AMARILLO, Texas–Some member objections, more payouts to CU execs even at CUs posting losses and one CU where all board members will join the acquiring CU’s board can all be found in this, the first of a three-part series in the CU Daily’s one-of-a-kind, ongoing analysis of credit union mergers.
The other two articles in this series will be published this week.
Editor’s Note: Due to reporting delays, some of the member votes in these mergers have already occurred.
As Two Members Question Combination, Struggling Texas CU Aims to Merge into Mississippi CU
Merging Credit Union: City FCU, Amarillo, Texas
Assets: $84.2 million
Members: 2,685
Year Chartered: 1948
Date of Member Vote: Sept. 16
Acquiring Credit Union: Magnolia FCU, Jackson, Miss.
Assets: $185.6 million
Members: 21,013
City FCU told members they would benefit from a merger due to financial strength and stability, enhanced products and services (“access to services the smaller credit union couldn’t offer alone, such as mortgage lending and business accounts), technology and infrastructure, operational efficiency (including stronger vendor negotiating power), member access and convenience, leadership and succession, and “competitive position.”
The two credit unions are approximately 770 miles apart.
City FCU posted a loss of $191,258 at mid-year, with net worth of 16.25% (CFCU said there will be no distribution of net worth to members). Magnolia FCU posted $1.34 million in net income with net worth of 23.4% as of the same date.
Member Feedback
This exchange was posted by one member on the NCUA website:
“Just the other day, my wife and I went to City Federal’s Soncy branch to cash some checks. While we were there, we noticed a table filled with City Federal merchandise, and the staff was encouraging members to take the items.
“My wife asked one of the tellers, “So, are y’all getting rid of all the City Federal stuff before the merger?” Her response was, “Yes, I wondered when someone was going to ask about that.”
“Another teller then asked whether we had voted. I responded by asking why we should vote if the merger already appears to be a done deal.
“The discussion went back and forth, and I explained that other staff members have made comments to me that gave me the impression the merger is essentially certain to go through. In addition, decisions appear to be taking place as though Magnolia is already involved in the decision-making process.
“As a long-time member of City Federal Credit Union, this concerns me.
“If members are being asked to vote on whether this merger should take place, then members should have confidence that the outcome has not already been decided. When employees are giving away City Federal merchandise, making comments suggesting the merger is inevitable, and actions are being taken that appear consistent with the merger already moving forward, it raises legitimate questions about the voting process.
“How can I, as a long-time member, feel confident that my vote truly matters when everything I am seeing gives the appearance that the merger has already happened?
“I would also like to know:
- Who first initiated the merger?
- How is the voting process being monitored?
- Who is responsible for receiving, counting, and verifying the votes?
- What safeguards are in place to ensure that every eligible member’s vote is counted accurately?
- Will members be provided with the final vote totals, including the number of votes cast for and against the merger?
- And most importantly, what actions have been taken to ensure that the merger has not been treated as a foregone conclusion before the members have completed their vote?
- These are reasonable questions because the members are the owners of this credit union. If we are being asked to make a decision about its future, we should be able to have complete confidence that our votes matter and that the process is fair, transparent, and independently verifiable.”
‘Smacks of a Takeover”
Another member posted a comment reading, “Mergers are NOT always what they are thought to be! ‘Merger’ with a larger, out-of-state firm, i.e. Magnolia Federal Credit Union, located not in Texas but in Mississippi, boasting six locations, all in MS, not just one as Amarillo’s is! Moreover, if one ‘reads between the lines,; this proposed ‘merger; smacks of a ‘takeover,’ not just a merger. Out of state! We hope not!”
The Financials
City Credit Union posted a loss of $191,248 through mid-year, with net worth of 16.25%. Magnolia Credit Union had $1.34 million in net income and net worth of 23.42% as of the same date.
Editor’s Note: The merger was created and City FCU’s website already features Magnolia CU’s branding.
