"The [California] DFI and NCUA have made the decision to combine the assets of Valley with another credit union, known as a purchase and assumption. I am pleased to announce that we have accepted Citizens Equity First Credit Union's bid," said NCUA Regional Director Melinda Love in the Dec. 15 letter to Valley members. The acquisition will be final on Dec. 31. Valley CU was placed under conservatorship on Sept. 2.
CEFCU President/CEO Mark A. Spenny said even he was surprised to begin receiving bid applications from the NCUA, especially for credit unions half way across the country, but he said the new trend of interstate assisted mergers and purchase and assumptions fits well into his strategic plan.
"It caught me by surprise, when I received the first one in the mail," he said. "I had to study and think about it for awhile, but the more I looked at it, I decided it was something worth looking at, because it would achieve our diversification goals."
Spenny said he had a long discussion with his senior management team prior to placing the bid. He said he received strong, unanimous support for the move, despite the fact that CEFCU doesn't currently have a strong membership base in San Jose. Instead, the purchase and assumption is designed to provide both cultural and economic diversity to the central Illinois institution.
"What we saw in Valley was a community credit union, and we think we know how to operate a successful community credit union," Spenny said. "Specifically for Valley, we did a very deep analysis of their financials, and what we see there is an organization that ran into problems because of a weak strategic plan and poor executive, and not so much because of poor lending practices."
"Obviously, the California economy, and particularly real estate loans, are very troublesome right now," he added. "But we believe we have very strong lending discipline, that, along with our culture and values, will allow us to be successful there."
Despite the strategic changes in store, Spenny said he'll keep all current Valley branches open and hopes to mine some of the knowledge, experience and culture that CEFCU's new California-based employees can bring to Peoria.
"At this point in time, what's going to be important to us is that Valley operates consistently with CEFCU's values and culture, but having said that, there are things they do that we want to capture here, too," he said. "For example, San Jose is more ethnically diverse, and Valley has some bilingual employees. We're looking forward to bringing that knowledge base back here to Illinois. There are some very good things that Valley does, and I think their people and values are already pretty consistent with CEFCU."
Spenny laughed when asked how many employees have put in transfer requests to the Golden State.
"Our people with have deep roots here, and besides, I think it was 34 in San Jose last night, so it's not that big of an advantage," he said, adding, "but, you might want to ask me that again in a couple of months."