Concerns over the federal charter and field of membership limits stand to play a big part in more voluntary mergers like the First Tech/Addison Avenue FCU combination, according to former NCUA Chairman Dennis Dollar.
Speaking out this week on the planned $4.6 billion merger underway between the two West Coast giants, First Tech CU of Beaverton, Ore. and Addison Avenue of Palo Alto, Calif., Dollar said merger negotiations among CU players "are now at the highest level in the past decade."
"The only thing preventing more voluntary mergers of healthy credit unions are the field of membership issues involved with community chartered federal credit unions, but SEG based credit unions like Addison Avenue and First Tech are not hampered by that," observed Dollar, who heads up a Birmingham, Ala. consulting firm.
The NCUA, he maintained, will eventually become more flexible in allowing voluntary mergers between CUs with unlike FOMs "because, if they do not, the continuing credit union will almost exclusively be a state charter going forward and the NCUSIF will have to take up the slack." That would be the case "if a federal credit union cannot merge until it exhausts its capital first to become insolvent," he said.
Dollar told Credit Union Times he is confident that the NCUA's fiduciary responsibility to the NCUSIF and their regulatory responsibility to the federal charter will bring about some improvement in the voluntary merger and FOM issues. "More mergers are coming, one way or another," he forecast.