KILGORE, Texas–In its newest analysis of proposed credit union mergers, CUToday.info has found CUs with some whopping capital ratios (one north of 63%) and only a few planning to return any of that capital to members, as well as a higher-than-usual number of credit unions with no succession plans citing both CEO and board member retirements as reasons they must find a partner.
CUToday.info’s industry-leading coverage of the merger issue also found credit unions in this latest review range in assets from $337,000 to nearly two-billion. In all, there are approximately a dozen merger disclosure forms filed with NCUA since CUToday.info’s latest review of mergers. Below, in Part I, is a look at about a half dozen of those.
A CU of ‘Similar Intent’
Merging Credit Union: Kilgore Shell Employees FCU, Kilgore, Texas
Assets: $1.813 million
Members: 253
Year Chartered: 1936
Date of Member Vote: Aug. 15
Acquiring CU: Telco Plus CU, Longview, Texas
Assets: $126.6 million
Members: 9,084
In its statement to members, Kilgore Shell Employees FCU said Telco Plus CU is of “similar intent, in the same market and offers a much greater selection of products and services, generally better rates for deposits and loans, better branch footprint and hours of operation.
Kilgore Shell Employees reported a first quarter loss of $28,534, with capital of 20.92%. It said it does not plan to distribute any capital to its approximately 250 members. Telco Plus reported $579,418 in net income and capital of 11.27% as of the same date.
Newspaper Employees CU to Hit Last Deadline
Merging Credit Union: Newspaper Employees CU, Loudonville, N.Y.
Assets: $337,092
Members: 78
Year Chartered: 1933
Date of Member Vote: Aug. 21
Acquiring CU: Hudson River Community CU, Corinth, N.Y.
Assets: $330.8 million
Members: 32.564
The NCUA website does not include the disclosure form that is to be provided to members providing reasons for the merger. The headline for Newspaper Employees CU in the first half of the year was a loss of $13,262, but it has capital of 65.14%. Hudson River CCU posted $2.321 million in net income, with capital of 14.57%.
CEO Plans Retirement; Merger to Push CU Over $1 Billion
Merging Credit Union: St. Lawrence FCU, Ogdensburg, N.Y.
Assets: $234 million
Members: 12,492
Year Chartered: 1954
Date of Member Vote: Aug. 28
Acquiring CU: Sea Comm FCU, Massena, N.Y.
Assets: $806.7 million
Members: 53,664
“Both organizations are financially well. Even with that said, credit unions overall continue to face challenges in an increasingly competitive environment. A couple of these challenges are from non-traditional banking options, such as fintechs and Walmart offering checking accounts, along with other financial institutions that have moved into our market and those that will move into our market,” said St. Lawrence FCU in its message to members. “As we look back, 15 years ago there were 8,300 credit unions and today…there are 4,853 across the U.S. The continued threat of reducing/eliminating certain non-interest income streams, i.e., interchange and overdraft privilege, are also an underlying risk to overall income for both credit unions.”
SLFCU cited the need to keep fees reasonable, enhance technology as further reasons to merge, and said Sea Comm FCU is a “like-minded, member-focused, similarly cultured” merger partner.
While also citing additional branches and efficiencies, St. Lawrence FCU also noted its CEO, Todd Mashaw, plans to retire on Sept. 30.
According to the disclosure forms filed with NCUA, Mashaw will receive merger-related compensation that includes the remainder of his 2023 salary, one year of salary as part of a change in control contractual provision, and health benefits until he is 65. The overall benefit is worth $330,779, the CU said.
St. Lawrence FCU reported $989,997 in net income during the first half of the year, with net worth of 10.61%. Sea Comm FCU posted $3.896 million in net income with net worth of 13.96%.
Partners Financial Points to the ‘Reality’
Merging Credit Union: Partners Financial FCU, Glen Allen, Va.
Assets: $93.7-million
Members: 7,947
Year Chartered: 1958
Date of Member Vote: Aug. 29
Acquiring CU: Argent FCU, Chester, Va.
Assets: $426.1 million
Members: 28,245
“The reality is the number of credit unions in America is shrinking,” Partners Financial said in its statement to members.” The ever-increasing competition for financial services continues to create challenges for small credit unions. A strategic merger with Argent FCU, a local and financially strong credit union, will enable us to continue to provide competitive products and services in a positive work environment.”
PFFCU cited enhanced convenience, competitive pricing and services, the fact two of the board members will join the Argent board, and the retention of staff as reasons for the merger.
It said current PFFCU CEO Johnna Muncy will become a vice president at Argent Credit Union.
Partners Financial reported $55,743 in net income through June 30, with capital of
7.77%. Argent FCU had $687,882 in net income and capital of 7.99% during the year’s first half.
First Century to Mark Its Last
Merging Credit Union: First Century FCU, Sioux Falls, S.D.
Assets:$28.4 million
Members: 1,510
Year Chartered: 1935
Date of Member Vote: Aug. 29
Acquiring CU: Voyage FCU, Sioux Falls, S.D.
Assets: $215.7 million
Members: 19,383
First Century FCU said it is seeking to merge because its CEO has expressed a desire to retire at the end of 2023 and it has been a “challenge to find a replacement.
“First Century FCU has a small staff, which tends to pull the team in various directions,” the credit union told members. “Merging with Voyage FCU will allow for the First Century FCU staff to focus more of their time on the member experience and less on operational functions. Voyage FCU has a team that can support IT services, accounting, human resources and marketing.”
FCFCU also said it has suffered from an inability to grow loans and that it has “concerns that the inconsistent rate environment will deteriorate the earnings and success of the credit union.”
The credit union also cited expanded product offerings at Voyage FCU as a reason to merge.
First Century said there will be no net worth distribution, but its CFO, Karmen Groos, will be eligible for some benefits as a result of the merger, including a one-time bonus of $1,500 and a 6% pay increase.
First Century reported $206,415 in net income through June 30, with capital of 13.37%. Voyage FCU had net income of $610,679 and net worth of 10.13% as of the same date.
Inability to Find a New Manager
Merging Credit Union: Petersburg Federal Reformatory FCU, North Prince George, Va.
Assets: $3.273 million
Members: 737
Year Chartered: 1951
Date of Member Vote: Aug. 30
Acquiring CU: Vantage Point FCU, Hopewell, Va.
Assets: $43.4 million
Members: 2,840
Petersburg Federal Reformatory FCU said it needs to merge because it has been “unsuccessful in securing a replacement for the retiring manager.”
In addition, it said the merger will allow it to provide a wider array of services, ATM access, electronic access and additional hours of operations at Vantage Point FCU’s main office.
PFRFCU said it will distribute a $450,000 extraordinary dividend to members, determined by the dividend earned and interest paid during the six months prior to the merger.
Petersburg Federal Reformatory posted a $8,398 loss during the first half of the year, with 32.18% capital. Vantage Point had $101,755 in net income and capital of 14.58% 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.