PARLIN, N.J.–The CU Daily’s latest review of credit union mergers finds 30% capital but no distribution, no payout for members at a CU where the board rewarded itself, combo that stretches 1,200 miles and much more.
This is the fifth in a series that examines nearly 100 of the most recent merger proposals that have been put in front of credit union members. The series has been divided into articles covering approximately 10 mergers/proposals each, to give time to readers to see what is driving mergers, what members are being told, who’s getting what, and more.
- Part I in this series can be found here.
- Part II in this series can be found here.
- Part III in this series can be found here.
- Part IV in this series can be found here
Unprofitable CU in New Jersey Merging into CU Half Its Size
Merging Credit Union: Pinnacle FCU, Parlin, N.J.
Assets: $94.9 million
Members: 11,805
Year Chartered: 1962
Date of Member Vote: Dec. 4
Acquiring Credit Union: Garden State FCU, Parsippany, N.J.
Assets: $41.4 million
Members: 3,561
Pinnacle FCU told members that with combined assets of more than $500 million, it will be better positioned for “future growth and long-term sustainability and profitability,” and noted that with net worth of more than 8% it will be considered “well capitalized” by NCUA.
It also said it will be able to expand to six branches (the two PFCU branches are to remain open and that two PFCU board members will join the combined CU’s board.
“Perhaps most importantly, we believe this newly merged credit union will result in a better credit union for all of the members involved,” Pinnacle FCU said, citing additional products, surcharge-free ATMs, shared branches and more.
Pinnacle FCU said there would be no net worth distribution, but its CEO, Dennis Fitzpatrick, would become a full-time consultant to the merged institution for the first six months of 2025 at his regular rate of pay, and will receive $176,400 in severance.
As of June 30, 2024, Pinnacle Federal posted a loss of $66,558, with net worth of 8.05%.
Merger Sought Because Manager is Retiring; Near 30% Net Worth But No Payout
Merging Credit Union: Kennametal Orwell FCU, Orwell, Ohio
Assets: $687,650
Members: 204
Year Chartered: 1962
Date of Member Vote: Dec. 4
Acquiring Credit Union: Lakeview FCU, Ashtabula, Ohio
Assets: $146.6 million
Members: 8,626
Kennametal Orwell FCU said its board was recommending the merger because the “current manager of the credit union is ready to retire and she is the sole employee of the credit union.”
Despite a 27.99% net worth ratio, Kennametal Orwell said it would not distribute any net worth due to the “difference in asset size” with Lakeview FCU. KOFCU had $5,465 in net income as of June 30.
Lakeview FCU reported $478,002 in net income, with net worth of 11.43%.
In Oregon, a Consolidation into Consolidated
Merging Credit Union: Providence FCU, Milwaukie, Ore.
Assets: $160.1 million
Members: 15,102
Year Chartered: 1969
Date of Member Vote: Dec. 10
Acquiring Credit Union: Consolidated FCU, Portland, Ore.
Assets: $489 million
Members: 20,662
Providence FCU told members the merger would benefit the respective memberships by “ achieving operational cost savings and improving the operational and financial strength of the continuing credit union comma ultimately enhancing member value.”
It also cited three additional branches, “new and enhanced products and services,” expanding loan offerings and “increased convenience” from expanded e-offerings.
PFCU further told members, “An analysis of the share values of Providence, Consolidated, and the combined probable asset/share ratio value of the continuing credit union are as follows: Providence 101%; Consolidated 79%; and Continuing Credit Union 90%. The credit unions have determined that the shared in each credit union are reasonably equal in value and no share adjustments are warranted.”
As of Sept. 30, 2024, Providence FCU reported a $1.33 million loss, with capital of 10.51%. As of June 30, Consolidated FCU posted $1.5 million in net income and net worth of 19.45%.
