NCUA Waived Merger Membership Vote for CU That Lost $13.5 Million in Q2
Since last December, the federal agency has approved the consolidation of three small CUs without a vote from their members.
The NCUA approved a merger without a membership vote of the $66.9 million Creighton Federal Credit Union in Omaha, Neb., which lost $13.5 million in the second quarter, according to the federal agency’s financial performance reports.
In addition to Creighton, the NCUA has waived the membership vote for the merger of two other small credit unions in Texas and Michigan since last December.
On Aug. 1, Creighton and the $1.2 billion Cobalt Federal Credit Union in Papillion, Neb., announced the regulatory-approved merger.
Under the NCUA’s regulations, the membership vote may be waived if the federal agency determines that the merging credit union is in danger of insolvency and that the proposed merger would reduce the risk or avoid a threatened loss to the NCUSIF.
In addition to the bottom-line loss of $13,558,928, Creighton recorded a non-interest expense of $14,524,400 at the end of the second quarter, compared to a $1,243,181 non-interest expense at the end of the second quarter in 2023. In the undivided earnings line item, the credit union posted a $7,338,464 loss in the second quarter compared to undivided earnings of $3,365,736 at the end of the second quarter of 2023, according to NCUA financial performance reports. The credit union also posted zero in its other reserves line item in the second quarter compared to $2,898,891 in the other reserves line item in the second quarter of 2023.
Creighton also posted a loss of $102,614 at the end of this year’s first quarter. Its delinquent and net charge-offs were 3.24% and 4.59% in the first and second quarter, respectively, while its net worth plunged from 9.08% in the first quarter to -10.95% in the second quarter, according to NCUA financial performance reports.
From 2019 to 2023, Creighton recorded mostly steady increases in assets and loans with no bottom-line losses, while maintaining a net worth of about 9% compared to peer average of 12%.
Cobalt said in its merger Q&A that the reason for the consolidation was the July 31 retirement of Creighton’s President/CEO Thomas C. Kjar.
“The merger coincides with the retirement of Creighton Federal Credit Union’s President, Thomas C. Kjar, effective July 31, 2024. Mr. Kjar has served as the President of Creighton Federal Credit Union for over 32 years,” the press release said. “Under his leadership, Creighton Federal Credit Union has grown significantly and achieved many milestones. We are grateful for his dedicated service and wish him all the best in his retirement.”
Chartered in 1951, Creighton’s 21 employees operated five locations and served 9,411 members from Creighton University, Catholic parishes and local businesses.
In addition to Creighton, the NCUA last December approved the mergers of the $2.9 million Waconized Federal Credit Union in Waco, Texas, and the $32.1 million Gabriels Community Credit Union in Lansing, Mich., without a membership vote.
Waconized received the OK to merge into the $17.9 million 1st University Credit Union, also based in Waco, after the Owens-Illinois glass plant closed last year. Waconized served employees of that factory.
Gabriels Community, which merged with the $7.8 billion Michigan State University Federal Credit Union in East Lansing, lost more than $6.1 million by the end of 2023, according to NCUA financial performance reports.
MSUFCU President/CEO April Clobes said the consolidation was approved by the federal agency and the Michigan Department of Financial Services because of “the extenuating circumstances of Gabriels.” She declined to say what those extenuating circumstances were.
READ MORE: Creighton FCU Q2 Financial Performance Report and Key Ratios