CU Losses Seen as Reason for Collapse of R.I. Merger
Officially, two Rhode Island credit unions calling off a planned merger this year have cited “bad timing” but deep financial problems and a management switch at one of the parties now figure as the cause for the collapse of negotiations, it was reported Tuesday.
The two CUs, the $39 million Alliance Blackstone Valley FCU of Pawtucket and the $42 million Blackstone River FCU of Woonsocket, had begun talks in January leading to a consolidation of the two teacher-based CUs.
That was until September when Alliance, which lost $1.4 million in 2010, also saw the exit of its former president/CEO, Joseph J. Cicione, replaced by a retired CU consultant, Andy Baumann, recruited in the past for NCUA turnarounds.
Baumann told Credit Union Times he had previously been hired as interim CEO at California’s High Desert FCU prior to a merger with Alaska USA FCU and also managed WestStar CU in Las Vegas after it was hit by an internal shakeup after large 2009 loan losses.
Baumann said Alliance, which had a $1.5 million in the first three months of 2011 with 4.4% net worth, has experienced problems in its commercial portfolio as several “start-up” loans went afoul.
Meanwhile, the 4,000-member Alliance said it has hired a Massachusetts banker, Robert DaSilva, as the new CEO. DaSilva, a vice president at Chelsea Bank in Boston, said he has had previous CU lending experience before taking the bank job.
Declining comment on conditions at Alliance, James Wood, president/CEO of Blackstone River, said the two CUs “do have similar backgrounds, of similar size and overlapping membership” and so a merger seems logical.
But the Blackstone River board, he said, decided “to remain independent for now” and that would apply “certainly this year and next but that wouldn’t mean that somewhere down the road we might revisit” the merger idea, said Wood.
Blackstone has two branches and 4,600 members.