The interchange fight in Congress may be heading toward a climax in the next few weeks but merger-ready Sound Credit Union has long prepared for an income hit certain to bring about a product repricing, according to Richard Brandsma, its president/CEO.
Brandsma said he remains concerned how many of the nation’s small and medium-size CUs, having withstood the assessment shock, can now absorb the revenue loss and still grow should the delay bill fail.
It’s much easier for larger CUs to handle this kind of financial trauma, Brandsma said, adding that even his $1.1 billion institution “will have to consider our platter” of checking products to make conditional increases.
“It seems to me that many credit unions will be hard pressed to expand given the interchange impact to the bottom line,” observed Brandsma.
The Washington state CEO spoke out as NCUA gave the final go-ahead for Sound’s “merger of equals” with the $564 Watermark CU following earlier approval from state regulators.
Brandsma said the merger plan is for Tacoma-based Sound to first rebuild capital to its current level of 10.5% after accounting rules drop it to 7.5-8.9% following completion of the consolidation this summer. The final vote for Watermark members is June 24.
Sound’s three year strategy, said Brandsma, is to expand throughout the Puget Sound area, concentrating new branches in King and Pierce counties. Once the Watermark merger is complete, Sound will have 21 branches.