CHICAGO—In what may be a first for the U.S. CU community, over the next six weeks the members of six different credit unions will be casting votes on whether to merge into Credit Union 1. 

Chicago-based Credit Union 1 (not to be confused with the Anchorage-based CU of the same name) is among the most aggressive credit unions in merging in other credit unions, and over the next six weeks the $1.9-billion credit union will be seeking to acquire more than $500 million in total assets and 33,000 members. 

Credit Union 1 currently has approximately 123,000 members. It posted $1.236 million in net income and had net worth of 10.06% as of the first quarter. 

Member votes are set for:

•  June 9, AAA Credit Union, South Bend, Ind.
•  June 30, Great River FCU, St. Cloud, Minn.
• July 1, Archer Heights CU, Chicago
• July 15, 77th Street Depot FCU, Chicago
• July 16, Loyola University Employees FCU, Chicago
• July 17, Homewood Credit Union, Homewood, Ill.

The co-ops Credit Union 1 is seeking to merge in range from just under $2 million in assets to approximately $345 million. Some are profitable, others are not. Several are paying merger-related compensation to executives, with the former chairman of one of the credit unions objecting to the payout given the CU’s performance. Only one is distributing any capital to members. 

Nearly Identical Disclosures

The disclosure forms NCUA requires be provided to members ahead of a proposed combination nearly all use the same language. With minor differences, those forms say the advantages of merging with Credit Union 1 include:

• “Technology and systems that align with our members’ needs” and “internal core values align with our own and give us confidence our membership will experience the continued quality, personalized service that members have been accustomed to in the past. 
• Branch Expansion. The businesses and branch locations of each of the respective credit unions will be preserved, CUs are told.
• Employees. “Staff development and career pathing opportunities for employees, including opportunities for increased salary, improved benefits and enhanced training and education, will expand…” In the case of AAA Federal Credit Union, staff will receive base salary increases of 10%
• Technology. “There will be economies of scale for operations and vendor contracts (that will) enable the Continuing Credit Union to invest in digital enhancements, business development and improved member technology experiences.
• Cost Savings
• Field  of Membership. “The Continuing Credit Union’s field of membership will retain all segments currently included in the field of membership of each of the credit unions and will consist of a growing segment of communities.”
• National Recognition . “Being associated with numerous marketing initiatives of Credit Union 1 that (acquired CU) will get to take advantage of as we partner with Credit Union 1.”
• Enhanced Operational Back Office 

The Merging CUs

In earlier merger reports, the CU Daily reported on and provided additional details on several of the credit unions where members will be voting in the near future. Below is a look at all six.

Management Payout in Indiana

Merging Credit Union: AAA Credit Union, South Bend, Ind.

Assets: $78.8 million 

Members: 4,791

Year Founded: 1939

AAA Credit Union posted $166,058 in net income as of March 31, with net worth of 11.20%. There will be no equity distribution to members.

Merger-Related Compensation

According to its disclosure form, executives receiving merger-related compensation include:

• Paul Obermeyer, President/CEO. AAA CU said Obermeyer will be paid a retention bonus of $250,000 and his annual salary will increase by $90,508. “In addition, he will be paid an additional one-time payment of $150,000 in the form of deferred compensation to be paid upon his retirement one year after the merger’s effective date and be allowed to purchase his existing company fleet vehicle (a 2019 Chevrolet Suburban, presently valued at $30,000) for $1. On or about the effective date of the merger, Paul Obermeyer will be paid out his existing accrued sick and vacation pay, which as of the date of this disclosure, will pay an amount no greater than $30,058.11 (this is not an increase in compensation due to the merger; the amount referenced is due as all employees will not carry over accrued sick and vacation time).”
• Steve Searfoss, Manager of Member Services. Searfoss will be paid a bonus of $15,000 and his annual salary will increase by $9,720 post-merger and he will be employed for a minimum of seven years. “On or about the effective date of the merger, Steve Searfoss will be paid out his existing accrued sick and vacation pay, which as of the date of this disclosure, will pay an amount no greater than $18,318.46 (this is not an increase in compensation due to the merger; the amount referenced is due as all employees will not carry over accrued sick and vacation time),” the credit union said.
• Brenda Case, Manager of Accounting & Investments. Case will be paid a retention bonus of $15,000 and her annual salary will increase by $8,646 and she will be employed for a minimum of seven years. “On or about the effective date of the merger, Brenda Case will be paid out her existing accrued sick and vacation pay, which as of the date of this disclosure, will pay an amount no greater than $16,294.38 (this is not an increase in compensation due to the merger; the amount referenced is due as all employees will not carry over accrued sick and vacation time).”
• Cheryl Nowicki, Manager of Lending & Collections. Nowicki will be paid a retention bonus $15,000, and her annual salary will increase by $8,376 and she will be employed for a minimum of four years. “On or about the effective date of the merger, Cheryl Nowicki will be paid out her existing accrued sick and vacation pay, which as of the date of this disclosure, will pay an amount no greater than $15,785.54 (this is not an increase in compensation due to the merger; the amount referenced is due as all employees will not carry over accrued sick and vacation time).”
• Eileen Jurgonski, Branch Manager. Jurgonski will be paid a retention bonus of $5,000, and her annual salary will increase by $5,500.”On or about the effective date of the merger, Eileen Jurgonski will be paid out her existing accrued sick and vacation pay, which as of the date of this disclosure, will pay an amount no greater than $9,361.85 (this is not an increase in compensation due to the merger; the amount referenced is due as all employees will not carry over accrued sick and vacation time).”

