The $3 million Glenvil Cooperative Credit Union is awaiting approval from the Nebraska Department of Banking and Finance and the NCUA to be acquired by the $1.2 billion First York Bancorp.

The credit union is the only financial institution located in Glenvil, Neb., a town of just 320 residents in the south central part of the state.

Glenvil Chairman Steve Hinrichs said the credit union faces challenges typical of its asset size: retaining management and compliance.

“We can't produce enough income to hire decent help,” he said. “Every time we get a good manager trained, they move on to bigger and better things.”

Compliance also killed the 292-member credit union, Hinrichs said.

“These days, it takes more manpower because there are so many new regulations.  Just trying to stay compliant is monumental for a little credit union like ours,” he said.

Hinrichs said the credit union approached the bank, which operates under the subsidiary name Cornerstone Bank in the area, because it specializes in providing mortgage and agricultural lending in small towns.

The $20 million Hastings FCU, the closest credit union located 10 miles away in Hastings, Neb., doesn't offer mortgages or ag lending, he said.

“Farmers drive the economy here,” he said.

Keeping a branch in Glenvil was the board's top priority when seeking a financial institution to acquire the credit union, the volunteer said.

“That's exactly what's it about, keeping that convenience,” he said. “It would be a loss of one more business in town, another nail in the coffin here.”

Cornerstone has been upfront with the credit union board, Hinrichs said, saying if the branch isn't profitable within three to five years, it may close. However, he said the credit union's prospects of staying in business that long weren't any better.

Hinrichs, a local tree farmer and landscaper, declined to say more about the deal because members may have to vote on the acquisition.

However, he did say the credit union took an informal poll of members earlier this year and found they overwhelmingly supported finding a financial institution to acquire the credit union, rather than face the possibility of losing the only financial institution in town.

As of Sept. 30, Glenvil Cooperative reported just 5.46% net worth, falling from 7.83% as of Dec. 31, 2011. Loan quality is a problem: as of Sept. 30, 6.56% of total loans were reported delinquent, and 1.59% were charged off. 

The credit union's net margin of 6.05% as of Sept. 30 is higher than its peers, as is Glenvil Cooperative's fee income and loan yield. However, expenses are also higher, and provisions were 4.11% of average assets as of Sept. 30.