ALEXANDRIA, Va.–A review by CUToday.info of the last four months of disclosure forms filed with NCUA by credit unions that are merging reveals intriguing insights into who is being compensated as the result of mergers and for how much, which CUs have distributed net worth to members (in some cases there is no distribution even in cases where capital is north of 40%), and poignant tales from credit unions that say they see no path forward.
In at least one case a credit union that suffered losses and had capital below 4% paid out bonuses to outgoing management, while in other cases credit unions that were in the black paid out nothing. The review also found at least one case in which the payout to management was larger than the sum total being distributed to members.
The information was gleaned from disclosure forms filed by federally insured credit unions. Credit unions merging out of existence, nearly all of them smaller, shared reasons for merging that included inability to invest in technology (even though some had very high capital levels), inability to find volunteers and staff and, a common theme, a lack of any succession planning and a retiring CEO.
The disclosures were required by NCUA after reporting by CUToday.info revealed some people within credit unions, both members of management and board members alike, had cut sweetheart deals for themselves on the way out the door, using the CU’s accumulated capital to cover the costs and, in many cases, distributing none of the excess capital back to the members who owned it.
Statement to Members
In addition to now being required to disclose merger-related compensation to board members/management as well as plans for any merger-related distribution of capital to members, today each federally insured credit union proposing to merge with another federally insured credit union is also required to include a statement in its member notice about the availability of a website where members of the merging credit union can share comments or questions with each other about the proposed merger.
In a statement to CUToday.info, an NCUA spokesperson said the agency reviews every merger plan to ensure that its requirements are met. If the credit union does not announce any compensation on the member comment site hosted by the NCUA’s Office of Credit Union Resources and Expansion or in their disclosure and notice to the membership, then there is no compensation that is required to be disclosed, the agency said.
The requirements were outlined in a 2018 NCUA Letter to Credit Unions.
The disclosure forms also reveal the pace of consolidation taking place in credit unions, which is supported by other data. Callahan & Associates, for instance, reported there were 39 mergers in the second quarter of 2021 and 31 in the first. That total, 70, for the first six months of the year is down one from the same time last year but brings the total from June 2020 to June 2021 to 135.
As of June 30, 2021, there were 5,136 credit unions in the United States.
About This Series
In this two-part series, CUToday.info offers an overview of the credit unions that are merging, including the reasons they have listed for doing so (given the same merger consulting firms handle many of the mergers, the language can often be similar, but there are often also shared insights into what was obviously a difficult decision for many). This report also includes a look at the financials of the merging institutions, merger-related capital distributions to members, and any agreements for merger-related compensation to members of management/board.
When it came to distributing some of the capital back to members, one other common theme among many of the CUs that chose not to make a distribution was, somewhat mysteriously, that the acquiring CU offered more products and services.
Two Other Notes
- The financials quoted below are based on the most recent 5300 filed with NCUA.
- In some cases, members have yet to vote on the merger proposal. In those cases the date of the member vote is listed below.
In Part I, CUToday.info lists those credit unions that are merging/have merged that are paying a bonus to members of the board/management.
Credit Unions Paying Merger-Related Management/Board Compensation
NMA FCU into Pentagon FCU
Merging Credit Union: NMA FCU, Virginia Beach, Va.
Assets: $64.5 million
Members: 7,835
Net Income: ($220,275)
Net Worth: 5.43%
Continuing Credit Union: Pentagon FCU, McClean, Va.
Assets: $27.6 billion
Members: 2.34 million
Reasons for Merger: “In today's landscape of digital transformation coupled with evolving technology, regulatory compliance, and increasing cyber-criminal threats, our board of directors evaluated strategic possibilities to assure that you, our member, will continue to receive the full range of products and services you deserve…,” NMA Credit Union said in its disclosure form. “A merger with PenFed meets the full range of our objectives: growth of membership, expansion of product offerings, infusion of investment in IT cybersecurity, improved training, and enhanced community service.”
Merger-Related Net Worth Distribution: NMA said it plans to distribute approximately $100,000 to eligible members in good standing.
