Mergers, Members & Mud: A Lot of Dirt is Being Thrown at the CU White Hat

SAN JOSE, Calif.–Credit unions pride themselves on their reputation for excellent service and acting in the best interests of members, but the white hat the CU community has long taken pride in wearing has been getting a lot of mud splashed on it recently in posts on Facebook, on NCUA’s website and in other media in response to mergers.

The CU Daily team has offered recent updates on mergers (here, here, here and here) as part of its ongoing, industry-leading coverage of credit unions looking to combine, including more instances of management teams and, increasingly, boards, taking multi-million-dollar payouts for themselves as part of the deals, often with no distribution of the net worth to the member-owners. 

In the most recent analysis by The CU Daily of the member disclosures provided to members as required by NCUA, and the opportunity to comment that NCUA provides as part of merger proposals, there has been a noticeable uptick in members pushing back on credit unions’ plans to combine, especially larger CUs. 

In addition, when reports of merger proposals have been posted on some media outlets’ Facebook pages, the feedback section has been filled with negative reactions to the plans. In some cases, CU employees have responded to those complaints with the credit union viewpoint on why a merger is beneficial, and in one case a member updated a comment critical of a merger that they had previously made to say they had been contacted by the CEO, and had been convinced the merger was a good thing. 

What Members are Saying

Below is an overview of some of the comments that have recently been made by members after their credit unions announced plans to merge. Editor’s note: The CU Daily has made some light edits to the comments where absolutely necessary but has otherwise left them as made.

Salary Increases for Execs Called ‘Outrageous’

Merger Proposal: Wings Financial Credit Union, Apple Valley, Minn., into Ent Credit Union, Colorado Springs, Colo.

This merger seeks to combine the $9.39 billion Wings Financial CU and the $9.71 billion Ent Credit Union to create a CU with approximately 900,000 members. The two CUs are approximately 1,000 miles apart. If approved, the CEO will receive approximately $7 million and several-million-dollars are also to be paid to other senior execs. 

Members of Wings Financial are being offered a chance to win one grand prize of $5,000 as part of the voting process. The full story is here.

There are three comments filed on the NCUA website:

• “Proposed merger increasing administration salaries is “outrageous”! This merger proposal is only offering a one-time $ 5,000 reward to a member for voting! Wings Financial merger proposal appears to be only benefitting administration salaries and will try to “supersede” Minnesota Law that “pays an hourly rate” in order for merger to pass. Appears “Wings” Financial Board Members “should not” enter merger until a more reasonable/assured merger can be obtained to the benefit all members of Wings Financial!!”
• “Retention bonus payments and the change of control payment are not warranted. Sound decisions for the credit union are expected with current income levels and are equally expected in the merged entity. Commensurate income adjustments should only come with increased responsibilities in the new organization. Persons leaving the new organization should only receive what is in the employment contracts in effect before the merger.”
• “They shouldn’t merge. That would be bad if they merge.”

Member Asks, ‘Why Are We Doing This, Other Than to Enrich a Few?

Merger Proposal: First Technology FCU, San Jose, Calif. and Digital FCU, Marlborough, Mass.

This merger would create a coast-to-coast CU of approximately $30 billion in assets and almost two-million members. Details are here.

Comments filed on NCUA’s site include:

• After reading the notice received in the mail, I am leaning towards voting “Do not approve” as there is no real data shown. The information presented does not tell me, as a borrower, how I will be affected and when those changes would be. Will incentives be offered to us such as being able to skip payments for times like spring break or Christmas or will interest rates go down. Will I be able to refinance my loan for better terms. I see there are some who will make some good money off the merger, but what will I gain? Why should I as a borrower vote yes? No one has really showed any data on how members will be affected, good or bad.
• What Asad Aziz said. Why are we doing this, other than to further enrich a few already-millionaires?

• I started saving with First Tech in the mid-80’s when it was Hewlett Packard Credit Union on Hanover Street in Palo Alto, CA and have stayed with it through its transformation to Addison Avenue and then to First Tech. My favorite thing about it is that it has remained local and accessible. I don’t see that continuing after this merger.
• I received the merger election packet for the merger of First Tech and DCU. I have been a member of First Tech for more than 40 years and have been generally happy. I will be voting against this merger for the following reasons.
  
  – The Merger election packet asking for my approval was woefully inadequate and lacking specifics for the business case for this merger.
  
  – The financial section was just a spreadsheet combining the balance sheets of the two companies with no specific goals. This is inadequate to make the financial case for the merger. It seems that DCU has a higher leverage (and therefore risk and return) than FTFCU and the combination will increase risk and return for FTFCU members while lowering it for DCU members. That discussion is however missing.
  
  – The case for ‘bigger is better’ was not made. The majority of credit union members have local banking needs, and the overwhelming majority of members conduct business online, as demonstrated by the redesign of FirstTech branches some years ago – so the case for an improved member experience is weak at best. Is there data that shows that a significant number of members face significant inconvenience due to lack of a nationwide branch network?
  
