ATOKA, Tenn.–Members told consolidation is “key” to future, a “closing dividend” and “future incentive,” and more management payouts can all be found in this, the third in a three-part series in the CU Daily’s one-of-a-kind, ongoing analysis of credit union mergers.
Part I can be found here, part II can be found here.
Here is a look at some of the latest in CU mergers.
‘Not Merely a Financial Transaction,’ Kimberly Clark CU Tells Members
Merging Credit Union: West Tennessee Credit Union, Atoka, Tenn.
Assets: $17.8 million
Members: 1,631
Year Chartered: 1967
Date of Member Vote: Dec. 1
Acquiring Credit Union: Kimberly Clark Credit Union, Memphis
Assets: $144.7 million
Members: 8,180
“In today’s rapidly evolving financial landscape, credit unions face growing challenges–from increased regulatory burdens to fierce competition with large banks and fintech companies,” West Tennessee CU told its members. “To thrive in this environment, collaboration and consolidation are often key. A merger between two credit unions is not merely a financial transaction, it’s a strategic move that strengthens both institutions and ultimately benefits the members.”
It listed the following as reasons to vote in favor of a combination:
- Increased financial strength and economies of scale
- Improved services, more ATMs and better e-offerings
- Better services for underserved areas
- Ongoing innovation
- Long-term sustainability and growth
Merger-Related Compensation
West Tennessee CU said President/CEO Kenneth Newberry will receive a monthly retirement payment of $1,200 as part of the merger.
The Financials
West Tennessee CU had $102,094 in net income and net worth of 11.52% at the end of Q2. Kimberly Clark CU had $377,239 in net income and net worth of 22.34% as of the same date.
Despite $21K Loss, One Small CU Still Makes a Distribution
Merging Credit Union: Delta Refining Co. Employees FCU, Memphis, Tenn.
Assets: $4.6 million
Members: 253
Year Chartered: 1954
Date of Member Vote: Dec. 2
Acquiring Credit Union: First South Financial FCU, Bartlett, Tenn.
Assets: $844.7 million
Members: 72,208
Delta Refining Co. EFCU was brief in urging members to vote I favor, telling members they would benefit from a merger due to access to multiple branches, a full suite of loan and deposit products, best-in-class digital banking, and the fact the combined CU would be fiscally responsible and secure.
It added its single location will remain open for a minimum of three years.
DRCEFCU said it will distribute $150,000 from its capital to members proportional to balances held.
The Financials
DRCEFCU posted a loss of $21,293 at midyear, with net worth of 21.28%. First South Financial had $8.3 million in net income and net worth of 30.23%.
Fort Peck CFCU Tells Members Merger is ‘Best Use’ of Their Capital
Merging Credit Union: Fort Peck Community FCU, Fort Peck, Montana
Assets: $13.4 million
Members: 1,156
Year Chartered: 1952
Date of Member Vote: Dec. 4
Acquiring Credit Union: Daniels-Sheridan FCU, Scobey, Mont.
Assets: $90.9 million
Members:3,198
Fort Peck Community told members the merger will be a positive because Daniels-Sheridan FCU offers “complementary products, services, and technology, as well as two additional branches.”
Moreover, it said the merger is “the highest and best use of Fort Peck Community FCU members’ net worth relating to strategic planning, succession planning, and business continuity.”
The Financials
Fort Peck Community had $18,381 in net income as of June 30, with net worth of 13.15% Through Sept. 30, Daniels-Sherian FCU had $179,828 in net income and net worth of 12.21%.
Merger Includes a ‘Closing Dividend’ and ‘Future Incentives’ for Members; Payouts to Management, Board Members
Merging Credit Union: HealthCare Associates Credit Union, Lisle, Ill.
Assets: $481 million
Members: 29,473
Year Chartered: 1979
Date of Member Vote: Nov.4
Acquiring Credit Union: Baxter Credit Union, Vernon Hills, Ill.