Merger-Related Board/Management Compensation:
- NMA said a 10% retention bonus, not to exceed $10,000, will be paid to each NMA staffer employed at PenFed six months after the merger date.
- NMA said CEO Michael Coleman will be entitled to the following optional severance payment: If termination if termination of employment by either party occurs within 12 months after the merger completion date, 24 months of his current annual salary; beginning on the 13th month of employment following the merger completion date for each successive month, up to the 36th month of employment, one month of severance pay will be deducted from the total 24 month severance guarantee. Michael Coleman's annual salary is $142,000; Maximum payout if employment is terminated by either party would be $284,000.
Date of Member Vote: Dec. 8, 2021
Meadow Gold Employees CU and Hercules First CU
Merging Credit Union: Meadow Gold Employees, Salt Lake City
Assets: $5.555 million
Members: 473
Net income $2,185
Net Worth: 19.34%
Continuing Credit Union
Hercules First, Taylorsville, Utah
$123.5 million in assets
Members: 6,912
Reason for Merger: “The board of directors has concluded the proposed merger is desirable and in the best interest of members because it will add more branch locations, the ability to offer more business and real estate lending. Increase the number of services available to members and allow the current manager to retire.”
Merger-Related Net Worth Distribution If approved, Meadow Gold Employees CU said it would declare a one-time special dividend on all regular share balances “based on each account’s preceding six-month average monthly balance in an amount estimated to be between 5% and 7% based on members’ average balance… The special dividend would be a one-time capital distribution payable to eligible Meadow Gold employees Credit Union members in an aggregate total amount not greater than $140,000.”
Merger-Related Board/Management Compensation
- Lynn Nelson, CEO, $77,168. Health insurance of $9,600.
Member Vote: Nov. 22, 2021
Canvas Credit Union and Western Rockies FCU
Merging Credit Union: Western Rockies FCU, Grand Junction, Colo.
Assets: $173 Million
Members: 14,000
Net Income: $516,392
Capital: 7.12%
Continuing Credit Union: Canvas CU, Lone Tree, Colo.
Assets: $3.5 billion
Members: 269,500
Reason for Merger: “The Board of Western Rockies believes that by merging with Canvas, the members of Western Rockies and the potential members in the communities served by Western Rockies will realize greater value because all members will have the opportunity to access improved products and services,” WRFCU said in its disclosure. “A merger between Canvas and Western Rockies will ensure the future financial stability of the continuing credit union and will promote thrift and improved access to credit for the members and potential members of the continuing credit union.”
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation: WRFCU said five of its executives will receive payouts for accrued and unused sick time and vacation time. Those payouts include:
- CEO Kristi Porter, $59,980.44
- EVP Kim Lindemann, $59,245.10
- HR Director Gail Webb, $44,921.68
- Director of Operations Jenny Parrott, $18,305.90
- Director of Accounting and Finance Clarice Hawkins, $17,520.20.
Member Vote: Dec. 30.
Good Samaritan CU and Voyage CU
Merging Credit Union: Good Samaritan CU, Sioux Falls, S.D.
Assets: $27 million
Members: 6,841
Net Income: $27,412
Net Worth: 19.50%.
Continuing Credit Union: Voyage Credit Union
Assets: $163 million
Members: 6,841
Merger-Related Net Worth Distribution: Good Samaritan FCU said it paid a one-time special dividend on all regular share, share draft and share certificate balances based upon each account’s average daily balance for the 12-month period ending Dec. 31, 2020, totaling $1.6 million, or approximately 8.0% of members’ average daily balance of the share, share draft, and share certificate holdings.
Merger-Related Board/Management Compensation:
- Manager Mike Gardner was paid a one-time bonus of $10,000; early payout of earned paid time off, estimated between $7,500-$10,000, as well as the same bonus dividend being paid to members on their deposits, which amounted to $21,000.
- The disclosure documents also show Board Member Joe Herdina was paid a bonus dividend of $32,000 based on his deposits in the credit union.