  – What is clear is that several senior executives stand to make around a million dollars each in accelerated vesting and bonuses if this merger goes through.
  
  – What we also know is that bank mergers increase concentration and increase the market power of the bank vs. the power of the depositors/clients by reducing choice. This is likely to lead to higher rates on loans, lower rates on deposits, a more centralized support model that decreases local connections. The transition can also be quite disruptive as credit and debit cards, login and access protocols are changed.
  
  Bottom line is that given all the downsides for the members for such a merger, the case has not been made as why this merger will be a net positive for the members. My recommendation is that the merger teams share the detailed information for the business case for this merger on their web sites and point members to that website so that this can be an informed vote
  Currently the business case is, “we’ll remain obsessed with making the banking experience simple”; “significant annual reinvestment…”; “continue to have a strong capital ratio …”; “access to an expanded branch network”. Of these – only the expanded branch network is tangible – but there is not data that suggests that members are asking for it. Might it not be easier if there is demand, to just open a branch or two in the most neglected areas?
  Otherwise, the message is – you’ll keep getting what you are getting now. 
  
  So why are we doing this?

• Why would FirstTech members approve this? The shares of the merged credit union are 1:1 exchanges with the shares of the two credit unions and THE VALUES ARE NOT EQUALIZED. All the ratios of value-per-share go down for the FirstTech members and up for the Digital members. The REAL STORY is that ALL THE FIRSTTECH C-SUITE PEOPLE (Domingo, Heupel, Hunt, & Little) GET MILLION DOLLAR PAYOUTS. That’s $4,000,000 of equity gone on day one. Of course they are in favor of the merger. The new credit union does not need two sets of CFOs, CEOs, COMs, and CPAOs – so there will be ADDITIONAL golden parachutes for the departing C-suite members, likely the FirstTech members as the Digital CEO will be in charge and the name will be Digital Credit Union – why would he fire his team to keep the new guys? THIS IS A BAD DEAL FOR FIRSTTECH MEMBERS but a sweet deal for the 4 C-suite people urging the merger. VOTE NO!
• I agree with the comment above, well at least the one that has not been white washed. I for one am VERY tired of these mergers. I started with Hewlett Packard Credit union and have been through HPFAMILY CU, HPMEDFED, Addison Avenue. Then the merger with First Tech, only because they wanted the ‘Federal’ Credit union status. I live in the mid-Atlantic states, specifically Wilmington Delaware. Months after that merger, the Credit union office at our ( now Agilent) site was closed up, even though we had about nine hundred employees on site. Now the closest office is up in the Boston Mass area . just a quick seven hour trip. 
• This merger does nothing for me, except the continued growth of a portfolio of West coast mortgages That due to the overheated real estate market, and the risk the overtaxed citizens will default. It is simply adding risk! And as noted in the comment above, WHY ? So that the CEO can collect his golden parachute retirement in his contract, and an average cool million drain for the Finance execs who decided this is a good thing! I see NOTHING in the way of strategic planning or benefit for the FTFCU members. We are taking on risk for no given reason. 
• This is a bad decision from the information given. The communication is very weak. It is obvious you believe you have the votes to push this through. It is sad. I joined the original HP credit union in 1979, and have had several mortgages, lines of credit, HELOC , savings, checking accounts, as well as account for my four children. I am done with this get rich quick management ( only for themselves) . If this goes through I will get out of this Credit Union once and for all. I’m out.

I have been both a member and an employee of First Tech for more than 45 years. Over that time, I’ve watched our credit union grow from just three offices into a mature organization with the ability to serve members across the globe.

Growth has always been part of our story—and this merger is the next chapter. I support it because I believe it delivers real, lasting value for both current and future members and employees. It’s about strengthening our ability to provide exceptional service, expand opportunities, and ensure we remain competitive in a rapidly changing financial landscape.

I’ve heard the concerns shared by others, and I respect those perspectives. But from my experience, I see this merger as a way to preserve what makes First Tech special while giving us the scale and resources to do even more for our members, employees & communities. 

After more than four decades here, I can say with confidence: this is a decision rooted in 

progress, member benefit, and the long-term health of our credit union.

In Houston, Members Concerned Over ‘Mega-Conglomerate’

The Proposal: Merger of Smart Financial Credit Union and Texas Dow Employees CU (TDECU)

This merger would create an approximately $5.5-billion credit union serving approximately 460,000 members, As the CU Daily reported here, TDECU and Smart Financial said in a statement to members the merger would “bring together two of Houston’s most-trusted financial institutions.”

When the news publication The Facts posted the news story announcing the intent to merge, members have been less than welcoming.

Among the comments posted.

• Whose goal is that? The members want a friendly, local credit union… not a Top 20 Mega conglomerate.

