Just When You Think You’ve Read It All, You Read Some More and Find…

By Frank J. Diekmann

Read through hundreds and hundreds of the disclosure forms credit unions are required to provide when proposing a merger and, I don’t want to be so cliché as to say if I had a buck for every time I read…

• “Better products and services” (often without any actual specifics)
• “More branches” (this is often true, but also often amusing in cases where one CU is merging with another that is several states away)
• “Alignment of philosophies” (Seldom told what that philosophy is, exactly, but it is aligned)
• And my favorite go-to, “synergies.” 

…but I’d have the capital to charter my own credit union.

What I would like to read, just once, is a credit union telling members, “Vote for this merger and we’ll put an extra $109 a year in your pocket, on average. Here’s how…” Now that’s putting your money where your merger mouth is. 

Yet just when jaded old me thinks I’ve pretty much read everything any credit union can say–from the cut-and-paste language from merger consultants to the heartfelt messages of long-time managers–in their messages to members about why a combination is needed, I still find some new stuff. 

Here are a few items pulled from the CU Daily’s most recent series on mergers, which can be found here and here.

Pretty Much Already Merged

As Tazewell County School Employees CU President Kevin Freeman explained to members, TCSECU has already been in a close relationship with Members Choice CU for 13-plus years, sharing office space, an ATM and even a mutual employee. 

Freeman noted that in 2017 Members Choice merged with Illinois Electric Credit Union to create the Cooperative Choice Network that has since merged in three other CUs, all of which operate as a separate division. Even after the merger, TCSECU would retain its name and brand, Freeman said, as well as its office and staff.

‘No More Waiting a Week’

C S P Employees FCU, which serves the Connecticut state prison system, said it has become “increasingly difficult for our small credit union to meet the financial demands of state-of-the-art technology and regulatory compliance. We have had to limit the scope of services provided to our members to maintain an adequate capital position…”

The board told members it chose America’s First Network CU as a merger partner because of its divisional/network structure,” which will allow it to retain its brand.  It will also maintain its staff and location, and add numerous products and services, pay higher rates on savings, improve turnaround on loans.

And in a landscape in which real-time decision-making has become the norm and AI promises to approve a loan before the member even knows they need one, CSP Employees told members, “No more waiting a week for loan committee decisions.”

We’re Tired & Want to Go Home

Increasingly, credit union board members and managers say they’re out of gas. 

• Ann Arbor Postal FCU said it needed to merge because the “current employees and volunteers of Ann Arbor Postal Federal Credit Union desire to retire.” Ann Arbor Postal AAPFCU had a loss of $2,852 through March 31, with net worth of 56.36%.
• The $294,924 Morning Star Baptist FCU in Clairton, Penn. said in its message to members, “The merger is intended for the welfare of the membership after the board of directors recognized that there are no volunteers to run the credit union’s daily operations as (manager) Joyce Hammons is retiring.”
• In Pace, Fla., ECCO Credit Union, said, “Our membership base is aging and, over time we have experienced a decline in deposits as long-time members pass away, their beneficiaries transfer funds to other institutions. Additionally, we have been unable to secure a permanent president to lead the credit union into its next chapter.”
• In Utah, Provo Police and Fire Department CU, “The board of directors has concluded that the proposed merger is desirable and in the best interests of members because current employees are ready to retire and no suitable replacements have been identified.”

Even the Tech is Retiring

And it isn’t just employees retiring: Plumbers 55 FCU in Brooklyn Height, Ohio said it needed to merge because its core system vendor is “ceasing operations at year-end.

Not Every Board is Done

In an unusual move, Florida-based ECCO Credit Union said that among the reasons to vote for the merger is that all board members will join the board of Harvesters FCU–“ensuring your voice remains represented.” To its credit, ECCO CU said all members will receive a one-time dividend of $250 if the merger is approved.

Better Use of Capital

In Delaware, Louviers FCU’s net worth (17.38%) was nearly double that of the acquiring CU, Del-One, but it said there would be no payout to members because “any excess capital would be better utilized in supporting the expansion for the combined credit union. Investment of any excess capital will have a significantly more long-term impact on member service than a one-time dividend…”

A Disclosure Form Worth Disclosing

Before it filed its last 5300, White River CU in Rochester, Vt., which is seeking to merge into 802 Credit Union in the same state, included some nontypical information for members. White River provided a link to 802 CU’s bylaws and also provided a full listing of its qualifications for membership. 

According to White River, its CEO, Wanda Dunham, will remain employed for five to six months after the merger is completed, after which she plans to retire. 

And at a time when many credit unions bury in their disclosures payouts from the members’ capital to members of management, White River told members, “There has not been any merger-related financial arrangements for Wanda Dunham; this includes both compensation and benefits. There has also not been any promised, planned or implied merger-related financial arrangements for Wanda Dunham. This statement also holds true for a period of two years prior to the date that the board of directors approved the merger plan.” 

Member Objections

The CU Daily has reported no end of payouts to members of management, in some cases egregious amounts compared with what members are getting (and it’s their money), but rarely do members take advantage of the forum NCUA offers to provide feedback and pushback.

No so In Louisiana, where Jefferson Financial FCU asked members to vote on a merger into Keesler FCU, across the state line in Biloxi, Miss. The merger included a payout for five members of management, even though the CU posted a $1.19 million loss during the first quarter and a $10.1 million loss at year-end 2024. 

What Members Said

Among the comments filed by Jefferson Financial members:

• “It may be that a merger with Keesler is the best outcome for JF’s members.”
• “I do not believe the NCUA should condone any of these ‘Merger-Related Financial Arrangements’.”
• “I would encourage a deeper audit of JF’s financials and the circumstances leading to JF’s operating loss before this merger before it is approved.”
• “This is supposed to be for the members benefit. I don’t see this benefiting the members. I personally feel this should be voted on separately from the merger by the members. Or if not voted on it should be significantly reduced. To maybe .25 of the proposed amounts.”

The merger was approved.

Frank J. Diekmann is Cooperator in Chief at the CU Daily. He can be reached at [email protected].