FIAFE FCU & Securityplus FCU
Merging Credit Union: FIAFE FCU, Baltimore
Assets: $5.918 million
Net income: $8,521
Net worth: 36.07%
Members: 388
Continuing Credit Union: Securityplus FCU, Baltimore
Assets: $482 million
Members: 34,458
Reason for Merging: After noting the board recommended the following improvements: online banking, free checking, debit cards, ATM access to nationally based network, online funds transfers, online loan apps, mobile banking, mortgages and HELCs and CDs, the CU’s chairman, Sheron E. Newsome, wrote, “As mentioned in the earlier letter, the cost of these services are too expensive to be carried by a credit union of our size. In our last attempt to merge we got pretty far along in the process. We withdrew from the deal, however, when we didn't feel that we were getting all we could for you. We learned a lot from that process and immediately began looking for another partner.”
Merger-Related Capital Distribution: A special bonus dividend of 15% was paid to members on share balances as of June 30, 2021.
Merger-Related Board/Management Compensation
- The credit union said it will pay bonuses to Ron Puntanen, Delores Newsome and Dorothy Whitesell of $83,000 in total.
Member Vote: Nov. 19, 2021
Belle River Community CU & FreeStar Financial CU
Merging Credit Union: Belle River Community, Casco, Mich.
Assets:$27 million
Members: 1,832
Net Income: ($24,973)
Net Worth: 8.15%
Continuing Credit Union: FreeStar Financial, Clinton Township, Mich.
Assets: $278.8 million
Members: 20,064
Reason for Merger: “The board of directors has concluded that the proposed merger is desirable and in the best interests of members because like many small credit unions across the country we are faced with challenges of securing the necessary resources to remain competitive and provide our members with the services they deserve now and into the future.”
Merger-Related Capital Distribution: None
Merger-Related Board/Management Compensation
- Noting Free Star Financial maintains an anti-nepotism policy and that BRCCU VP Maranda Isaac will be unable to join the credit union, it is paying Isaac a severance of $21,320.
Member Vote: Nov. 18, 2021
JACO CU & Centric CU
Merging Credit Union: JACO Credit Union, Ruston, La.
Assets: $12.2 million
Members: 1,840
Net Income: ($46,207)
Net Worth: 17.04%
Continuing Credit Union: Centric Credit Union, West Monroe, La.
Assets: $270 million
Members: 32,449
Reason for Merger: Jaco Credit Union told members the “proposed merger is desirable and is in the best interests of members because this will undoubtedly provide our members with access to a larger organization with more services, loan and deposit products.”
Member-Related Net Worth Distribution: JACO CU said it is distributing up to $700,000 back to the membership.
Merger-Related Board/Management Compensation
- Manager Debbie Brister will be offered position of Center Manager at the new credit union and given a transition/retirement benefit of $59,207
- Assistant Manager Sandra Albritton will be offered position as Assistant Center Manager and will retire on April 1, 2022 and be given transition/retirement benefit of $30,129
- Senior Member Service Clerk Robin Hart will be offered a position as Centric Service Representative III with the new CU and be given a transition benefit of $16,911 and will also be able to earn a retention payment of $3,000 on Nov. 30, 2022
- Member Service Clerk Dan Warren will be offered a Centric Service Representative II position and given a transition benefit of $6,179 and be eligible to earn a $3,000 retention payment on Nov. 30, 2022.
Member Vote: Nov. 4, 2021
My CU & San Francisco FCU
Merging Credit Union: My Credit Union, Redwood City, Calif.
Assets: $35.1 million
Members: 1,960
Net Income: ($127,662)
Net Worth: 6.90%
Continuing Credit Union: San Francisco FCU
Assets: $1.28 billion
Members: 46,451
Reason for Merger: “My credit union has faithfully served its members since 1963. However, it has become increasingly challenging to continue to deliver the variety of products and services given the continuous rise in costs for both technology and compliance. Combining this with the difficulty in increasing our membership base prevents the investment and resources and infrastructure in services in order to affectively compete in today's competitive marketplace.”
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation
- Alex Castillas, who will remain with San Francisco FCU as District Manager of San Mateo County, will see an increase in annual salary of $20,000 and has a maximum possible payout of $95,500.