‘Appreciation Payments’ for Board, Big Payout for CEO, No Payout for Members, Odd Statement on Capital
Merging Credit Union: Texas Telcom CU, Dallas
Assets: $55.9 million
Members: 3,807
Year Chartered:1952
Date of Member Vote: Dec. 11
Acquiring Credit Union: America’s Credit Union, Garland, Texas
Assets: $391.2 million
Members: 29,691
The unprofitable Texas Telcom’s board cited three bullet pointed reasons for why members should vote in favor of merging into America’s Credit Union:
- Increased branch footprint and expanded FOM to drive future growth
- Improved capital position (Texas Telcom CU actually had a higher capital ratio than America’s CU as of mid-year)
- Enhanced core system and technology, as well as additional products and services
While there will be no distribution of its near 16% net worth to members or any other payment, seven members of the board said they would reward themselves with an “appreciation award” of $9,999 each. The awards were paid to Michael Robbins, Jim Williams, Martin Daniel, W.L. Ashwood, Ed Long, Jr., Larry Starrett and Bob Edmondson, according to the statement to members.
The credit union’s CEO, Pam Toler, was paid $400,000 in severance/retirement, Texas Telcom said.
Texas Telcom reported a loss of $131,314 as of mid-year 2024, with net worth of 15.93%. America’s CU reported $908,711 in net income and net worth of 13.83% as of the same date.
To Help Itself, WSFCU Says It Must Turn to Self-Help
Merging Credit Union: Winston-Salem FCU, Winston-Salem, N.C.
Assets:$60.9 million
Members: 8,961
Year Chartered: 1957
Date of Member Vote: Dec. 13
Acquiring Credit Union: Self-Help CU, Durham, N.C.
Assets: $2.14 billion
Members: 129,812
In making its case for why it needs to merge, Winston-Salem FCU said Self-Help CU has a strong history of serving working families that are “not well-served by mainstream financial institutions. This merger with a mission-aligned financial institution will enable WSFCU to grow our suite of products and continue to serve our existing members.”
Winston-Salem FCU posted a $50,925 loss at mid-year 2024, with net worth of 12.36%. Self-Help CU had $12.6 million in net income and net worth of 27.52% as of the same date.
Two California CUs in Combination
Merging Credit Union: North County CU, San Diego
Assets: $66 million
Members: 2,757
Year Chartered:1953
Date of Member Vote: Jan. 14, 2025
Acquiring Credit Union: Cabrillo CU, San Diego
Assets: $408.8 million
Members: 24,400
The member disclosure form that appears on the NCUA website for the merger of North County Credit Union into Cabrillo CU is actually that of Winston-Salem FCU (see above). There is no document for NCCU.
As of June 30, 2024, North Country CU had $15,619 in net income and net worth of 10.11%. Cabrillo CU posted $3.9 million in net income and had net worth of 10%.
Member Payout Depends on Time as Member
Merging Credit Union: Empower CU, West Allis, Wis.
Assets: $88.9 million
Members: 4,639
Year Chartered: 1997
Date of Member Vote: Dec. 16
Acquiring Credit Union: Educators CU, Mt. Pleasant, Wis.
Assets: $3.4 billion
Members: 232,481
“Financial services today are highly competitive and require a higher level of scale, financial strength, and resources than ever before,” Empower CU said in its message to members. “When filling critical roles and economies of scale become challenges to empower and its future, Empower found a partner in Educators that would offer value to its members, support to its communities, and opportunities for its employees.”
ECU cited expanded services such as branch and ATM networks, digital capabilities, “expanded products and services and enhanced financial wellness resources as benefits to members.
How Distribution Will Work
With net worth of more than 20%, Empower CU said it would distribute $2.5 million to members based on their time of membership.
- Less than one year: $125
- 1-5 years: $225
- 5-10 years: $375
- 10-20 years: $575
- 20-plus years: $825
Comp for Execs
ECU said the merger would result in bonus compensation to five employees, including:
- President/CEO Michael Brandt: An increase in annual pay of $14,040 and a retention bonus of $150,000
- COO Cari Bray: an Incase in pay of $13,014 annually and a retention bonus of $10,501 if still employed 90 days after the merger
- CLO Dennis Lyon: An annual increase in pay of $5,992 and a retention bonus of $9,599 if still employed 90 days after the merger
Empower CU said that in the event of the executives termination or due to voluntary resignation for good reason, the three executives above would receive their annual salary at the new, higher rate.
