The chairman of Toyota FCU, Lloyd Mistele, said motivation for a merger came from the CU board and management which felt that despite its high earning ratios it lacked sufficient long-term capital "to offer first class products and service" to members and their families employed at a company growing so rapidly.

Thus, it chose to partner with a "highly regarded, nationwide credit union that specializes in serving the needs of large corporate sponsors."

Indeed, Western, with 350-400 SEGs and a branch next door to a Toyota facility in Torrance, has long touted its SEG expertise with such firms as Northrop Grumman, SAIC, TRW Automotive, Experian, Sees' Candies and SkyWest Airlines, all of which have Western branches in their respective facilities.

"Our expertise in supporting world-class corporate sponsors across the country is a perfect compliment to the opportunities" now afforded Toyota FCU, said Western President/CEO John Bommarito in a prepared statement.

Bommarito noted that the Toyota merger to be completed by November would help Western with these existing SEGs on branch expansion since Western could now grow "in areas that we might not have been able to provide otherwise."

He cited Toyota's plans for a new technical center in Ann Arbor, Mich. and a new plant in Tupelo, Miss.

That's in addition to reaching employees at Toyota's big Georgetown, Ky. factory.

Western, with 120,000 members and 20 branches nationwide, said it now plans to expand further and "in short order to support those members in that region" through a new Midwest Call Center in Bentonville, Ark. opened in April.

Mistele, a retired Toyota Corp. vice president of treasury who took over the CU chairman's job in February, told Credit Union Times the CU found itself "consistently constrained from a capital standpoint about staying with our vision" of supporting the giant auto firm.

"We even had charter limits about serving employees at a Subaru plant in Indiana," said Mistele explaining that Toyota had reached agreement with Subaru to start producing Toyota Camrys at an idle Subaru facility.

Mistele said the board had considered expansion "on our own" without a merger partner, but in the final analysis decided a merger was the best course.

Toyota FCU, he said, has long maintained "a high customer satisfaction ratio" and did not want to jeopardize it by failing to meet member needs.

Indeed, one merger consultant, Bartoo Associates Inc. of Portland, Ore. ranked the Torrance CU as "a top overall performer in the past four quarters in their FOM type having posted positive growth trends in membership, loans, shares, ROA, and capital." (see accompanying chart)

Moreover, said the firm, the Western/Toyota combination is extraordinary considering Toyota FCU "is one of the least likely credit unions in the country to consider and complete a merger. "

"The announcement of this merger may come as surprise to most credit unions and associations as Toyota FCU has a strong performance profile and a very solid brand," said David Bartoo, president of Bartoo and of its Merger Solutions Group.

Mistele of Toyota said the merger with Western permits the CU "to grow with the sponsor," and produce economies of scale. "There were simply a lot of things that we looked at that we couldn't do," he said, citing even the need for more bilingual services.

Christine Klein, executive vice president of business development and strategic planning for Western, acknowledged Toyota FCU being "blessed" with a corporate sponsor that is experiencing "explosive growth."

Thus, it is hardly surprising, she said that Toyota FCU would face a daunting challenge to keep pace with its sponsor at a time "when it is the number one automotive firm" and happens to be "blowing away" its competitors.

–[email protected]