- Loan Supervisor Judy Ellis will remain with FFCU on an “at will” basis and receive a retention bonus of $6,388.20 if she remains employed through six months after the merger. If terminated for reasons other than cause, Ellis will be eligible to receive severance of $65,520 based on her 28 years of experience, for a maximum payout of $71,908.20.
- Senior Member Service Representative Ryan Rice will continue with San Francisco FCU on an “at will” basis and will receive a retention bonus of $5,931.90 if employed with the CU for six months after the merger date. If terminated for other than cause, he will be eligible to receive severance of $7,020.
- Loan Officer Erica De La Rosa will continue with San Francisco FCU n an “at will” basis and will receive a retention bonus of $5,171.40 if she remains employed with the CU for six months after the merger date. If terminated for other than cause, he will be eligible to receive severance of $8,160.
Member Vote: Nov. 4, 2021
SUNY Geneseo & Genesee Valley CU
Merging Credit Union: SUNY Geneseo FCU, Geneseo, N.Y.
Assets: $7.1 million
Members: 475
Net Income: ($56,098)
Net Worth: 23.32%
Continuing Credit Union: Genesee Valley, Geneseo, N.Y.
Assets: $126.1 million
Members: 9,161
Reason for Merger: “The board of directors notes Genesee valley Federal Credit Union has invested a significantly larger amount of its equity in building the infrastructure our members will be able to access,” the credit union stated in its disclosures.
Merger-Related Net Worth Distribution: SUNY Geneseo FCU said it distributed 6% of its capital to members.
Merger-Related Board/Management Compensation
- SUNY Geneseo said its president/CEO, Barbara Dillon, who has been with the CU for 34 years, will remain in the SUNY Geneseo branch or work remotely with limited hours at her current salary and benefits through Dec. 31. It further noted that prior to the merger agreement, the board had provided for a three-year merger employment contract for Ms. Dillon that includes current health benefits, retirement credits and paid attendance to the NYCUA Annual Convention for 2022, 2023 and 2024, with a total value of the plan at $290,909.
Viriva Community CU & American Heritage FCU
Merging Credit Union: Viriva Community CU, Warminster, Penn.
Assets: $85.7 million
Members: 7,980
Net Income: $40,657
Net Worth: 8.58%
Continuing Credit Union: American Heritage FCU, Philadelphia
Assets: $3.68 billion
Members: 233,412
Reason for Merger: “The board of directors has concluded that the proposed merger is desirable and in the best interests of members because of several challenges: in order to offer the services and branch locations that the members were requesting, we needed to find a larger credit union partner. The current CEO is retiring and the board felt that it was in the best interest of both the member owners and the stamp to merge into a larger local credit union with solid finances and a wide branch footprint. Versus hiring a successor CEO and continuing to fight an uphill battle for our size for profitability and growth…Viriva Community Credit union experienced 4.32% negative membership growth in 2020 and the profitability of the credit union is struggling due to low interest rates…”
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation:
- Viriva reported its president and CEO of 35 years, James McCaw, will remain a consultant/advisor to American Heritage for five years, with American Heritage paying medical, prescription, dental and vision premiums for McCaw and his immediate family until the CEO hits age 65. The cost will be $100,000 annually.
Virginia Beach Schools FCU & Langley FCU
Merging Credit Union: Virginia Beach Schools FCU, Virginia Beach, Va.
Asset Size: $114.3 million
Members: 7,028
Net Income: $219,433
Net Worth: 7.09%
Continuing Credit Union: Langley FCU, Newport News, Va.
Asset Size: $3.923 billion
Members: 297,228
Reasons for Merger: “The board of directors has concluded the proposed merger is desirable and in the best interests of members because it allows for a consolidation of energies and resources of the two credit unions to better serve the members in a competitive and secure environment.”
VBSFCU also said up to seven members of its board will have the opportunity to serve on Langley’s Advisory Board, and that it’s CEO, Brian Clark, will become a VP at LFCU.