• Meanwhile it’s now more than a 2 hour wait on the phone when you have an issue. Wonder how long the wait will be after this merger. Can they work on their call center and bring it back like it used to be?? 
• And what’s up with the verification questions “how long have you had an acct with us?” And “which location did you open your acct?” 
• Remember when TDECU use to put their members first? I miss those days.
• The bigger it gets, the worse it gets
• I don’t know one single person who’s happy with the evolution of TDECU over the past three years…
• Well, I guess it’s time for me to go ahead and move to Navy Federal.
• Leaving TDECU was the best decision we made. Our family had been with them for over 30 years and it sure isn’t the same place they started out as.
• Go back to old site. Better location and better parking
• I’ve changed banks, I know my little account won’t break them but so happy with 1st State Bank in Clute
• Great, so, it’s going to be even harder to get someone on the phone! I’m about to move banks
• These guys don’t have the slightest idea what (they’re) doing can’t get an answer besides hold on while I transfer to someone else 
• Judging by the comments I am very surprised they have a single member lol. I left them years ago! When I got better financing through Toyota than the bank I was with for 20 years.
• Top of everything we can’t get a decent debit) card with our favorite team on it because were not up to system blah blah blah so go figure
• Go back to Dow employees and family

• They are focusing on the wrong thing. That building you’ve built is sadly holding less and less because you’ve forgotten what got you there. Somebody in the decision making is hurting them rather than helping. Biggest isn’t always best
• And the quality of member service no longer exists.
• Great. Phone waits are already over 60 mins +, the app takes forever to work (that’s if it does), debit and credit cards get shut off for the smallest things and take forever to come in when replaced (if they ever do) and the loan department is constantly falling behind and not completing loan paperwork in the correct amount of time, so they have to be redone. Don’t get me started on the micro size bank they built. Can’t wait to see what fresh hell this (merger) brings.
• They need to start with taking care of the customers they have and stop making members sit on hold for 1-2 hours then be told they can’t help you or put you on hold for another 30 minutes because they can’t help you
• It’s  heart-breaking that they don’t care if they (lose) the members who have supported them for years
• I’ve been a member over 50 years and they are absolutely horrible and the bad part when you change banks all your automatic withdrawals…all has to be changed. Your Social security checks have to be changed. It’s one big mass to get everything switched over to a different bank, but I’ve had so much trouble. Just trying to get into my account to see how much I have so I don’t overdraw paying on the bill, it’s unbelievable. I think I will just try to transfer to a credit union in Cedar Park and see how that goes. I know where it’s at is not going very good at all
• The building is nice. The service is mediocre, About to leave them because customers or “members” no longer matter.
• I am concerned. Seems like they are getting worse. I can only hope for better.
• Now we’ll never get thru on the phones
• It used to be great to bank there! That bank is just horrible now.

Member of Georgia CU Calls Proposal ‘Deeply Disheartening’

Merger Proposa:  GP FCU in Rome, Georgia, into Illinois-based Credit Union 1

This proposal seeks to merge the $144.5-million GP Federal Credit Union in Georgia with the $2.29-billion Credit Union 1 in Lombard, Ill., as reported here. The two CUs are approximately 700 miles apart. 

Three member comments were filed with NCUA, including:

• I find it deeply disheartening to witness yet another small, community-oriented credit union being absorbed by a vast financial conglomerate. The gradual erosion of local, member-focused institutions in favor of large-scale operations is a troubling trend that undermines the very principles upon which credit unions were founded.
  
  While I acknowledge that the enhanced technological infrastructure proposed by Credit Union 1 may appear advantageous—particularly when compared to the current Mobicint system utilized by GP Federal Credit Union—my primary concern lies in the loss of essential and practical member functions.
  
  Credit Union 1 mandates the use of Zelle for member transfers. Within my own family, six of us currently utilize GP’s secure member-to-member transfer system for our daily financial interactions. According to Credit Union 1 (as evidenced by the attached screenshot), this feature will be discontinued, and members will instead be required to use Zelle.
  
  Zelle, unfortunately, has become synonymous with rampant fraud and unauthorized transactions nationwide. It is not a service I am willing to use. Consequently, should this merger proceed, my account—and those of my family members—will effectively become unusable. The broader local community will undoubtedly feel the impact as well.
  
  Small credit unions are the lifeblood of their communities. They should be preserved—not absorbed.
• The letter from GP Federal mentions that the credit union’s net worth ratio is lower than that of Credit Union 1, but it does not provide the most recent value for the ratio. So, what is the most recently calculated net worth ratio? Secondly, the letter presents the benefits of the merger but offers no information on the consequences of voting no. What are those consequences (or risks)? Is there a risk of NCUA forcing a merger or closure? I’ll be unable to attend the meeting on December 11, so would like answers to these questions in order to make an informed choice.
• I prefer a local community credit union or at least one located in the Southeast United States. GP Credit Union began as a Georgia Power credit union. That is what attracted me to it. What would be required to maintain the current GP FCU without merger? The compensation increases for existing GP FCU employees prejudices them to favor this merger. I prefer to have more than one option to choose from. Was the Southern Energy Credit Union in Birmingham, Alabama, considered as a possible merger?