San Jacinto Area CU Exec Says Merger with Texas Dow 'Feels Right'
The regulatory pileup and heavy compliance burden is triggering a fresh look at mergers among small and medium-size credit unions, said the CEO of a Texas credit union that plans to be consolidated into Texas Dow Employees CU.
Speaking out as his struggling $60 million Pasadena, Texas CU agrees to a merger plan. Courtland Crochet, head of San Jacinto Area CU, said he was surprised at how many of his peers have put merger consideration on a front burner, something that was not the case four to five years ago.
"I think credit union boards and managers are simply more receptive today to the idea that larger organizations have the strength and ability to compete more successfully in this economy,” Crochet said of the decision a year ago by the San Jacinto board to opt for a merger.
"We had as many as eight merger prospects to look at,” said Crochet in citing the potential pairings available before San Jacinto decided on the $1.6 billion Texas Dow Employees.
The Lake Jackson CU has been open about its plans to aggressively expand into metropolitan Houston. Little more than a month ago, Texas Dow signed a letter of intent to merge the $80 million Bluebonnet CU of Houston.
Crochet said his institution has been cooperating with regulators for months to bolster San Jacinto’s undercapitalized position “and on that we felt we had made progress and the regulators were supportive.”
But the board felt that in the final analysis a merger would be best for its 7,600 members, said Crochet. The CU had seen its net worth drop to 3.39%, losing $295,000 in 2010.
After making the final decision to find a merger partner and surveying suitors, the board and management of San Jacinto “knew right away that we had more in common with Texas Dow than with any of the others,” said Crochet. “Sometimes you know when something is natural and feels right.”