ALEXANDRIA, Va.–In part two of a review by CUToday.info of the 18 latest credit union merger disclosures provided to NCUA, retiring managers, lost sponsor “benevolence” and the usual “more products and services” are cited by CUs looking to combine.
As reported in part one of this series and in this follow-up, the review examines the payouts some executives are getting (and improved compensation for all employees in one case), which CUs are distributing net worth, which are not for what seem like odd reasons (such as the acquiring CU has more branches), and more.
CUToday.info has been regularly reporting on all the merger disclosure forms filed by NCUA, which requires credit unions to inform members of the reasons for a merger, who will benefit, whether any will be distributed (and why or why not), along with other information. NCUA also requires credit unions to give their members the opportunity to express opinions on proposed mergers.
Losing Branch Location, Manager
Merging Credit Union: Lincoln USDA FCU, Lincoln, Neb.
Assets: $6.9 million
Members: 846
Acquiring Credit Union: First Nebraska CU, Omaha, Neb.
Assets: $170 million
Members: 16,269
Lincoln USDA FCU said it is seeking to merge because it is losing the location for its branch within its sponsor organization and is also losing its manager. USDAFCU said the merger will allow it to provide members with six additional locations, as well as electronic services. But members will also see some increases in fees charged, such as for NSFs, while other fees will decrease.
The CU said there are no plans to distribute any part of its capital to members and that there will be no merger-related compensation paid.
Lincoln USDA reported a loss of $10,502 for 2021 with capital of 10.69%. First Nebraska CU reported $592,400 in net income with 13.6% capital as of year end.
A member vote is scheduled for June 1.
One-Third Of Net Worth Being Paid Out
Merging Credit Union: S.M.S.D. FCU, Buffalo, N.Y.
Assets: $2.493 million
Members: 337
Acquiring Credit Union: Financial Trust FCU, Cheektowaga, N.Y.
Assets: $159.3 million
Members: 13,502
In its disclosure to members, S.M.S.D. FCU said the board has opted to merge because Financial Trust has services such as checking, holiday loans, debit and credit cards, IRAs and more that it doesn’t offer, as well as additional branches and shared branching.
S.M.S.D. FCU said it will distribute about one-third of its net worth, or $146,000, to members as a result of the merger. It did not disclose the formula for distributing the funds.
S.M.S.D. FCU said there will be no merger-related compensation paid to anyone.
S.M.S.D. FCU reported $7,211 in net income through March 30, with net worth of 19.79%. Financial Trust posted $1.736 million in net income and net worth of 11.79% net worth at year-end.
S.M.S.D. FCU has set June 1 as the date for its member vote.
The Loss of a Sponsor’s ‘Benevolence’
Merging Credit Union: WILMAC Employees Credit Union, York, Penn.
Assets: $3.38 million
Members: 468
Acquiring Credit Union: Belco Community CU, Harrisburg, Penn.
Assets: 4812 million
Members: 70,964
In explaining why it must merge, WILMAC ECU said in its disclosure to members, “in connection with be likely sale of WILMAC corporation in late 2021, WILMAC Credit Union began evaluating its strategic alternatives to ensure that its members would be in a position to continue to receive the products and services on which they have come to rely, as well as improved services and product offerings. As an employer-sponsored credit union, WILMAC has been dependent on the financial benevolence of WILMAC Corporation. Unfortunately, success in the current banking market requires continuous investment in technology, security and employees, all of which come with increasing cost. Recognizing this additional cost would present a major challenge to such a small, unique credit union, WILMAC CU engaged financial advisors to assist the board and management in identifying and assessing strategic alternatives available to the credit union.”
The CU said Belco provides more branches, products, services and more.
WILMAC ECU said if the merger is approved members will be paid a special dividend on a pro rata basis, with the total funds paid out capped at $75,000. The funds will be paid based on deposit balances.
In addition, WECU said Manager Jackie Winters will be paid cash severance of $28,616.25 if terminated within the first 12 months after the merger.
WILMAC Employees’ CU reported $3,580 in net income through March 2022, with net worth of 19.05%.
Belco Community CU reported net income of $8.45 million and net worth of 9.96% at year-end 2021.
A member vote is scheduled for June 1.
‘Wider Array of Services’
Merging Credit Union: Ward County CU, Monahans, Texas
Assets: $18.3 million
Members: 1,382
Acquiring Credit Union: WesTex Community CU, Kermit, Texas
Assets: $143.4 million
Members: 13,722
Ward County Credit Union, which was chartered in 1957, said it is seeking to merge in order to provide a “wider array of financial products and services, including access to a mortgage/real estate lending department, a business lending department, access to its own ATM and even AD&D coverage for members.”