In the event that any of the aforementioned employees of AAA Federal Credit Union are terminated without cause before the aforementioned number of years of minimum employment has concluded, they shall be entitled to severance for the remaining term of their minimum employment term, AAA CU said. 

A Former Board Member Has Objections

Merging Credit Union: Great River FCU, St. Cloud, Minn.

Assets: $344.2 million

Members: 20,974

Year Founded: 1999

Great River posted a loss of $4,874 as of March 31, with net worth of 6.98%. It had a $2-million loss at year-end 2024. 

Compensation Paid

According to Great River FCU’s message to members, “Based on president and CEO Brant Hicks’ valuable institutional knowledge, credit union related relationships, experience with the culture and operations of Great River Federal Credit Union and his continued contributions and best efforts to the success of the combined entity post-merger, he will be provided a one-time retention bonus in the amount of $250,000 and he will be employed for five years post-merger.”

In the comment section on NCUA’s website related to mergers, former board member Harold “Harry” Rothstein raised objections to the payout.

‘What Members Would Ask’

“As a past board member (of 5 years or so) and a lifetime member since April 10, 1960, at 10 months old, I offer the following in no specific order, but with honesty and understanding that change is inevitable,” wrote Rothstein. “I feel my perspective represents what members would ask, but likely won’t be doing due to the communications structure provided being what it is.”
Rothstein said he wants to know:

• What are the top three reasons for this merger to take place?
• When/how was the most recent news of this potential merger communicated with members, as most people click out of emails and throw their snail mail.
• Is it felt that a snail mail vote will reflect the majority? How will the results be communicated?
• Has this information been sent out electronically?
• Were other financial institutes contacted regarding their interest in merging with GRFCU? If so, how were those inquiries managed?
• What would be the plans for the brick-and-mortar structures that GRFCU has built if this merger is voted yes?
• How does having 28 out-of-state locations for those in Minnesota benefit the member?
• Would a merger require all members to go paperless?
• Would a merger dissolve our current BOD, therefore the local input we have had for so many years?
• With it being typical to offer current employees’ employment, how many are there?
• Understanding that our president/CEO would receive a one-time retention bonus and a five-year employment agreement, are there any managers receiving the same? If so, how many, how much, for how long would their employment agreements be?
• “That said, how would you answer the question, ‘Why should the leadership team that managed to get us to this point (not being self-sufficient) be rewarded so well?’”
• How many mergers has Credit Union 1 been a part of in the past five years?

Down from the Heights

Credit Union: Archer Heights CU, Chicago

Assets: $20.3 million

Members: 2,219

AHCU posted a loss of $7,097 as of March 31, after closing 2024 with a loss of $20,429. It has net worth of 10.12%.

Archer Heights will pay a special dividend of $25 to each member if the merger is approved. Several members of management will receive much more, including:

• President CEO Lisa Strnad will be paid a retention bonus of $75,000, receive an annual salary increase of $28,187, and be employed for a minimum of five years.
• VP-Finance David Kash will receive a retention bonus of $15,000, an annual salary increase of $13,772, and will be employed for a minimum of three years.
• VP-Lending Maribel Lopez will be paid a retention bonus of $10,000, receive an annual salary increase of $21,728, and be employed for a minimum of three years.

Employees of Archer Heights Credit Union will be offered employment with Credit Union 1, which shall offer employment to each employee for a period of at least three years, it told members. 

Archer Heights Credit Union employees who voluntarily resign from credit union within the first 12 months after the effective time shall be eligible for a severance payment

Last Stop for One CU

Credit Union: 77^th Street Depot FCU, Chicago

Assets: $19.5 million

Members: 4,417

77^th Street Depot FCU reported Q1 income of  $32,270 and net worth of 24.61%. Despite the high capital, it indicated no plans for a member distribution.

All employees will be offered employment, but there will be no merger-related financial arrangements for execs.

You Can’t Go Homewood Again

Merging Credit Union: Homewood Credit Union, Homewood, Ill.

Assets: $1.8 million

Members: 669

Homewood CU posted a loss of $1,846 as of March 30, to go with capital of 9.18%. The credit union said Homewood CU employees will be retained. No merger-related compensation for management is to be paid.

Matriculating on a New Campus

Merging Credit Union: Loyola University Employees FCU, Maywood, Ill.

Assets: $42.4 million

Members: 4,038

Year Founded: 1979

Loyola University EFCU lost $53,170 as of the first quarter, with capital of 12.58%.  The CU posted a $505,770 loss at year-end 2024. 

There will be no share distribution.

Loyola University EFCU said it will pay merger-related compensation to certain executives, including:

• CEO Harry Tram. In recognition of Tram’s 24 years of “dedicated service,” the credit union said it will pay a one-time severance bonus in the amount of $125,000 at his retirement, which shall coincide with the successful close of the merger. “This bonus represents approximately $15,000 more than his current annual salary. Mr. Tram will continue to provide his services, management, and insight during the critical transition period leading up to the effective date of the merger,” LUEFCU stated. 
• Juliann Vitale: $10,000 Retention Bonus and annual base pay increased by $6,799.52
• Jacquelin Trejo: $10,000 retention bonus and annual base pay increased by $5,899.92

Other Employee Compensation

In its disclosure form, LUEFCU said employees of Loyola University Employees Federal Credit Union will be offered employment with Credit Union 1 for a period of at least three years from the effective date of the merger.

Any LUEFCU employee can be terminated within the first three years or not offered employment if cause exists, it said. 

Retained employees shall be provided with a minimum base salary increase of 10% or a minimum base salary provided to similarly situated employees Credit Union 1, whichever is greater, LUEFCU said.