Assets: $6.4 billion
Members: 372,377
HealthCare Associates CU told members the merger will combine its “strong foundation, healthcare heritage and longstanding commitment to its members with BC’’s scale, resources, technology and expertise. It added the emerger will provide more value, enhanced digital tools and more access and convenience.
HACU said it will distribute approximately $12 million of its net worth to members through two methods: $5 million to be distributed at the closing of the merger as a “closing dividend”; and $6 million to be paid after the merger as “future incentives.”
Merger-Related Financial Compensation
Five executives of HACU are eligible to receive retention bonuses and increased incentive compensation following the credit union’s merger with BCU, provided they meet certain employment and performance requirements. .
The compensation arrangements include:
- President and CEO Joseph J. Kregul, whose retirement was planned before the commencement of any merger-related discussions, the credit union said. It added that to “help preserve continuity and support the transition, and given Mr. Kregul’s deep institutional knowledge and strategic expertise,” will serve as a consultant for 12 months for a consulting fee of $180,000.
- Elian Caban, HACU SVP/COO: Caban will be eligible for a $24,000 retention bonus payable within 15 days after the merger, provided she remains employed by BCU through the payment date. She will also be eligible for a second retention bonus of $72,000, payable within 15 day after the merger’s 12-mmonth anniversary, subject to the same employment requirement. Following the merger, Caban’s target annual incentive compensation will increase by $7,200, while her target long-term incentive compensation will increase by $6,000. Both incentives will depend on individual and organizational performance and her continued employment with BCU, with the long-term incentive also subject to applicable vesting requirements. Caban also participates in an HACU deferred compensation plan that is expected to terminate in connection with the merger. At that time, her current plan balance of approximately $25,000 is expected to become fully vested and payable.
- Adam DuMoulin, SVP/CFO: DuMoulin will be eligible for a $24,000 retention bonus within 15 days after the merger, provided he remains employed by BCU through the payment date. He will also be eligible for a second retention bonus of $72,000 within 15 days after the merger’s 12-month anniversary, subject to continued employment through that payment date. Following the merger, his target annual incentive compensation will increase by $7,200, and his target long-term incentive compensation will increase by $6,000. Both incentives will depend on individual and organizational performance and continued employment with BCU, while the long-term incentive will also be subject to applicable vesting requirements. DuMoulin participates in an HACU deferred compensation plan that is expected to terminate in connection with the merger, at which time his current balance of approximately $50,000 is expected to become fully vested and payable.
- Jason Bade, HACU vice president of information technology: Bade will be eligible for a $22,000 retention bonus within 15 days after the merger, provided he remains employed by BCU through the payment date. He will also be eligible for a second retention bonus of $66,000 within 15 days after the merger’s 12-month anniversary, subject to continued employment through that payment date. Following the merger, his target annual incentive compensation will increase by $22,000, while his target long-term incentive compensation will increase by $27,500. Both incentives will depend on individual and organizational performance and his continued employment with BCU. The long-term incentive will also be subject to applicable vesting requirements.
- Jordan Csepregi, VP-marketing. Csepregi will be eligible for a $21,000 retention bonus within 15 days after the merger, provided she remains employed by BCU through the payment date. She will also be eligible for a second retention bonus of $63,000 within 15 days after the merger’s 12-month anniversary, subject to continued employment through that payment date. Following the merger, her target annual incentive compensation will increase by $10,500, subject to individual and organizational performance requirements and Csepregi’s continued employment with BCU.
Director Compensation
HACU said certain of its directors will be eligible to join the BCU board, where they will also be eligible to receive increased annual compensation under BCU’s existing Board Compensation Policy. That includes:
- Chairman Jack Gilbert, who is expected to see an increase of $22,700 annually
- Director Edward Holzhauer, who is expected to see a compensation increase of $12,900;
- Director Dean Comber, who is expected to be appointed to a BCU board committee and see a pay boost of $12,600
- Director Sameer Shah, who is expected to be appointed to a BCU committee and see a pay increase of $12,600.
