GRANDVILLE, Mich.–“Letters like this are always difficult to write,” the chairman of one credit union told its members as it seeks to merge. That was just one of the messages to members featured in this new CUToday.info roundup of the latest disclosure forms filed with NCUA by credit unions seeking to combine with others.
In this group of CUs seeking to merge, no credit union is distributing any capital to members.
In all, eight credit unions below told members they have little choice but to seek a merger partner, telling members they can afford new technologies or employees (one CU is open just two hours per day, four days per week), they can’t find volunteers, and that “it’s very difficult to go forward.”
One CU is merging into another that is half its size and which posted a net loss last year.
Below is an overview of the latest CUs to announce mergers and to file the disclosure forms NCUA requires of federally insured CUs.
Bigger Is Not Always Better, But…
Merging Credit Union: First United Credit Union, Grandville, Mich.
Assets: $64.4 million
Members: 4,879
Year Chartered: 1937
Date of Member Vote: May 23
Acquiring Credit Union: North Central Credit Union, Houghton Lake, Mich.
Assets: $165.9 million
Members: 14,717
In its notice to members, First United CU said, “Bigger is not always better. But in today’s highly competitive financial marketplace it takes size and scale to provide the level of products and services that members of today and tomorrow want and need. During the past year we have been collaborating on helping to grow both credit unions. First United CU’s CEO, Mark Richter, has partnered and served as CEO at North Central Area Credit Union, as well as continuing to be the CEO here at First United CU. He has worked to instill an enhanced sales and service culture and implement new strategic initiatives at North Central Area Credit Union that will continue in the new combined organization.
“During our work together, and after careful consideration, your board of directors decided that partnering with North Central Area Credit Union would be the best solution to ensure that the needs of our members are met for generations to come. North Central Area Credit Union was chosen because it shares the same commitment to member service, has the same values and culture. After all, this cooperative spirit is the basis of the credit union philosophy.”
First United said it members of its board will have the offer to participate on the NCACU board, that there will be no lost jobs, and it will be able to provide “more products and services.”
First United CU posted net income of $961,408 and capital of 10.74% at year-end.
‘Letters Like This Are Always Difficult’
Merging Credit Union: Nebraska Rural Electric Association CU, Lincoln, Neb.
Assets: $5.66 million
Members: 747
Year Chartered: 1973
Date of Member Vote: May 24
Acquiring Credit Union: Nebraska Energy FCU, Columbus, Neb.
Assets: $330.6 million
Members: 11,871
“Letters like this are always difficult to write, so I will try to be brief but ask that you read this letter in its entirety before taking any action. The decision your board is asking you to take will directly affect you and your future direction of your credit union,” Board President John Hoke wrote in a letter to members, noting he has served on the board since 2004.
“The NREA Credit Union is a small boutique credit union. We basically do three things: loan money for autos, trucks, and small personal loans; give you a place to earn interest on your deposits, and provide you with easy payroll deductions. Over the years requests from the membership that we do more things like ATM debit cards, credit cards, checking, and mortgages have been part of our strategic planning sessions. Our small size, limited membership and competition from online banking has prevented us from providing these services to you at a competitive cost. We were able to continue providing basic needs and personalized service because of our long term and very loyal employees. When that changed, the credit union was faced with the difficulty of employee attraction and retention. A problem that affects many small businesses today. Being unable to resolve that problem has put us in a situation where we find it impossible to move forward.”
After careful consideration, Hoke said the decision was made to merge.
Nebraska Rural Electric Association CU closed out 2022 with $8,474 in net income and 14.60% net worth. Nebraska Energy FCU posted $3.649 million in net income and had net worth of 15.18% as of Dec. 31.
Merging Into CU Half Its Size That Posted Loss
Merging Credit Union: Dowell FCU, Tulsa, Okla.
Assets: $42.2 million
Members: 7,549
Year Chartered: 1952
Date of Member Vote: May 25
Acquiring Credit Union: Space Age Tulsa FCU, Tulsa, Okla.
Assets:$17.55 million
Members: 1,450
Although it is merging into a credit union less than half its size and which also reported a loss at year-end 2022, Dowell FCU told its member the merger is in their best interests because it will result in better pricing and services, additional products, enhanced convenience and account access, lower operating costs and economies of scale.
DFCU said it will close its current office after the merger, if it is approved.
Dowell FCU reported $380,253 in year-end 2022 net income, with net worth of 14.14%. The merger disclosure form says there are no plans for a capital distribution. SATFCU posted $27,616 in negative net income at year-end, with capital at 15.71%.
Economies of Scale Pitched as Rx
Merging Credit Union: My Healthcare FCU, Gainesville, Fla.
Assets: $33.3 million
Members: 3,760
Year Chartered: 1974
Date of Member Vote: May 30
Acquiring Credit Union: FiCare FCU, Tampa, Fla.
Assets: $59 million
Members: 6,745
In its statement to members, My Healthcare FCU said by merging with “another credit union twice our size the economies of scale will be markedly better, leading to a decrease in shared expenses and an increase in efficiency,” and that “each credit union has several services that the other one does not, thereby adding value to every credit union member.”
