Two Seattle area credit unions, the $564 million Watermark CU and the $544 million Sound CU of Tacoma, are planning a summer merger, creating the state’s fourth largest CU.
The consolidation is the largest of its kind in years in Washington State and marks what its managers say is a merger of equals by two healthy CUs seeking to stay competitive in the Seattle market.
The proposed transaction, subject to member and regulatory approval, would create a footprint stretching across Puget Sound with 21 branches.
In a statement announcing the deal and noting the similarities in structure and history since both were founded by telephone company employees, Richard Brandsma, president/CEO of Sound CU, would become president/CEO of the combined CU, which would the Sound name. Sharon Sanford, president/CEO of Watermark, is planning to retire at year-end, said the release.
In a combined operation, Brandsma said the two CUs could retain enough heft to compete more vigorously against larger CUs across the state, including the $9.1 billion BECU of Seattle, which serves Boeing Co. employees. Both Sound and Watermark, which began a merger dialogue five months ago, had been on separate expansion trajectories across the north and south ends of Puget Sound, noted Brandsma.
"We explored all strategic alternatives and a partnership with Sound Credit Union presented a great opportunity," said Bob Valentine, chairman of Watermark.
The merger would "allow the ongoing organization to better serve member/owners with full-service branches from Lynnwood to Olympia."
Watermark, based in Seattle, had sought to expand in the south Puget Sound region while Sound had planned member growth to the north, said Brandsma, citing the potential for new expansion in both Pierce and King counties. Future branches are planned in those areas, he said.
Given the current economic environment, mid-sized CUs like Sound and Watermark have pursued a merger to remain competitive and perhaps this could be a pattern in the future for other like-minded CUs in metro areas, Brandsma suggested.
Nonetheless, 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.
In the case of Sound and Watermark, the timing was right and the outlook looks bright, he concluded.
According to industry sources, Watermark, which itself has gone through several name changes, remains an attractive entity because of its real estate holdings, including its headquarters building in Seattle.
Despite the closeness in size, the CUs retain differing staff levels. Sound has 115 employees and Watermark has 170.
There are no current plans to reduce staff, "though we expect to see changes through attrition," said Brandsma.