The Financials
Healthcare Associates CU had $1.083 million in net income through midyear with net worth of 14.53%. BCU had $22.9 million in net income and net worth of 10.25% as of the same date.
‘Greater Convenience, Stronger Long-Term Support’
Merging Credit Union: Healthcare Plus FCU, Aberdeen, S.D.
Assets: $70.3 million
Members: 5,037
Year Chartered: 1979
Date of Member Vote: Nov. 8
Acquiring Credit Union: Norstar FCU, Britton, S.D.
Assets: $78.5 million
Members: 2,828
Healthcare Plus FCU said a merger will “bring together two financially sound, community focused institutions to provide members with greater convenience, broader product access, and stronger long-term support,” in addition to expanded services and economies of scale.
The Financials
Healthcare Plus had $100,776 in net income through the year’s first half, with net worth of 8.54%. Norstar FCU had $647,984 in net income and net worth of 15.26% through June 30.
Posting a Big Mid-Year Loss, BHFCU Sees ‘Sustainability’ in Merger
Merging Credit Union: Baker Hughes FCU, Houston
Assets: $11.1 million
Members: 1,390
Year Chartered: 1964
Date of Member Vote: Dec. 8
Acquiring Credit Union: Cy-Fair Credit Union, Houston
Assets: $394.9-million
Members: 25,984
According to the board of Baker Hughes FCU, the merger will “enhance the long-term financial strength and sustainability of the credit union while providing members with access to expanded products, services, technology and delivery channels.”
BHFCU said it will distribute a portion of its net worth through a special dividend in advance of the merger, but did not indicate how much.
Merger-Related Compensation
Three people will be paid merger-related compensation, all for accrued vacation, including:
- M, Levien: $73,966.13
- Y. Luna: $37,201.80
- D. Cavazos: $2,594.63
The Financials
As of Sept. 30, Baker Hughes FCU reported a loss of $358,214, with net worth of 9.90%. Cy-Fair FCU had $3 million in net income 9.52% as of the same date.
Posting Losses, Virginia’s SHRFCU Finds a Rx in HSFCU
Merging Credit Union: Summit Hampton Roads FCU, Portsmouth, Va.
Assets: $8.2 million
Members: 1,105
Year Chartered:
Date of Member Vote: Dec. 9
Acquiring Credit Union: Healthcare Systems FCU, Falls Church, Va.
Assets: $135.4 million
Members: 13,948
Summit Hampton Roads was succinct in its message to members, saying the merger would provide expanded products and electronic channels, greater operating scale, stronger compliance and technology support, and enhanced long-term ability to serve healthcare-related members in Hampton Roads and throughout Virginia.
Summit Hampton Roads FCU had a loss of $49,147 through June 30, with net worth of 14.27%. Healthcare Systems FCU reported $364,903 in net income, paired with net worth of 11.41%.
With Net Worth Below 5%, ANCO CU Looks to Join SOCU
Merging Credit Union: ANCO Credit Union, LaSalle, Ill.
Assets: $10.2 million
Members:
Year Chartered: 1955
Date of Member Vote: Dec. 9
Acquiring Credit Union: Streator Onized Credit Union, Streator, Ill.
Assets: $423.3 million
Members: 38,500
In a statement, ANCO CCU said its members will benefit from a merger by gaining access to SOCU’s broader range of financial products, expanded branch network and digital banking tools once the merger goes through officially, according to a news release.
‘Best Long-Term Interest’
“After careful consideration, our board of directors determined this merger is in the best long-term interest of our membership,” Wanda Bunzell, president and CEO of ANCO, said in a statement. “Joining SOCU allows us to provide enhanced services and greater financial opportunities while continuing our mission of serving our members’ financial needs.”
Bunzell will continue her career and manage the La Salle location, the credit unions said.
The Financials
ANCO Community, chartered in 1955 to serve employees of American Nickleloid, posted a loss of $104,107 and had net worth of just 4.8% as of June 30. Streator Onized posted $2.5 million in net income at midyear, with net worth of 15.58%.