WCCU said there would be no payout of capital to members, nor would there be any merger-related compensation paid to anyone.
WCCU reported net income of $42,583 at year-end 2021, with capital of 8.52%.
WesTex Community CU reported $1.954 million in net income and capital of 11.25% as of the same date.
The member vote is scheduled for June 2.
Execs to Get Pay Raises Following Merger
Merging Credit Union: Prairieland FCU, Normal, Ill.
Assets: $95.8 million
Members: 6,797
Acquiring Credit Union: University of Illinois Community CU, Champaign, Ill.
Assets: $475.7 million
Members: 46,224
In its statement to members, Prairieland FCU said it has been “successful, but faces continual and increasing challenges to growth as well as challenges that come with growth. The board has found it difficult to recruit qualified board members and the complexities of overseeing financial institutions continues to increase. The credit union’s size makes it difficult to keep up with new regulations and compliance needs.
“We think our merger partner is well-managed and well-known in our region. They can provide all the products and services our members have now, along with the scale and innovation to continue to add additional services. We feel their management training program, along with their benefit programs, will be beneficial to Prairieland FCU’s members and staff.”
The CU also cited numerous product and service advantages from the merger.
Although its net worth is three percentage points higher than University of Illinois Community CU, Prairieland said there will be no share adjustment or distribution of net worth, but three executives will be receiving annual pay increases: President Barbara Michael, $39,791; EVP Barbara Morris, $30,782, and VP Brenda Riddle, $23,806.
Prairieland FCU reported $1.1 million in net income at year-end 2021, with net worth of 11.94%. UofI Community CU posted $3.84 million in net income, with reserves at 8.38%.
Members are to vote on the proposal on June 2.
Undercapitalized, Struggling BCCU Finds Partner
Merging Credit Union: Barstow Community CU, Barstow, Calif.
Assets: $7 million
Members: 1,372
Acquiring Credit Union: Frontwave Credit Union, Oceanside, Calif.
Assets: $1.2-billion
Members: 116,919
Barstow CU said in its member disclosure it is seeking to merge because the two CUs serve the same communities and have branch locations less than two miles apart. Frontwave CU also offers “feature rich” online and mobile banking, lo loan rates, service excellence standards and more, the CU said.
Not surprisingly, given that it reported a loss of $83,482 for Q1, with net worth of 4.58%, Barstow Community indicated there will be no distribution of capital nor any merger-related compensation to management or board.
Frontwave posted net income of $1.36 million in Q1, with net worth of 10.42%.
Members are to vote June 1 on the merger.
Merger Will Create More Attractive Employer
Merging Credit Union: WIT FCU, Rochester, N.Y.
Assets: $23.1 million
Members: 3,831
Acquiring Credit Union: Ever $ Green FCU, Rochester, N.Y.
Assets: $43.5 million
Members: 1,990
WIT FCU, founded in 1962, told its members it is merging in order to gain a branch, because the combination of staff will increase specialization resulting in better service, due to “considerable” cost savings, and to create a larger, stronger organization so “as to attract solid candidates as future employees to service members.”
WIT said there will be no distribution of net worth, but that staff will see increased health insurance benefits as a result of the merger. The objective is to retain all staff, the CU said.
WIT reported net income of $249,981 at year-end, with capital of 10.70%. Ever $ Green FCU. Through March 30, 2022, Ever $ Green FCU posted $36,836 in net income, with net worth of 9.41%.
A member vote is set for June 7.
Merging CU Has Higher Net Worth, But…
Merging Credit Union: First Class FCU, Allentown, Penn.
Assets: $35.5 million
Members: 2,092
Acquiring Credit Union: Allentown FCU, Allentown, Penn.
Assets: $93.1 million
Members: 6,066
First Class FCU told its members the merger will provide them with four new offices and the potential to add more, as well as access to the Allpoint ATM network, Apple Pay and Android Pay.
It further stated “both credit unions are very strong financially. As of 12/31/21, First Class Federal Credit Union had a net worth of 14.92%, which is higher than the net worth of Allentown FCU’s 10.45%. The net worth of the combined credit unions is 11.69%.”
Although net worth is 14.48%, First Class FCU, chartered in 1934, said it will not be returning any funds to members, since Allentown FCU offers multiple offices and ATMs, as well as the aforementioned Apple Pay and Android Pay.
As of Q1, FCFCU reported $22,469 in income. Allentown posted a loss of $631 for the first quarter of this year, with net worth of 9.95%.
A member vote is scheduled for July 13.