Two of Houston's mid-size credit unions, First Service and Right Choice, are planning a merger set for completion by yearend creating a $304 million CU with 14 branches and 51,000 members, it was announced Wednesday.
The consolidation, which has been in the works since February with applications pending with regulatory agencies, will combine two healthy CUs each with net worth ratios in the 7.8%-8% range, said David Bleazard, president/CEO of the $120 million Right Choice.
Bleazard is the designated head of the surviving CU retaining the First Service brand. "With all that has happened on the corporates and the NCUA assessments, our new partnership is one that reflects the need for credit unions like ours to pursue economies of scale," he explained.
Given current conditions, the consolidation, he said, will give the combined organization "greater flexibility" to pursue any number of goals including possibly looking at more mergers, expanding CUSO business models perhaps into payday lending or other ventures.
To that end, Right Choice has dropped its federal charter effective in November to move ahead with the merger, he said.
Under the merger deal, the current president/CEO of the $180 million First Service, Jerry Shrode, is retiring and will head up the expansion efforts as executive director of strategic business development.
"Economic scale really matters which is why we think this kind of a merger is so important if credit unions expect to grow," Bleazard said.
A press statement noted that applications for the merger have been submitted to NCUA and the Texas Credit Union Department. The merger plan must also be approved by First Service members.