Following the pattern set this week in Washington State, mid-sized credit unions across the country will be looking to chart more “mergers of equals” to remain competitive with larger brethren.
That’s the outlook as forecast by Richard Brandsma, the president/CEO of Sound CU, a $544 million Tacoma CU proposing an in-state merger becoming effective this summer with the $564 million Watermark CU of Seattle.
If consummated, the $1.1 billion combination, including 21 Puget Sound branches, would create Washington’s fourth largest CU and strategically “give us the strength we would need to come up against credit unions like Boeing,” said Brandsma, referring to the state’s dominant player, the $9.1 billion BECU of Seattle.
In the current economic environment, mid-sized CUs like Sound may need to pursue mergers with like-minded peers, although mergers “are much harder to put together with many more internal hurdles,” observed Brandsma. For one thing, managers have “to get past the pride factor” since many boards disfavor giving up their brand and identity.
Still, the proposed Sound/Watermark merger has all the right elements, since both CUs were on the same trajectory in seeking to expand along both the north and south ends of Puget Sound.
“The timing has been right,” said Brandsma, noting that serious dialogue between the two CUs, both started as telephone company CUs, began five months ago with the consolidation timed to the planned year-end retirement of Watermark CEO Sharon Sanford.
Under the transaction, the Sound brand will be retained, said Brandsma, with plans to add more stand-alone branches in King and Pierce counties “so we can remain competitive.”