Vote Approves Spin-Off of First Harvest’s Branch

In a rare move for credit unions, members of the Deptford, N.J.-based First Harvest Credit Union approved a spin-off of the credit union’s branch in Williamsport, Pa., to Members 1st Federal Credit Union in a transaction that will essentially transfer the branch without a financial gain for First Harvest.

Members 1st announced the vote’s outcome Tuesday morning after First Harvest members cast their ballots Monday. According to the statement, the “vote means all members and associates of the Williamsport First Harvest branch will become members and associates of Members 1st later this year.”

Spin-off discussions began in October 2023 when board members at First Harvest ($452 million in assets, 47,315 members) met with the board of Members 1st ($7.4 billion in assets, 573,603 members). In November, the boards submitted an application for a spin-off of the Williamsport branch from First Harvest to Members 1st.

NCUA officials approved the spin-off on Feb. 12.

The term “spin-off” is usually associated with a transaction involving a business selling part of their operation to another business. During an interview with CU Times in February, First Harvest President/CEO Mike Dinneen said the term has special meaning under NCUA rules, and that it is essentially a transfer to another credit union without a gain.

Dinneen said Members 1st agreed to assume all of the liabilities, assets, members at the location as well as hire its staff. About 1,000 members with $14 million in share deposits are attached to the Williamsport branch.

“Since the transaction is modeled this way, we will not be generating any cash or gain from it,” Dinneen said at the time.

In Tuesday’s statement, Members 1st President/CEO Mike Wilson said, “We are thrilled with the overwhelming support that has allowed us to take this important step forward. The approval of the spin-off reinforces our promise to deliver support, resources and unparalleled service to the Williamsport community. We look forward to welcoming our new members, associates and local businesses into the Members 1st faM1ly, where they will benefit from our comprehensive range of products, innovative technologies and a firm commitment to their financial well-being.”

Dinneen added, “Our Williamsport-based membership and staff will flourish in their new partnership with Members 1st. As a Southern New Jersey-based credit union, we believe in local engagement, decision-making and member support. By partnering with Members 1st, our Williamsport colleagues and membership will now enjoy the level of local engagement and leadership that they deserve. Members 1st will be an outstanding steward of our Williamsport family, and we will work diligently to ensure a seamless transition.”

A spin-off such as this is a rare occurrence among credit unions. In the CU Times archive only one reference to a spin-off could be found: Two Florida credit unions transferring Jacksonville assets in 2012.

Officials said they expect the spin-off transaction will close by the third quarter of this year.