A Familiar Model: Payouts for Five Managers as Texas CU Merges into Credit Union 1
Merging Credit Union: Gulf Coast FCU, Corpus Christi, Texas
Assets: $259.7 million
Members: 17,603
Year Chartered: 1940
Date of Member Vote: Sept. 29
Acquiring Credit Union: Credit Union 1, Lombard, Ill.
Assets: $2.86-billion
Members: 172,066
Credit Union 1 is among the most aggressive credit unions in the country in merging in smaller CUs, nearly all of which use the same boilerplate language in their disclosures to members, and that is true of Gulf Coast FCU.
GCFCU told members they would benefit from a merger due to expanded branch and ATM network, improved technology (“continued investment in the latest technology to greater increase (sic) access and convenience”), expanded products and services :to meet members; diverse financial needs and preferences”), enhanced financial wellness options, “enhanced operational back office,” “consistency through knowledgeable and friendly employees,” improved cybersecurity, national recognition through established partnerships, and :more resources to provide enhanced member service.”
As is also common with many of the credit unions Credit Union 1 seeks to merge in, the CEO of the Gulf Coast FCU management team will be receiving payouts from the members’ capital (it indicated there will be no distribution to members).
Management Payouts
Receiving payouts will be:
- CEO Jeremy Garza, who is to receive a “retention incentive” of $250,000 payable upon closing of the merger. Garza will then be offered continued employment for 109 years and will serv e as SVP-market region manager Southwest Texas. Garza’s post-merger annual base salary will increase by $36,420 and will be eligible for discretionary annual bonus of up to $100,000.
In addition, Garza’s fully funded split-dollar life insurance plan provided by Gulf Coast FCU will fully vest, under which he is entitled to a total benefit of $1.918 million to be paid over 25 years.
- CFO Karen Scholz, who is to retire with the merger, is to be paid a merger incentive of $60,000 payable upon close of the merger
- IT Director Joel Acuna is to be paid a merger-retention incentive of $50,000, and will receive an annual base salary increase of $20,000
- VP-Branch Operations Ruby Carillo is to receive a merger-retention incentive of $50,000 and a post-merger base salary increase of $20,000
- Marketing Director Hugo Marciales Mendoza is to be paid a merger retention bonus of $25,999 and an annual base salary increase of $8,550.
The Financials
Gulf Coast FCU had $576,367 in net income and net worth of 8.35% as of mid-year. Credit Union 1 had net income of $22.3 million and net worth of 10.91% as of June 30.
‘We’re Becoming Smaller and Smaller’: With Loss at Mid-Year, GNSEFCU Looks to Merge Into PWFCU
Merging Credit Union: Great Neck School Employees FCU, Great Neck, N.Y.
Assets: $2.719 million
Members: 334
Year Chartered: 1945
Date of Member Vote: Oct. 6
Acquiring Credit Union: Port Washington FCU, Port Washington, N.Y.
Assets: $109.9 million
Members: 3,036
Great Neck School Employees FCU told members it needs to merge because it is becoming “smaller and smaller due to the new financial trends and our inability to offer the new types of services that the members are seeking.”
Great Neck School Employees FCU said the merger would give members access to a broader range of products and services, including:
- Regular savings accounts, certificates of deposit and youth savings accounts.
- Free checking accounts and individual retirement accounts.
- Direct deposit, ATM access and debit cards.
- Personal loans, mortgages and home equity lines of credit.
- Auto loans and leasing.
- Visa credit cards with no annual fee and competitive rates.
- Online banking, bill payment and online loan applications.
The credit union said members also would have access to other services through Port Washington FCU, the continuing institution.
No Distribution Of Net Worth
Despite net worth of 26.8%, Great Neck School Employees FCU noted its net worth ratio is higher than Port Washington FCU’s, but there will be no distribution because the credit union distributed more than $70,000 in dividends in 2024 and members would benefit from the continuing credit union’s improved products and services.
The credit union also announced that its single office will close after the merger.
The Financials
Great Neck School Employees reported a mid-year loss of $15,827. PWFCU had $1.19 million in net income at mid-year, with net of 15.31%.
