Sometimes a merger can mean more than two cooperatives combining to form a bigger and stronger credit union. Sometimes it can mean a big dividend payout for members.
Following the recently completed merger of two Houston credit unions – the $120 million El Paso Corporation Federal Credit Union and the $365 million First Service Credit Union – the 7,300 members of EPCFCU became the beneficiaries of a $9.5 million dividend pay out.
The average payout per member was approximately $1,300. However, the amounts varied greatly from member to member because the calculations were based on the average deposit balances of each member in 2012, according to First Service CU. The dividends were paid to members April 25.
“The members-owners of EPCFCU should receive a benefit of the capital they helped earn over the lifetime of that credit union,” said David Bleazar, president/CEO of First Service CU. “They were the reason the credit union was able to grow, remain strong and become a desirable merger partner for our organization.”
Formed in 1949 with 994 members and assets of $82,178, EPCFCU had indeed grown over the decades.
However, even though EPCFCU posted a net worth of 18.38% at the end of 2012, its net income has been steadily declining over the last four years from $717,366 in 2008 to $203,489 in 2011, according to NCUA financial performance reports.
At the end of 2012, the credit union posted a net loss of $100,329, and at the end of the first quarter of this year, it recorded a net loss of $709,325, according to NCUA financial performance reports.
What’s more, after Kinder Morgan Inc. purchased El Paso Corp. in May 2012, the credit union was informed it would lose its sole corporate sponsor. From 2011 to 2012, EPCFCU’s membership fell from 8,170 to 7,441. In 2008, the credit union served a membership of nearly 9,000.
The merger was closed April 1. All of the former EPCFCU employees were retained by First Service CU, and credit union’s one branch was converted to a First Service CU branch. The data system conversion is scheduled for completion July 1.