Second Largest CU Membership Formed in N.Y. After Merger Approval

Members of Capital Communications Federal Credit Union (CAP COM) approved a merger into the State Employees Federal Credit Union (SEFCU) that creates New York’s fourth largest financial cooperative with $8.3 billion in assets and 523,712 members, forming the second largest membership in the Empire State.

“The overwhelmingly positive CAP COM member vote confirms our historic merger. It also affirms what we’ve learned after more than a year’s worth of discussions and planning – bringing together our two like-minded and high performing credit unions presents tremendous opportunities for our members, employees and community partners,” the credit unions said in a prepared statement on Tuesday.

The $2.7 billion CAP COM in Albany did not publicly disclose the final vote tally when requested by CU Times. In a letter announcing the member approval of the consolidation with the Albany-based SEFCU, CAP COM President/CEO Christopher McKenna wrote that the vote on the merger was shared with members who attended the special meeting on June 22. He did not share the vote tally result in the letter. Though he wrote the merger was approved by the majority of votes cast by CAP COM members, he did not characterize the member vote as “overwhelmingly positive.”

One SEFCU member and five CAP COM members submitted written statements against the consolidation that were posted on the NCUA’s page of comments on proposed credit union mergers.

“As a member of SEFCU for over 15 years, I am appalled that this so-called merger of equals is going to be allowed,” Russell Kuhles wrote. “If that is the case then not only should the CAP COM membership get to vote but so should the SEFCU members. You can’t have a merger of equals if it’s only going to get voted on by one side.”

“This is being pushed down our throats and we are not being given full information to make an informed decision,” CAP COM member S. Price wrote. “Both credit unions are doing well, and the merger is not needed. They have given us vague promises about ‘efficiencies,’ while downplaying that there will be negatives.”

CAP COM member Paul Lenz wrote he also had grave reservations about the merger.

“There was not enough due diligence to provide a transparent account of why two thriving institutions must merge, and members have not been given enough complete information to make an informed vote,” he wrote.

In their Q&As explaining the rationale for the merger, the credit unions said: “More members and deposits enable us to provide more loans at great rates. Interest generated by those loans allows us to offer affordable services and banking technologies members want. By uniting two leading credit unions, we can do more for you!”

In addressing the question, “Is bigger really better?” the credit unions stated: “We will be bigger for all the best reasons: in the countless ways we benefit members. That said, compared to massive national banks and online financial services, the combined credit union will be fairly small. Providing the array of financial solutions people want, with a personal touch, suits us just fine.”

The combined capital of the credit union is estimated to be approximately $702 million.

According to CAP COM’s merger documents filed with the NCUA, its five highest compensated employees will not receive compensation that requires disclosure.

However, CAP COM CEO McKenna and CFO David Jurczynski hold collateral-assigned split dollar life insurance plans that were established in 2019, prior to any merger discussions with the $5.5 billion SEFCU. These plans include a “change in control” provision requiring that any unvested benefits that may be subject to a vesting schedule under the plans become 100% vested on the effective merger date.

CAP COM did not disclose the current or projected values of those plans.

The ultimate payment date of benefits, if any, is not affected by the accelerated vesting and remain at the existing retirement ages of McKenna and Jurczynski. There is no additional funding or cost to CAP COM or the merged entity, according to CAP COM’s merger documents.

Starting Aug. 1, the 158,609 members of CAP COM and 367,103 SEFCU members will be able to perform basic transactions – like making deposits, withdrawals, transfers and payments – at either credit union.

“We plan to be fully operational as one credit union late in 2023,” the credit unions stated.