Mergers like the big First Tech-Addison Avenue combination seem certain to become more prevalent in the next 18 to 24 months, according to former NCUA Chairman Dennis Dollar.
Speaking out last week on the planned $4.6 billion merger underway between the two West Coast giants, First Tech CU of Beaverton, Ore. and Addison Avenue FCU of Palo Alto, Calif., Dollar said, "The only thing preventing more voluntary mergers of healthy credit unions are the field of membership issues involved with community chartered federal credit unions." Those are issues not in play for SEG-based First Tech and Addison, he said.
Nonetheless, he said the NCUA will eventually become more flexible in allowing voluntary mergers between CUs with dissimilar FOMs "because, if they do not, the continuing credit unions will almost exclusively be a state charter going forward and the NCUSIF will have to take up the slack if a federal credit union cannot merge until it exhausts its capital first to become insolvent."
That would be the case "if a federal credit union cannot merge until it exhausts its capital first to become insolvent," he said, noting that merger negotiations among CU players "are now at the highest level in the past decade."
Dollar, who heads up a Birmingham, Ala. consulting firm, 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 added.
Meanwhile, Gary Oakland, president/CEO of the $8.6 billion BECU of Tukwila, Wash., a prime competitor to the merged First Tech-Addison, said he welcomed the mega CU to the mix in the Northwest market. Their entry can only add to CU market share "relative to banks and bottom line. Consumers in the State of Washington will benefit," he said.
Oakland also said BECU has long cooperated with First Tech on industry matters and finds the Portland CU "a very strong credit union in both the Portland and Seattle/Eastside markets."
As to whether there is a trend toward large CU combinations like First Tech-Addison, Oakland said, "I think there is more of a willingness to consider such opportunities, but I also think that this is a unique opportunity in today's environment that may not be easily duplicated."
--jrubenstein@cutimes.com