Merger-Related Comp
GNSECU said Manager Flaviano Pereira would receive $200,000 in deferred compensation related to the merger.
A Tiny CU Seeks Shelter Inside a Credit Union That’s 7,952 Times Larger
Merging Credit Union: Harris Employees CU, Cordele, Ga.
Assets: $625,584
Members: 180
Year Chartered: 1947
Date of Member Vote: Oct. 6
Acquiring Credit Union: Robins Financial CU, Warner Robins, Ga.
Assets: $4.97 billion
Members: 273,627
In a fill-in-the-blank notice to members, the tiny Harris Employees CU, which posted a mid-year loss, said a merger will “protect the long-term future of our members. By joining forces with Robins Financial Credit Union, our members will gain access to advanced digital banking technologies, expanded branch locations across Georgia, and a wider variety of financial products while preserving our legacy of personalized service.”
In an unusual statement, Harris Employees CU’s notice to members indicates it both will and will not distribute net worth to members. The amount it plans to distribute to members is not defined, with the disclosure listing only those who will be eligible to receive a payout.
The Financials
Harris Employees CU posted a mid-year loss of $4,359, with net worth of 34.27%. Robins Financial. Robins Financial posted $47.5 million in net income, with net worth of 17.61%.
A CU That’s Only Open 3-6 Hours Per Day, 4-Days Per Week Sees Opportunity to Go Full-Time
Merging Credit Union: Great Horizons FCU, Munster, Ind.
Assets: $3.62 million
Members:420
Year Chartered: 1977
Date of Member Vote: Oct. 8
Acquiring Credit Union: Tech Credit Union, Crown Point, Ind.
Assets: $599 million
Members: 39,002
Great Horizons FCU told members they will benefit from a merger due to expanded hours and a full array of products and services at Tech CU, as well as access to 11 branches, financial wellness resources, improved technology and cybersecurity.
GHFCU said it is currently open four days per week, ranging from 3-6 hours per day, and does not have cash-onsite or offer checking accounts.
It said its main office in Munster, Ind. will remain open for a “period of time.
The Financials
Great Horizon reported $21,809 in net income in the first half of the year, with net worth 24.48%. It indicated it would not be distributing any net worth. Tech CU had net income of $1.05 million, with net worth of 9.29%.
Editor’s Note: Members voted to approve this merger.
In Ohio, Merger Offers a Bonus to Members, a Payout to Management
Bonus to Members, Payout to Management
Merging Credit Union: Cincinnati Interagency FCU, Cincinnati
Assets: $20.7 million
Members:1,191
Year Chartered: 1951
Date of Member Vote: Oct. 13
Acquiring Credit Union: Kemba Credit Union, West Chester, Ohio
Assets: $1.73 billion
Members: 130,948
The board of Cincinnati Interagency FCU told members that in merging, “Together, we become more–empowering members, communities, and teams through a bold, unified future. Both organizations bring a strong legacy of member satisfaction, operational excellence, financial stability and community impact. The merger is driven by a shared strategic vision to deliver greater value to members and communities where they live, work and play through increased scale and complementary strengths.”
Specific benefits of the merger will include, according to CIFCU:
- Financial wellness
- Enhanced products and services, including “deposits that work harder for our members” and “lending that understands real life.”
- An “enhanced wealth journey”
- Mortgages that “move our members.”
- Powering “local business with heart and strategy”
CIFCU said its main office will close once the merger is completed.
Merger-Related Payout to Members
If the merger is approved, CIFCU said a one-time bonus dividend equal to 1% of eligible members; deposit balances as of Dec. 31, 2025 will be paid, as will a rebate equal to 25% of loan interest paid by eligible members during 2025.
Payout to Management
A number of members of management are to receive payouts tied to the merger, should it be approved, including:
- CEO Karen Anderson, whose role will be eliminated as part of the merger. CIFCU said she will be retained a consultant For up to three months following the completion of the merger under the terms of a consulting agreement. She will receive a consulting fee of $158,426.82, which is equal to one week’s pay for each year of service (42 years), three years’ worth of 40(k) forfeited contributions, three years of Medicare reimbursement lost due to the merger, and all applicable cost of living adjustments and taxes.
