Oregon has now become center stage for credit union mergers with a proposed consolidation of two medium-size CUs in the southeast corner of the state, the $410 million Oregon First Community CU of Coquille and the $285 million SOFCU Community CU of Grants Pass.
The merger is slated to become effective in 2011 and will create the largest branch network in the state, with 34 facilities.
The Oregon First-SOFCU marriage announcement comes against a backdrop of the nation's biggest planned $4.6 billion merger of First Tech CU of Beaverton and Addison Avenue FCU of Palo Alto, Calif. That consolidation, first announced in March, is still awaiting NCUA approval, which originally was slated for late this summer.
As for Oregon First and SOFCU, its managers cite a confluence of factors, including management succession, as triggering the need for the merger, which will create a CU with 70,000 members.
The surviving CU will be formally known as First Community, but SOFCU and Oregon First will operate independently as affiliates under the First Community brand.
Under the merger plan, the two CEOs, Charla Zeltway of SOFCU and Dal King of Oregon First will retire as presidents of each CU in February 2012. David Elmer, currently executive vice president of Oregon First, will lead the combined team as CEO.
"We figure we will be saving both organizations major management expense and overhead while creating economies of scale in our planned succession," explained Zeltway, who has been CEO of SOFCU for 28 years. King has been CEO of Oregon First for 23 years.
Zeltway noted her CU "has had our losses like everyone else, but we have managed to keep our capital at 8.96% despite the fact that this low-income area of southern Oregon has 15% unemployment and has really suffered in this recession, much like it has done in past recessions."
The merger with Oregon First is timely since it will eliminate operational duplications while providing members more up-to-date products and services, she said.
The consolidation is still subject to regulatory approval and a vote of SOFCU's membership. Both CUs will operate under a state charter.
"This is a strategic alliance of two financially healthy credit unions, joining together to create an even stronger one aligned in common purpose," said a formal press release. "As a merger of equals, First Community will assume the lead position on the executive team and SOFCU will assume the lead position on the board of directors."
King told Credit Union Times that he has worked with Zeltway for years on various industry ventures and realized last March that their retirement dates coincide. They also realized that "we can be smarter working together" saving on audit and data processing expenses for starters.
Both CUs had undertaken numerous mergers of smaller CUs over the years, he said, adding "merger is not a foreign word to us."
"We had seven, and I think they had five or six," said King, noting at the same time the need to protect the identity of both CUs under the First Community umbrella.
Troy Stang, the president/CEO of the Credit Union Association of Oregon and the heir apparent at the newly named Northwest Credit Union Association, said the SOFCU-Oregon First combination "certainly reflects a growing trend throughout the industry as credit union leaders chart new strategic courses to deliver a not-for-profit, member-owned value proposition."
Zeltway of SOFCU said the merger should prove fruitful in being able to deliver services to low- income areas in southern Oregon.
There's no doubt, she said, that CU managements everywhere find it more difficult to operate under the present climate without secondary capital."These are tough times in Oregon and elsewhere and with the cost of technology, many credit unions find themselves further behind," she said. "They simply cannot afford the bells and whistles."