Credit union mergers in Virginia took an uptick this week with consolidation plans unveiled for two separate combinations of mid-sized credit unions in Richmond and Roanoke.
In both cases, the boards and management stressed the overall health of the parties but said the decision to combine was an outgrowth of continuing challenges on compliance, management succession and technology and other areas.
In Richmond, the $125 million Henrico FCU said it won NCUA approval to merge the $55 million Bellwood FCU in a process to be complete by July 1. Members of Bellwood will vote on the merger deal this Thursday at a Richmond country club.
In a statement, Bellwood said “ccombining these two financially sound credit unions will result in a credit union with more than $180 million in assets, serving over 30,000 members with a potential of 1.2 million throughout 15 counties as well as the cities of Petersburg, Colonial Heights, Hopewell and Richmond.”
Bellwood also pointed out “it would take many years for Bellwood FCU to grow to this level and be able to provide the numerous branches, more competitive products and new technologies” that Henrico can provide.
Susan Epperson, vice president of retail at Henrico, said discussions between the two credit unions have been under way since last fall and coincides with retirement of Bellwood’s president/CEO, Daniel Adams.
“Our goal now is to generate some loans and grow and we think the merger will help toward that end,” said Epperson.
In Roanoke, crosstown competitors, the $34 million Roanoke Valley FCU and the $27 million Roanoke County Schools CU of Salem, said they had also won NCUA approval to merge with a member vote by Roanoke County Schools held March 27.
“I’d say this is a unique kind of a merger of two credit unions who are on opposite sides of the city but have worked close together in the past,” explained Woody Windley, president/CEO of Roanoke Valley, the surviving credit union.
While adequately capitalized, Roanoke County Schools has been without a CEO for a year, struggled with compliance issues and overall growth and decided a merger was the best option, Windley said.
“Rather than spending large amounts on finding management talent, Roanoke County discussed with us a year ago the merger prospect” said Windley. The combined credit union will have more than 11,000 members and three branches and will look at coming up with a new name, he said.
The Virginia Credit Union League said it expects to see more mergers as the economy improves.
“Credit union merger activity slowed, for a period, after the economic downturn in 2008 and the ensuing corporate credit union restructuring as credit unions took stock of their own financial positions including declining net worth, increasing delinquencies and charge-offs,” said league Senior Vice President David Miles.
“As the economy has begun to turn around and we are seeing economic growth, there is some pent up demand for merger activity among credit unions. With a clearer picture of where they stand financially and what growth opportunities are available, credit unions are again considering strategic mergers,” Miles said.