ST. LOUIS–In part two of this two-part 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 and as reasons they must find a partner.
The credit unions in this latest review range in assets from $337,000 to nearly two-billion dollars. 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.
Part I can be found here.
‘Multiple Retirements’ Extinguish the Fire(fighters)
Merging Credit Union: St. Louis Firefighters & Community CU, St. Louis
Assets: $23.5 million
Members: 1,662
Year Chartered: 1933
Date of Member Vote: Aug. 30
Acquiring CU: Alliance CU, Fenton, Mo.
Assets: $365.5 million
Members: 21,153
‘The board of directors has concluded the proposed merger is desirable and in the best interests of members because multiple key employees, including the CEO, are retiring by the end of the year,” the credit union told members. “Members have asked for an expanded branch network and services that we are unable to provide financially due to size.”
St. Louis Firefighters posted $79,494 in net income for the first half of the year, with capital at 10.30%. Alliance CU had $1.551 million in net income and capital of 10.74% at midyear.
‘Limitations’ That Can’t be Overcome
Merging Credit Union: Brewton Mill FCU, Brewton, Ala.
Assets: $26.2 million
Members: 1,729
Year Chartered: 1959
Date of Member Vote: Aug. 31
Acquiring CU: Alabama One CU, Tuscaloosa, Ala.
Assets: $1.008 billion
Members: 80,380
Brewton Mill CU said it is seeking to merge to address capital concerns, product/service limitations as well as a lack of succession planning for its CEO and its board.
It cited a long list of benefits from the merger, including new technology, low-cost mortgages, insurance products, wealth advisory services, financial wellness, expanded branches and field of membership and more.
Through the first half of the year BMCU had $113,371 in net income to go with capital of 8.36%. Alabama One reported $3.226 million in net income and capital of 9.34%.
Plans Are to Operate as An ‘Affiliate’
Merging Credit Union: Members First CU, Madison, Wis.
Assets: $28.2 million
Members: 2,846
Year Chartered: 1955
Date of Member Vote:
Acquiring CU: Avestar Credit Union, Waterloo, Wis.
Assets: $39.7 million
Members: 3,975
In a message to its membership, Members First CU wrote, “Since our founding in 1954 by 13 Sub-Zero employees, Members First Credit Union has existed to provide members with quality products and services at competitive rates with the personal service and care of being a small member-owned institution. Your volunteer board of directors is committed to seeing that your credit union membership continues to provide meaningful value to you and the rest of our members. Witnessing many small credit unions in the Madison area disappear due to increasing costs and regulation and their difficulty in staying on top of new technology and advances in member service/products, our board and management started discussing ways to maintain what we have been all these years and grow to a level that we can remain for years to come.”
To that end, it said it has selected Avestar CU as a merger partner because it is similarly sized and will be able to offer a “personal touch” for “many years to come.”
Members First said it plans to retain its name and will be an affiliate of Avestar CU, and that all staff will be retained.
Members First has $163,683 in net income and capital of 14.35% through June 30. It did not indicate any plan to pay out some of that capital. Although larger, Avestar CU reported lower net income, $121,201, with capital of 9.43% as of the same date.
Two of Minnesota’s CUs Seeking to Merge
Merging Credit Union: Hiway Credit Union, St. Paul, Minn.
Assets: $1.748 billion
Members: 92,040
Year Chartered: 1988
Date of Member Vote: Sept. 13
Acquiring CU: SPIRE Credit Union, Falcon Heights, Minn.
Assets: $2.193 billion
Members: 157,204
In its notice to members, Hiway CU said the merger is in their best interests because both CUs focus on member experience and community giveback, the number of branches will increase to two from four, there will be “reduced fees, improved service and better rates,” and Hiway employees will see more opportunities for advancement and enhanced benefits.
Hiway CU said there will be no net worth distribution, but because its member share account par value is $5 and SPIRE CU’s par value is $10, upon the merger each Hiway CU member will receive a $5 deposit.
As CUToday.info reported earlier, in a statement the credit unions said if the deal is approved, Hiway and SPIRE will combine their boards and management teams, and the credit unions’ 600+ employees will be retained. SPIRE President/CEO Dan Stoltz will take the role of CEO, and Hiway President/CEO Dave Boden will become the new organization’s president.
In addition, a new name and brand will be created.
Hiway Credit Union reported $3.552 million in net income through mid-year, with capital of 9.7%. It has 92,000 members. SPIRE, with 157,000 members, reported $5.861 million in net income and capital of 7.88% as of June 30.
Needing to Merge, One CU Turns to the Holy Ghost
Merging Credit Union: Morrison Employees CU, Dubuque, Iowa
Assets: $1.9 million
Members: 139
Year Chartered: 1953
Date of Member Vote:
Acquiring CU: Holy Ghost Parish CU, Dubuque, Iowa
Assets: $29.45 million
Members: 832
Morrison Employees CU said it has been unable to attract new board members or to retain the current board, which is one reason it needs to merge. In addition, it said there will be no change in staff, and that members would receive a fourth quarter bonus and quarterly statements as a result of the merger.
Morrison CU said it plans to distribute 50% of its net worth to members, including paying 18.25% on primary and Christmas Club shares.
MECU reported $5,315 in net income to go with capital of 27.42%. at mid year. Holy Ghost Parish showed $52,007 in net income for the first half of the year, with capital of 10.63%.
‘We Do Not Have the Funds Necessary’
Merging Credit Union: SSMOK Employees FCU, Oklahoma City, Okla.
Assets: $7.575 million
Members: 883
Year Chartered: 1965
Date of Member Vote:
Acquiring CU: Focus FCU, Oklahoma City, Okla.
Assets: $147.4 million
Members: 11,701
In its statement to members, SSMOK Employees FCU said the continued rising costs of products necessary to meet its membership’s demands has “shown us we do not have the funds necessary to offer the services our membership is requesting. We have also found the cost for employees and benefits rising at a pace we cannot compete with in the employment market. There is also a retention problem when members leave the employment of SSM healthcare due to the limited access to our services.”
SSMOK Employees FCU had $30,419 in net income during the first six months of the year, with capital of 19.22%. It said it has no plans to distribute any net worth. Focus FCU had $152,470 in net income and capital of 8.44% as of June 30.
No More Living on the Edge
Merging Credit Union: Edge FCU, Liverpool, N.Y.
Assets: $64.5 million
Members: 3,082
Year Chartered: 1956
Date of Member Vote: Sept. 19
Acquiring CU: Sidney FCU, Sidney, N.Y.
Assets: $865 million
Members: 66,967
Edge FCU said a merger will provide members with greater convenience (13 branches), member service (it will invest in providing even better service), expanded and improved products and services (due to its larger size) and more competitive loan and deposit rates (due to efficiencies of scale).
It said all employees will be retained.
Edge FCU reported $293,031 in net income for the first six months of 2023, with capital of 10.54%. Sidney FCU reported $2.683 million in net income to go with capital of 10.92% as of June 30.
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, Aug. 2.
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