A number of credit unions that were merger targets in recent years reported a material increase in year-over-year quarterly salaries and benefits before their mergers were completed.
Looking at mergers completed between the third quarter of 2014 and third quarter of 2017, 189 credit unions reported at least a 15 percent year-over-year increase in quarterly salaries and benefits. The salary and benefit information is from the quarter or two quarters before the mergers were completed.
Fifty-nine credit unions reported at least a doubling in salaries and benefits.
Below are several examples of material increases in compensation prior to the completion of the merger.
American Federal Credit Union (Mission Hills, CA), which was merged into NuVision on April 1, 2017, reported an 845 percent increase in salaries and benefits at the end of the first quarter of 2017 compared to a year earlier. This material increase in compensation caused the credit union to post a loss of $735,526,
Newport Beach City Employees (Newport Beach, CA), which was acquired by the Credit Union of Southern California on August 7, 2015, reported an 815 percent increase in quarterly salaries and benefits at the end of 2014 compared to the year earlier. The quarterly payment of almost $1.2 million wiped out the credit union's net worth. The last call report filed by the credit union reported a net worth ratio of minus 8.68 percent.
Star Harbor (Rancho Dominique, CA) reported a year-over-year quarterly jump in salaries and benefits of 747 percent. The credit union merged with Financial Partners Credit Union on August 1, 2017. Due to the material increase in salaries and benefits, the credit union on its last call report posted a mid-year loss of $530,552.
Focal Point Federal Credit Union (Syracuse, NY) merged with Empower Federal Credit Union on January 1, 2016. The credit union reported a 424 percent increase in quarterly compensation in the fourth quarter of 2015 compared to the fourth quarter of 2014. The increase in compensation contributed to a loss of approximately $2 million for the fourth quarter of 2015.
Credit Union of SO CA, Financial Partners CU, & NU Vision CU have a history of greasing the CEO's of the merged credit union. This is not the exception to the rule. It is the rule. It is a small price to pay because the merged out credit union surrenders 100% of the "members net worth" to the surviving credit union. Maybe the members net worth does not belong to the member after all. These CEO's run the credit union into the ground and get a "crack pipe high" with a "payoff" from the acquiring credit union. Screw the member. Grease the CEO. Greed = When more is not enough. And the NCUA remains blind, deaf, dumb, and otherwise dead.
ReplyDeleteCEO Dave Gunderson @ CU of SO CA is paid over $1M combined 1099 & other income. CEO Nader Morghaddam is paid over $731,000 combined 1099 and other income as of 2015. Credit Union are each over $1B in assets. These $1B+ credit unions are cannibalizing the industry. They are the piranha eating their young. The Bernie Madoff Ponzi scheme resulted in a government "clawback" of ill gotten gains from Bernie and his gang. The NCUA must clawback the excessive payouts paid to the acquired merged out credit unions CEOs. The NCUA must issue a cease and desist order against these $1B+ credit union CEO's and prohibit such sharp business practices that border on extortion of member owned net worth for ones' personal gain. Expect less from the NCUA and you won't be disappointed. Don't hold your breath. The small credit union will continue to be raped, pillaged and plundered by its own industry. Banks are not their competition. Look from within. CUNA and the state trade associations remain silent least they offend these $1B credit unions and the tribute/ dues they pay.
ReplyDeleteI guess credit unions really are different. In a bank transaction, the acquired shareholders get paid for the sale. Apparently, in a credit union transaction, the acquired shareholders pay for the sale. This is disgusting and wrong on so many levels. It’s management first, not members first. It’s a black eye for the industry. These people should be ashamed of themselves; including the incompetent, or paid-off board members that allowed this to happen. Who are they representing? Clearly, themselves.
ReplyDeleteBallots mailed to members encourage a yes vote to merge. Did the ballots explain the huge windfall payout to management? Did the ballots explain the net worth (profits) would be paid to the management and not distributed to the members? Did the ballots explain how many employees would be laid off once the merger was completed? No transparency. No disclosure. No morals. No ethics. No honesty. Another member owned benefit. Bank "stockholders" get financial benefits from mergers. Credit Union members get "screwed." The corporate management pigs at the trough get greased. NCUA is blind to the members being ripped off. Legal, yes. Ethical, no.
ReplyDelete