- Members of Garden City Park, N.Y.-based Sperry Associates Federal Credit Union will vote over the next month to potentially merge with Pentagon Federal Credit Union (PenFed), the nation's third-largest credit union.
- "Thanks to the entrance of more big banks and global Fin-Tech companies, it's become more challenging for mid-sized institutions like Sperry to thrive," Gary Barello, Sperry's chairman, wrote in a statement to members posted on the credit union's website. "While Sperry is currently financially healthy and well-capitalized, our Board of Directors felt that partnering with PenFed is the best option to ensure that our membership gets the service they both expect and deserve."
- Eligible members will be given a $350 merger dividend once the deal goes through, expected at the end of the year. Sperry employees who do not secure a position at PenFed will receive a year's salary as a severance package. Several Sperry executives have been given two- to five-year guarantees of employment at PenFed, American Banker reported.
While credit union takeovers of banks have garnered much attention in the financial industry, credit unions merging with each other have largely flown under the radar. Twenty-five credit union mergers were approved in the second quarter of 2020, according to American Banker, citing data from the National Credit Union Administration. That's down more than 20% compared with the previous quarter. However, mergers have continued at a steady clip — 59 in the first half of 2020, as opposed to 61 in the first half of 2019.
Much of the activity appears to be happening among smaller institutions. Just two credit unions with more than $100 million in assets received approval to merge into other institutions in the second quarter, according to the NCUA data.
That makes Sperry's move a bit of an outlier. The Long Island-based credit union holds about $278 million in assets. However, the credit union's earnings dropped by more than half over the past year: Sperry earned $256,200 in the first half of 2020, compared with $553,300 in the first half of the previous year.
PenFed, by comparison, has about $26 billion in assets.
Sperry's board noted that both credit unions share roots in the defense industry, and said a potential merger with PenFed "offered the most comprehensive benefits to our membership and employees," including a national branch network, above-average savings rates and access to PenFed's professional call center.
"In our Board's estimation, such a merger would ensure a continuance of the service that our members have come to expect from Sperry, and ensure that our credit union's legacy continues in the years to come," Barello wrote. "While Sperry is experiencing strong financial performance and health, the Board felt that this measure is the best action to take in a hyper-competitive market for the sake of our members and our employees."