Two other employees, Kemaine Holland and Angela Alvarez, would be eligible to receive $29,838 and $28,470 in severance, respectively.
ECU reported $183,506 in net income through Sept. 30, with net worth of 20.73%. Educators CU had $29.7 million in net income and net worth of 13.43%.
Merger Reaches More Than 1,200 Miles
Merging Credit Union: ACU Credit Union, Abilene, Texas
Assets: $6.3 million
Members: 880
Year Chartered: 1954
Date of Member Vote:
Acquiring Credit Union: University CU, Los Angeles
Assets: $1.13 billion
Members: 55,948
Without listing any specifics, ACU Credit Union told members the merger will be in their best interests because it will bring “greater financial resources, financial products, delivery channels and other benefits…,” ACU Credit Union said. “As a larger institution, the credit union will gain the economies of scale and efficiencies in operations, infrastructure, risk management and financial metrics that result from a consolidated organization structure. It allows for a consolidation of energies and resources of the two credit unions to better serve members in a competitive and secure environment.”
If the merger is approved, ACU Credit Union said it will distribute $900,000 to members with $700,000 distributed on the average daily balances of regular shares, and $200,000 to returned to members on loans.
ACU said its single member office in Abilene will remain open, and that members will have access to additional branches, all of which are in California.
ACU Credit Union lost $19,551 through Sept. 30, with net worth at 20.47%. University CU posted $5.73 million in net income, with net worth of 9% as of the same date.
Michigan CU Reaches into Pennsylvania in Combination
Merging Credit Union: Knoll Employees CU, East Greenville, Penn.
Assets: $5.59 million
Members: 670
Year Chartered: 1974
Date of Member Vote: Dec. 19
Acquiring Credit Union: AAC Credit Union, Grand Rapids, Mich.
Assets: $191 million
Members: 14,837
Knoll Employees CU said it is “finding it hard to compete in today’s highly regulated, high-tech environment. The cost of regulations have made it difficult for the credit union to provide its members with all the products and services that larger credit unions can provide.”
It further noted that AAC CU has also focused on serving the needs of employees of furniture manufacturers.
KEFCU reported a $46,363 loss during the first nine months of 2024, with capital at 23.72% (it said it did not intend to distribute any capital as part of the merger). AAC Credit Union posted $1.6 million in net income with net worth of 23.58% as of the same date.
Acquiring CU Pledges Donations to Foundation as Part of Proposal
Merging Credit Union: NE PA Community FCU, Stroudsburg, Penn.
Assets: $167.4 million
Members: 12,581
Year Chartered: 1960
Date of Member Vote: Dec. 19
Acquiring Credit Union: Utilities Employees CU, Wyomissing, Penn.
Assets: $1.31 billion
Members: 49,330
NE PA Community FCU told members a merger will not alter the “same knowledgeable, friendly employees,” but would offer expanded services that include a card rewards program, addition card benefits and other “innovative solutions,” and “the best” digital banking solutions.
It said Utilities Employees CU has also committed to contributing $25,000 annually to the NE PA Community FCU Foundation for five years after the merger, and to adding two NEPACFCU board members to the UECU board.
Effective with the merger, NEPA’s CEO, Mark Filbert will retire and receive a one-time bonus of $53,000. EVP Donald Carr will move to the acquiring credit union and provide technology consulting, and will receive a one-time annualized pay increase of $17,025 and will also be eligible for a one-time retention bonus of $46,500, in addition to a one-time payout of $27,647.38 for accrued unused personal time.
NE PA Community reported $782,572 in net income and net worth of 8.88% as of Sept. 30. Utilities Employees CU’s 5300 shows that through March 31, the most recent filing on NCUA’s website at the time of the merger proposal, it posted $458,447 in net income, with net worth at 16.59%.