1935
Member Vote: Jan. 26, 2024
Acquiring Credit Union: VyStar CU, Jacksonville, Fla.
Assets: $13.4 billion
Members: 915,867
A credit union that is paying more than $900,000 in merger-related compensation to five top execs—plus undisclosed amounts in SERPS—is saying it was “very important to highlight that the board of directors conducted a thorough evaluation of multiple credit unions lasting more than a year before selecting VyStar as the ideal merger partner,” 121 Financial told members.
The $709-million credit union told members the merger will provide enhanced services, meet the evolving needs of members and employees, and make a “profound positive impact on its communities.”
It did not identify what those enhanced services would be, but did say members would have access to more branches across much of northeast Florida and southeast Georgia, where VyStar has been active in expanding.
In addition, 121 Financial, which began its life a year after the FCU Act was passed in 1934 as Florida Telco CU before changing its name in 2010, said the merger will further its mission to “Do Good,” 121 Financial added.
Payout to Senior Executives
In an unusual move for merger disclosures to credit union members, long bios appear for each of five executives at 121 Financial, at the end of which is information on merger-related compensation increases each will see as a result of the merger, including:
- CEO David Marovich, who will continue for five years as SVP-Northeast Community President, with a salary increase of $15,000, two retention bonuses of $122,500 each at six and 12 months after the merger; and who will receive a supplemental executive retirement plan that will pay him 40% of his annual salary of year five upon retirement in year six for a period of five years.
- COO Paul Blackstone, who will continue on for five years and be named SVP-special projects with a salary increase of $95,000, two retention bonuses of $126,250 to be paid six and 12 months after the merger; and the establishment of a SERP that will pay him 35% of his annual salary of year five upon retirement in year six for a period of five years.
- CFO Cyndi Koan, who will continue on for three years as SVP-financial special projects and who will be paid retention bonuses of $35,000 six and 12 months after the merger closes.
- SVP-Lending Cathy Hufstetler, who will retire and receive a year’s severance of $273,000, and retention bonuses of $28,000 at six and 12 months after the merger closes.
- Executive Assistant Nichole LeBlanc, who will continue on for five years as senior executive assistant with a salary increase of $5,000 and with retention bonuses of $9,500 at six and 12 months after the merger.
There are no plans to distribute capital to members.
121 Financial posted $1.1 million in net income through Sept. 30, with capital of 9.24%. VyStar Credit Union posted $14.9 million in income and had capital of 9.27%.
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, Sept. 13, Nov. 14, Nov. 15.