SAN JOSE, Calif. -- Despite the impact of the housing market decline on Golden Bay Federal Credit Union, Meriwest Credit Union said it has successfully completed a data conversion with the Tucson, Ariz.-based financial institution.
Golden Bay's contribution to Meriwest's year-end performance was approximately 20% growth in assets, deposits, and loans, according to Meriwest. Golden Bay's loan portfolio contained $26 million in subprime second mortgages which led Meriwest to increase its allowance for loan losses by $9.0 million in December resulting in a loss for 2007, as required under the pooling of interest method for accounting for mergers, Meriwest said. Offsetting this, however, was Golden Bay's $16.6 million of capital adding a net increase of $7.3 million in retained earnings for Meriwest, nearly double the original plan.
"During the later phase of the merger process, Golden Bay was affected by the rapid decline in the housing market which directly affected its subprime portfolio," said Christopher Owen, CEO of Meriwest. "At the end of the day, we increased our business volumes by almost 20%, added nearly 17,000 new members, expanded our branch presence, and added $7.3 million to our retained earnings."
Owen said, "In assessing the stability and strength of Golden Bay going forward, Meriwest's board of directors and its senior officers felt confident that this merger was a smart, strategic step for Meriwest."
Meriwest and Golden Bay announced merger plans in October 2007. Meriwest now serves more than 92,000 members in the Bay Area and Tucson, Ariz.
--msamaad@cutimes.com
