The $1.7 billion Redwood Credit Union of Santa Rosa, Calif. marking its first merger in three years, is expanding its local footprint by taking over the ailing, $90 million Cal State Central CU effective April 1.
Brett Martinez, president/CEO of Redwood, said Cal State, with 16,000 and four branches, had approached his CU at the beginning of the year about consolidation "and we thought it would be a strategic fit."
"Cal state is not unlike a number of California credit unions which have struggled in recent years," said Martinez, a former chairman of the California/Nevada Credit Union League and a member of the CUNA board.
Cal State had indeed suffered two straight years of losses–$2.1 million in 2010 and $1.3 million in 1009. Its December call report showed 3.65% net worth.
Martinez said the last merger for Redwood was in 2008 and in the meantime his Sonoma County CU "has not been actively out there looking for merger prospects but we are always ready to help out when we can."
Martinez said while the northern California economy has hit bottom with signs of recovery, his CU continues to field numerous inquiries from interested suitors, but we would only entertain one "if we felt there was a match."
On another topic, Martinez, a member of the league’s corporate realignment task force, acknowledged industry disappointment in the NCUA rejection of a merger of Western Bridge Corp and Members United Bridge.
"This leaves us with a go-it-alone strategy and I guess we want to know whether NCUA rejected the idea for now or whether it was forever," observed Martinez.
The NCUA stance, he said, has thrown a curve ball at Western Bridge and so now for the moment, "it looks like we have to go back to the drawing board."
On the Cal Sate merger, directors of both CUs have approved, and approvals from the NCUA and the California regulator are pending.