By Ray Birch
ALBANY, Ga.—In a rare move, one small credit union has merged into another even smaller CU, and the leaders of both organizations say the cooperative spirit—and the right opportunity—are primary reasons.
The $68.2-million Members United FCU has merged into a credit union one-fourth its size, the $15.3-million Bridgeway FCU across the state line in Phenix City, Ala., with the Bridgeway name continuing.
Membership of Members United voted in favor of the merger March 29.
MUFCU CEO Liz Gilmore explained the deal came about largely because Members United was seeking a CEO to take over for her, as her contract as CEO had expired, and she also did not want to be away from her family.
“The CEO before me here retired and I took over after the credit union offered me the position,” explained Gilmore, who was EVP. “But it was contingent that I have to be here in Albany. So, I took up a part-time residence here. But I knew I could not continue with this situation, being almost a two-hour drive from my family. So, I spoke to our board about finding a replacement for me.”
Gilmore explained she knew Bridgeway CEO Kimberly Nichols and that both credit unions, in the past, had talked about merging.
“We had been talking, and talking about her replacing me, but Nichols did not want to leave her credit union. But I knew that she would be the perfect replacement for me. Eventually, through all our conversations, we decided to merge,” said Gilmore.
A Complicating Factor
But Bridgeway had a strong CDFI grant program already in place, and would lose the funding if her credit union was not the continuing organization, Nichols said.
“We could not lose that funding—almost $3 million. There are people we serve who really need that,” Nichols explained. “And, we also knew that the two organizations together would be stronger and offer members better, more complete services.”
Both Nichols and Gilmore acknowledged the merger of a larger CU into one that is significantly smaller would appear odd to industry watchers.
“But this is a good fit. Our credit union has a strong suite of digital services and we’re growing,” said Nichols.
The tiny TBFCU has instant issue debit cards, remote deposit capture, prepaid debit, business accounts and small and micro-business lending.
A Look at the Financials
Looking at performance, Members United lost $334,047 in net income in 2019, made $13,764 the following year and lost $315,461 at year-end 2021, according to Call Report data. The CU had net worth of 12.89% and ROAA of -0.47% at the close of 2021. Bridgeway FCU reported net income of $59,515 in 2019, $330,009 in 2021 and $313,367 last year. Capital stood at of 12.81% at the close of 2021. ROAA was 2.19%.
Gilmore is staying on as chief business development officer. She said her salary is not changing with the merger, and there will be no capital payout to members.
“It just made a lot of sense for us to come together,” said Nichols, who will remain CEO of the new four-office Bridgeway. “There are a lot of gaps we will fill by doing this.”
Both leaders said regulators have had no issues with the smaller CU merging in the larger organization. However, Members United had to first convert from a state to federal charter in order for NCUA to approve the combination.
Boards to Merge
The boards of both credit unions will combine under the new organization, and all staff will be retained, the leaders said.
“This is really an example of credit union cooperation,” said Gilmore, looking back on how this merger came about over the last year. “I think this is a good way to show what credit unions can do when they work with each other. We are really excited about this and we will be able to meet more of our members’ needs now.”