My Healthcare said its one branch in Gainesville, Fla., will remain open, and that members will have access to four other branches in the greater Tampa area, about 90 minutes away.
The credit union said it will not distribute any capital as a result of the merger.
My Healthcare reported $34,959 in net income at the end of the first quarter, with net worth of 13.41%. At year-end 2022, FiCare posted $212,419 in net income, with net worth of 11.58%.
Many ‘Advantages & Benefits’ to Merging
Merging Credit Union: Solutions FCU, Elmira, N.Y.
Assets: $37.5 million
Members: 3,591
Year Chartered: 1952
Date of Member Vote: June 1
Acquiring Credit Union: Guthrie Community FCU, Sayre, Penn.
Assets: $103.1 million
Members: 7,405
In a letter to its membership, the board of Solutions FCU said a merger with a larger financial institution will avail the members with “advantages and many benefits.” The board added it also sought a merger partner within its geographic area that shares its “values and principles.”
In addition to sharing those values, the board said Guthrie Community FCU will offer more deposit and loan services and that the two CUs share the same core processor and ATM platform. The merger will also provide members with two more branches and expanded loan offerings, the credit union said, telling members no employees will lose their jobs as a result of the merger.
Solutions FCU had originally planned a late December meeting for a vote on the merger, but that has been rescheduled until June 1.
For year-end 2022, Solutions FCU reported $311,377 in net income with net worth at 9.43%. Guthrie Community posted $796,395 in net income and net worth of 11.20% as of the same date.
‘Very Difficult to Go Forward’
Merging Credit Union: Delmarva Power Southern Division FCU, Salisbury, Md.
Assets: $17.8 million
Members: 1,310
Year Chartered: 1973
Date of Member Vote: June 12
Acquiring Credit Union: Tidemark FCU, Seaford, Del.
Assets: $451.4 million
Members: 19,101
In its statement to members, Delmarva Power Southern Division FCU said the merger will allow it to increase services to members, including checking, online and mobile banking, debit and credit cards, and mortgages.
“The complexity of running a financial institution today has, in the opinion of the board of directors, made it very difficult for a credit union of our size to go forward,” the CU stated.
DPSDFCU said its single branch will remain open.
Delmarva Power Southern Division FCU reported $76,455 in net income during 2022, with net worth of 20.15%. It will not be distributing any net worth to members. Across the state line, Tidemark FCU had $4.63 million in net income last year, with net worth of 13.2%.
Open Just 2 Hours, 4 Days a Week
Merging Credit Union: WAYCOSE FCU, Huntington, W.V.
Assets: $3.38 million
Members: 919
Year Chartered: 1991
Date of Member Vote: June 14
Acquiring Credit Union: Metro Community FCU, Huntington, W.V.
Assets: $40 million
Members: 3,266
“The board of directors has concluded the proposed merger is desirable and in the best interests of members because WAYCOSE has limited assets of only $3.3 million and has a limited menu of products and services,” the CU told its members. “We are unable to adequately staff the credit union and fill voluntary board positions. We are open only two hours Monday-Friday (closed Wednesdays).”
The merger will provide members with expanded services, WAYCOSE reported, adding its five employees will be offered positions at MCFCU at a minimum of what they are currently paid and be given credit for their time at WAYCOSE for leave and sick time purposes.
While its net worth is north of 14%, WAYCOSE said there will be no share adjustment due to merger-related costs, including a “lengthy information technology contract,” and due to “increased convenience for our current and potential members.”
WAYCOSE said its current office at Vinson Middle School would close at year-end.
WAYCOSE FCU reported a net loss of $10,530 at year-end 2022, with capital of 14.62%. Metro Community FCU had $47,317 in net income as of the first quarter of this year, with net worth of 7.92%.
CEO of Merging CU to Lead Combined Institution
Merging Credit Union: Western Connecticut FCU, Bethel, Conn.
Assets: $34.5 million
Members: 2,895
Year Chartered: 1966
Date of Member Vote: June 8
Acquiring Credit Union: Soundview Financial CU, Bethel, Conn.
Assets: $43.8 million
Members: 3,485
In its statement to members, Western Connecticut FCU said the proposed merger will benefit them by getting access to competitive CDS rates, expanded loan products, access to auto loans and real estate loans for members who live in nine states outside the Nutmeg state, reduced operating expenses that will provide “new growth opportunities,” and a credit union with the ability to support “our local community on a deeper level.”
WCFCU said its one branch will remain operating.
NCUA’s rules on mergers require disclosure of any merger-related compensation.
According to WCFCU, its president and CEO, Sabrina DeFazio, will become CEO of the combined credit union if the merger is approved and, as a result, will see an increase in compensation. Western Connecticut CU said DeFazio’s compensation package would go from the current range of $115,000 to $241,500 to a new range of $$160,000-$336,000.
Given its 6.76% net worth ratio, WCFCU said there will be no distribution of net worth to members related to the merger. Western Connecticut FCU had $276,198 in net income. Soundview Financial had $96,484 in net income last year, with capital at 10.78%.
Earlier Reports
CUToday.info’s earlier 2023 reports on mergers to date can be found here:
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