Small CUs in Three States Plan Rare Three-Way Merger

Small credit unions in Virginia, Georgia and Mississippi are planning a rare three-way merger.

The $51 million MUNA Federal Credit Union in Meridian, Miss., the $95 million Pinnacle Credit Union in Atlanta and the $80 million RVA Financial Federal Credit Union in Richmond, Va., said in a prepared statement Tuesday they are combining because today’s highly regulated, high-tech environment is increasingly arduous for small credit unions to compete.

Based on their second quarter financial performance reports, the proposed consolidated credit union would manage assets of more than $227 million with 66 employees operating five branches, serving nearly 23,000 members.

“This is what makes the idea of smaller credit unions working together collaboratively to pool resources and do things together for the good of their members, a strategy some credit unions are choosing to pursue,” the credit unions said. “The idea of pooling resources is the very foundation credit unions were built on. The credit union industry remains steadfast in its mantra of ‘people helping people’ and mergers are just one way to do this.”

For example, if approved by MUNA and Pinnacle members and regulators, the consolidated credit unions will be able to offer members home equity loans, business lending, a 24/7 contact center and ITMs, which are services not all three credit unions are currently offering. In addition to enhancing the virtual member experience, the combined credit union will also look for opportunities to expand its branch network in the three states.

An additional advantage of the proposed merger is RVA Financial’s CDFI certification.

“Once combined, the three credit unions will remain committed to serving low-income communities and providing financial services to people who lack access to financial products, services and lending,” the credit unions said.

The three credit unions are well-capitalized at 10.47% for MUNA, 9.01% for Pinnacle and 9.27% at RVA Financial, their second quarter NCUA financial reports indicated. Combined, the three credit unions hold a potential membership reach of more than 621,000, according to their Call Reports for the second quarter.

Nonetheless, Pinnacle and RVA have seen varying degrees of membership declines since the end of December 2017 through the second quarter of this year, except at the end of 2017 when RVA Financial recorded a membership increase of nearly 8%.

However, from the end of 2017 to this year’s second quarter, Pinnacle has posted consistent loan growth, except for 2018 when loans declined by more than 3%. RVA Financial’s loan performance has been a mixed bag since 2017, though it recorded loan growth of 18.37% and 21.09% at the end of the first and second quarters of this year, according to NCUA financial performance reports.

MUNA has consistently recorded strong loan growth from 2017 to this year’s second quarter, except at the end of the first quarter of 2022 when it posted a 3.81% loan decline. Membership growth for MUNA from 2017 to this year’s second quarter also has been consistently strong except at the end of 2017 when its membership fell by 3.47%, according to NCUA financial performance reports.

If the consolidation is approved, Bo Pittman, president/CEO of MUNA, would be the CEO and regional president; Matt Selke, president/CEO of Pinnacle, would be the CFO and regional president, and Rick Preble, president/CEO of RVA Financial, would be the COO and regional president.

If the approvals are secured from regulators and the members of MUNA and Pinnacle, the legal merger is expected to be finalized on Jan. 1, but the operational integration is expected to extend into early next year. The credit unions noted they share the same core system, which may make the IT conversion process easier for members and employees.

The consolidated credit union will be headquartered in Atlanta at Pinnacle and a unified brand is expected to be determined later.