NCUA Approves 43 Mergers During Q3 as Consolidations Climb

During the third quarter of this year, the NCUA approved 43 mergers compared to 34 consolidations approved during the same quarter in 2020.

So far, the federal agency has approved 117 mergers through three quarters this year, compared to the 93 consolidations that received the green light during the three quarters in 2020.

Seven credit unions were merged because of their poor financial condition, while an additional three financial cooperatives were consolidated because of a lack of sponsor support, one for lack of growth and three for “inability to obtain officials,” according to the NCUA’s Merger Activity and Insurance Report for the third quarter of 2021 posted this week.

The remaining 29 credit unions that were approved to merge for expanded services were all under $70 million in assets.

The third quarter’s largest merger was the $634 million Financial Center Credit Union in Stockton, Calif., into the $2.4 billion Valley Strong Credit Union in Bakersfield.

Part of the consolidation plans call for Financial Center to make a one-time capital distribution of $10 million to the FCCU2 Foundation, and for Valley Strong to make an additional commitment of $2.5 million to the FCCU2 Foundation over 10 years, according to Financial Center’s merger documents. The non-profit foundation will support charitable and educational activities for the betterment of the Stockton area. Patrick Duffy, former Financial Center president/CEO, who is serving as chief advocacy officer for Valley Strong, is listed as the FCCU2 Foundation’s agent. Manuel Lopez, who served as Financial Center’s board chair, is listed as the foundation’s CEO, according to opencorporates.com.

The quarter’s second largest consolidation was the $115 million Virginia Beach Schools Federal Credit Union in Virginia Beach, Va., into the $4 billion Langley Federal Credit Union in Newport News City, Va. Virginia Beach Schools President/CEO Brian Clark’s possible maximum payout amount before taxes is $398,878. That is based on an incentive retention bonus, a vacation/sick time payout and a severance opportunity, according to Virginia Beach Schools merger documents.

Tied for the second largest deal in the third quarter was the $115 million Heartland Federal Credit Union in Dayton, Ohio with the $231 million MidUSA Credit Union, now MyUSA, in Middletown, Ohio. Because MyUSA is insured by ESI, the rule on member-to-member communication does not apply, according to the NCUA.

The third largest merger was the $73 million Chabot Federal Credit Union of Dublin, Calif., with the $920 million University Credit Union of Los Angeles. Though Chabot noted in its merger documents that the consolidation cost $42,000, there were no increases in compensation for Chabot President/CEO Christine Petro or any of the other most highly compensated employees at the credit union. However, Petro will continue her employment with UCU, and Chabot employees will be offered the same compensation and benefits that are provided for UCU employees.

Other notable mergers were the $64 million NMA Federal Credit Union in Virginia Beach, Va., into the $27 billion Pentagon Federal Credit Union in McLean, Va. Even though NMA President/CEO Michael Coleman will receive an employment contract guarantee for three years, the merger agreement included an optional maximum severance payment of $284,000 if his employment is terminated by either party. His current annual salary is $142,000. In addition, a 10% retention bonus, not to exceed $10,000, will be paid to every NMA employee who is employed at PenFed six months after the merger completion date.

Credit unions that were approved to merge because of poor financial condition included the $49 million New Horizons Credit Union in Cincinnati into the $1.2 billion Kemba Credit Union in West Chester, Ohio; the $9.5 million Tri Ag W Va Federal Credit Union in Morgantown, W. Va., with the $214 million Pioneer Appalachia Federal Credit Union in Charleston, W. Va.; the $9.3 million Friends Federal Credit Union in Norman, Okla., with the $226 million Oklahoma Educators Credit Union in Oklahoma City.

Additional credit unions that were approved for consolidation because of their poor financial condition were the $5.2 million Empire BR 36 National Association of Le Carr Credit Union in New York City with the $49 million Rockland Employees Credit Union in Spring Valley, N.Y.; the $3.2 million PATA Credit Union in Pittsburgh, with the $19 million Alleg-Kisti Postal Federal Credit Union in New Kensington, Pa.; the $396,096 T.C.W.H #585 Federal Credit Union in Washington, Pa., with the $15 million Wabellco Credit Union, also based in Washington; and the $28,669 People Ind. Church Federal Credit Union in Los Angeles with the $2.2 billion Arrowhead Central Credit Union in Rancho Cucamonga, Calif.

Because of its lack of growth, the $3.4 million UBC Credit Union in St. Louis was approved to merge with the $2.2 billion Together Credit Union, also based in St. Louis.

According to the NCUA’s Merger Activity and Insurance Report, three credit unions received approval to consolidate because of lack of sponsor support. They were the $2.9 million Boys Town Federal Credit Union in Boys Town, Neb., with the $1.1 billion Cobalt Federal Credit Union in Papillion, Neb.; the $2.3 million Patterson Pump Federal Credit Union in Toccoa, Ga., into the $80.9 million North Georgia Credit Union, also based in Toccoa; and the $343,075 Artmet Federal Credit Union in Stoughton, Mass., with the $1 billion RTN Federal Credit Union in Waltham, Mass.

Finally, three credit unions were approved to merge because of their “inability to obtain officials,” which generally means the financial cooperatives were unable to recruit a new CEO. They included the $13.5 million First Choice Credit Union in Ottawa, Ill., with the $176 million Illinois State Credit Union in Normal, Ill.; the $3.4 million M.G. & E. Credit Union in Madison, Wis., with the $386 million Heartland Credit Union, also based in Madison; and the $349,791 All Saints Catholic Federal Credit Union in Forth Worth, Texas with the $278 million Forth Worth City Credit Union.