Sperry Associates Federal Credit Union's lone branch in Garden City Park would close if a proposed merger with Pentagon Federal Credit Union is completed, according to documents sent to members.
Sperry's members, who number 16,345, according to the National Credit Union Authority, a federal regulatory body, must approve the merger. That compares to two million at PenFed as Pentagon Federal is known.
If the merger were approved, the merged credit union would pay out a one-time $350 capital distribution to each member, worth about $5.7 million in total, according to the documents.
In an email, Kevin J. Healy, Sperry's chief executive and vice chairman of the board, said that members would have access to "PenFed's robust online, mobile and telephone banking options" if the merger is approved and the Garden City Park branch and headquarters is closed.
PenFed has 49 branches nationwide, including one in Manhattan, two in upstate West Point and one in East Windsor, New Jersey.
Unlike banks, which are owned by investors, credit unions are owned by their members in a not-for-profit structure. While banks can offer services to anyone, credit unions limit membership depending on their charter.
The charter of Sperry, founded in 1936 for employees of Sperry Gyroscope in New Hyde Park, limits new members to those who live, work, worship or conduct business in Nassau County.
Initially, Sperry had been seeking a merger with a smaller credit union, according to a person familiar with the deal, but management changed course and agreed to be absorbed by an institution with almost 100 times its assets.
A merger would give PenFed, based in McLean, Virginia, a foothold in the lucrative Long Island market and potentially position it for further mergers in the region.
A spokeswoman declined to discuss PenFed's strategy before the Sperry merger was finalized.
"The financial services landscape across Long Island is rapidly changing," Healy said. "As large institutions continue to grow . . . it is tougher for mid-sized institutions like Sperry to aggressively gain market share."
Banks and credit unions increasingly are turning to mergers, he said, pointing to a nearly 40% decline nationwide in the number of banks insured by the Federal Deposit Insurance Corp. from the end of 2008 to June 2019.
PenFed has assets of $25.9 billion, according to the National Credit Union Authority. That compares to Sperry's assets of $278.4 million.
Members of Sperry, with 38 employees, were sent a mail-in ballot, an invitation to attend a meeting at the branch on Sept. 30 and an explanation of the proposed merger.
The merger agreement calls for top management to receive employment guarantees, with Healy getting a five-year term and an optional severance payment if he separates within 24 months of the merger at a rate of 36 months of his current annual salary of $335,956.
Nonunion Sperry employees who are not in top management and do not secure a job with PenFed will receive 12 months of their annual salary as severance, according to the documents. Severance for union members is under negotiation.
Though the branch would close, the agreement calls for PenFed to continue to provide ATM service at the Garden City Park location for at least 12 months.