Merger-Related Net Worth Distribution: None
Merger-Related Board/Member Compensation
- CEO Brian Clark, eligible for a maximum payout of $398,878.89, representing a retention bonus of $50,000 if he remains with the CU thorough successful systems migration; $40,078 for unused accrued vacation and sick-time hours, and a “limited-time severance opportunity if during the first 12 months of employment with Langley he is terminated without cause, if he voluntarily resigns, or if he dies or is disabled, representing gross compensation of $306,898.
- Vice President Michelle DeMuro, eligible for a maximum payout of $36,203.85 if she remains with Langley through completion of system migration
- VP Carla Gregory, eligible for a maximum payout of $26,680.23 if she remains with Langley through successful system migration (including payout for accrued vacation and sick time)
- VP Amy Mallinson, eligible for up to $18,934 for remaining with CU through systems migration and for unused vacation and sick time.
- VP Becky Westman, eligible for up to $61,798.31 for remaining with the CU through successful system migration (including payout for accrued vacation and sick time).
Silgan White Cap CU & Healthcare Associates CU
Merging Credit Union: Silgan White Cap, Downers Grove, Ill.
Assets: $3 million
Members: 506
Net Income: $1,060
Net Worth: 25.47%
Continuing Credit Union: Healthcare Associates, Naperville, Ill.
Assets: $459.8 million
Members: 34,602
Reasons for Merger: “During the spring of 2021 the board of directors decided to seek a merger partner that could provide a more comprehensive suite of products and services to its members. In addition, it became increasingly burdensome and costly to maintain the necessary infrastructure and adherence to the growing regulatory demands.”
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation
- The credit union said it would not be distributing any net worth to its membership and that no employees would be retained after the merger. SWCCU’s CEO, Carolyn Callard, was awarded severance pay of $9,000 in addition to a “merger dividend of $6,000.
Honea FCU & Honolulu FCU
Merging Credit Union: Honea Federal Credit Union, Ft. Shafter, Hawaii
Assets: $20.6 million
Members: 739
Net Income: $64,870
Net Worth: 10.24%
Continuing Credit Union: Honolulu FCU, Honolulu, Hawaii
Assets: $326.4 million
Members: 18,578
Reasons for Merger: Honea CU cited increased products, services and branches as reason for merger.
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation
- Honea said Manager Fred Dalit was paid merger-related compensation of $100,000
Texas FCU & Texas Trust CU
Merging Credit Union: Texas Federal Credit Union, Dallas
Assets: $62 million
Members: 6,677
Net Income: $16,115
Net Worth: 6.03%
Continuing Credit Union: Texas Trust Credit Union, Arlington, Texas
Assets: $1.671 billion
Members: 122,371
Reasons for Merger: “The directors of both credit unions have concluded that (the) proposed merger is desirable and in the best interests of members for a number of reasons, such as better pricing and services, additional products, enhanced convenience and account access, continued employee representation and lower operating costs.”
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation
- Cathy Perry, president/CEO: Contract payout, $450,000; Severance bonus, $100,000; Retention, $12,509.50; Lump sum for lifetime medical per contract, $200,022.98
- Sandy Smith, former CEO/compliance officer: Contract payout, $228,000; lump sum for lifetime medical per contract, $200,022.98
- Mary Minard, SVP-loan administration: Severance bonus, $219,000; Retention, $6,083.33
- Jose Garza, accounting manager: Severance bonus, $135,000; Retention, $3,750
- Robin Gilbert, HR manager: Severance bonus, $97,750; Retention, $4,250
CU of the Berkshires & Greylock FCU
Merging Credit Union: Credit Union of the Berkshires, Pittsfield, Mass.
Assets: $20.3 million
Members: 1,565
Net Income: ($211,091)
Net Worth: 11.21%
Continuing Credit Union: Greylock FCU, Pittsfield, Mass.
Assets: $1.49 billion
Members: 92,908
Reasons for Merger: “The board of directors has concluded that the proposed merger is desirable and in the best interests of members because the alternative would require prohibitive investments in people, technology, products, and services to compete effectively in the marketplace.”
