In a $300 million consolidation, two Houston credit unions, First Service and Right Choice are planning a merger to be completed by year end.
Under the proposal, subject to approval of regulators and First Service members, the combined CU would have 14 branches and 51,000 members in metro Houston.
The merger plan, which has been in the works since February, would combine two healthy CUs, each with net worth ratios in the 7.8% to 8% range, said David Bleazard, president/CEO of the $120 million Right Choice.
Bleazard is the designated head of the surviving CU, which will retain 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," explained Bleazard.
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 agreement, the current president/CEO of the $180 million First Service, Jerry Shrode, will retire 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," said Bleazard, who also mentioned the $1.8 million spent by the two CUs to fund NCUA corporate assessments.
"Just think if we could have used that money to benefit our members with new services and fuel growth," said Bleazard.
As for future mergers of other Texas CUs, he said First Service and Right Choice has already signed up on the NCUA's registry of interested parties seeking out merger bids.
Mergers, he said, may become necessary "for community charters but the single sponsor credit unions" can likely operate status quo,
Regarding the actual merger applications, a press statement noted that First Service-Right Choice paperwork has been submitted to the NCUA and the Texas Credit Union Department.