- Member Service and Operations Manager Angie Preston, whose employment will continue post-merger. Preston is to receive $49,177.96 as a retention bonus equal to one week’s pay for each year of service (32 years).
- Lending and Marketing Manager Tina Gallimore, whose employment will continue post -merger. Gallimore is to receive $48,776.22 as a retention bonus equal to one week’s pay for each year of service (25 years).
- MSR Kathy Kirk, whose employment will continue post -merger. Gallimore is to receive $29,318.69 as a retention bonus equal to one week’s pay for each year of service (two years).
- MSR Patric Anello, whose employment will continue post -merger. Anello is to receive $8,860.03 as a retention bonus equal to one week’s pay for each year of service (eight years).
The Financials
Cincinnati Interagency FCU posted $301,287 in net income as of mid-year, with net worth of 18.24%. Kemba Credit Union reported $4.9 million in net income and net worth of 11.68% as of the same date.
Editor’s Note: Members of CIFCU have approved this merger.
With a Loss at Midyear, Mass.CU Plans Payout to Five Execs
Merging Credit Union: Members Plus CU, Medford, Mass.
Assets: $358.9 million
Members: 13,688
Year Chartered: 1940
Date of Member Vote: Oct. 16
Acquiring Credit Union: Metro Credit Union, Chelsea, Mass.
Assets: $3.3 billion
Members: 218,846
Members Plus told members the plus in the merger proposal could be found in better pricing and services, additional products, enhanced convenience and “lower operating costs as a larger, combined institution.”
“The merged credit union will also achieve economies of scale, which will permit it to better compete in the increasingly competitive financial services industry,” it said, adding that Metro Credit Union also has a “members first philosophy.”
The Financials
Members Plus posted a midyear loss of $848,116 and net worth of 11.02%. Metro Credit Union had net income of $5.78 million and net worth of 9.18% as of June 30.
Payout to Management
Members First said there would be no distribution of net worth, “…because both credit unions are well-capitalized…” but indicated five members of management would receive merger-related compensation, including:
- CEO Michael Wilberton, who would receive a retention bonus of $61,582.57 and a pay increase for a total value of $72,969.73
- SVP/COO Jill DeAlmeida, who would receive a $55,800 retention bonus and a pay increase for a total value of $62,000
- VP-Real Estate Lending Eric Rich, who would receive a retention bonus of $40,643.38 and a pay increase for a total value of $45,604.54
- VP-Branch Administration/Operations Justin Lasko, who would receive a retention bonus of $46,788.07 and a pay increase for a total value of $51,868.09
- Mortgage Lending Manager Laura Ganat, who would receive a retention bonus of $26,845.69 and a raise for for a total value of $30,193.35
In Michigan Merger, All Members of Acquired CU’s Board to Join Board of Acquirer
All Board Members to Join New Board
Merging Credit Union: Case Credit Union, Lansing, Mich.
Assets: $400 million
Members: 26,447
Year Chartered: 1936
Date of Member Vote: Oct. 20
Acquiring Credit Union: Team One Credit Union, Saginaw, Mich.
Assets: $765.9 million
Members: 46,433
“…This proposed merger is not driven by financial distress of the need to survive. Rather, it reflects a strategic decision to position the credit union for long-term success in an increasingly complex, technology-driven, and highly regulated and competitive operating environment,” CASE Credit Union told members. The rising costs of technology, regulatory compliance, and the recruitment and retention of skilled employees increasingly favor larger organizations with the scale to invest effectively.”
CASE CU said Team One is a “like-minded organization” and that a merger will allow it to provide a wider range of products and services.”
CASE CU said all members of its board will join the board of the combined organization, and that its president/CEO, Jeffrey Benson, will serve as CEO of the merged CU. It added that its branches will also remain open.
The Financials
CASE CU reported $599,800 in net income through June 30, with net worth of 10.97%. Team One had net income of $2.99 million and net worth of 9.88% as of the same date.