Merger-Related Net Worth Distribution: None indicated
Merger-Related Board/Management Compensation: “The Credit Union of the Berkshires’ CEO may receive a promotion and/or salary increase after the merger based upon the results of an interview process.”
Erie Times FCU & Erie FCU
Merging Credit Union: Erie Times FCU, Erie Penn.
Assets: $6.98 million
Members: 867
Net Income: ($128,110)
Net Worth: 11.54%
Continuing Credit Union: Erie FCU, Erie, Penn.
Assets: $718.2 million
Members: 67,910
Reasons for Merger: “The board of directors has concluded that the proposed merger is desirable and in the best interests of members because of declining year over year capital and membership levels, inability to foster continued loan growth, and a lack of desirable management succession planning.”
Merger-Related Net Worth Distribution: Erie Times FCU said it would distribute a portion of its net worth to members, but did not indicate the formula or amount.
Merger-Related Board/Management Compensation
- Darlene Spitzer, CEO: Years of Severance payment, $52,192
- Trish Landis, Assistant Manager, Years of Service Severance, $30,132
- Shannon Rider, MSR, Years of Service Severance, $4,472
St. Francis Medical Center CU & Aloha Pacific CU
Merging Credit Union: St. Francis Medical Center, Honolulu
Assets: $10.1 million
Members: 1,076
Net Income: ($176,046)
Net Worth: 14.09%
Continuing Credit Union: Aloha Pacific
Assets: $1.1 billion
Members: 64,177
Reasons for Merger: “The board of directors has concluded that the proposed merger is desirable and in the best interests of members because of the lack of succession and depth of expertise. With only two staff members and the additional expertise necessary to comply with an increasingly complex regulatory and economic environment resources are stretched too thin.”
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation
- Mary A. Brown, manager: Separation agreement, $35,696.94.
Solano First FCU & Valley Strong CU
Merging Credit Union: Solano First FCU, Fairfield, Calif.
Assets: $186.1 million
Members: 9,540
Net Income: ($1.7 million)
Net Worth: 3.47%
Continuing Credit Union: Valley Strong
Assets: $2.47 billion
Members: 178,305
Reasons for Merger: “As a result of the proposed merger the continuing credit union will be able to offer, and you will be able to expect additional products…better pricing on products and services…enhanced convenience and access…employee representation…and leadership representation (as) Mike Warrell will become a market president at Valley Strong and will continue to be very actively involved with the credit union’s day to day operations.”
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation
- Mike Warrell, president/CEO: Compensation and benefits and severance opportunity, possible maximum amount, $107,467.34. “Mr. Warrell is currently employed by Solano First pursuant to an employment agreement which provides for a severance opportunity if Solano First terminates Mr. Warrell’s employment not ‘for cause.’ The employment agreement with Valley Strong provides for an increased severance opportunity if Valley Strong terminates Mr. Warrell’s employment not ‘for cause’ during the term of the employment agreement.
- Susan Mays, SVP. Severance opportunity: $270,400. Disclosure notes that under terms of Solano First employment agreement mays is eligible for severance is she is demoted below the level of SVP and if she elects to terminate employment or if Valley Strong terminates employment upon the merger.
- Christopher McGown, VP-marketing/Facilities: Severance opportunity: $30,253
- Steven Ferguson, AVP-lending: Severance opportunity, $34,164.08.
Gulf States CU & McCoy FCU
Merging Credit Union: Gulf States CU, Maitland, Fla.
Assets: $36.5-million
Members: 3,000
Net Income: $16,675
Net Worth: 13.47%
Continuing Credit Union: McCoy CU, Orlando, Fla.
Assets: $847 million
Members: 71,361
Reason for Merger: “Increased costs associated with compliance and regulatory functions comma declining membership comma costs of new technology comma increasing employee wages and benefits and the difficulties in competing with larger financial institutions.”
Merger-Related Net Worth Distribution: None
Merger-Related Board/Management Compensation: One person identified as “VP/controller,” who will be retiring, will be paid $37,695 in conjunction with the merger.