LOS ANGELES — First City Credit Union and SCE Federal Credit Union announced an intent to merge late last week, making the combined $785 million institution the latest Southern California credit union to merge its way to more favorable economies of scale.
Dennis Huber, CEO $430 million SCE, will carry on as CEO of the surviving First City. $356 million First City has been without a permanent chief exec since late last year, when former CEO Steve Punch left to take the top job at $1 billion Pacific Service Credit Union in Northern California.
Both credit unions have reported decreases in ROA for 1st quarter 2008, with SCE additionally reporting increases in delinquencies, charge-offs and loan loss provisions. However, Huber said his loan portfolio doesn't require a bail-out; instead, both credit unions are after better economies of scale. And, the combined branch network will be a big benefit for both memberships.
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"For credit unions in that mid tier range, from $100 to $500 million, it can get difficult to compete in Southern California. Sometimes they have a little bit of an identity crisis, and they aren't large enough to get economies of scale," Huber said. "Even with good sponsor support like we have, you never know what the future will bring. You need to grow in order to stay strong, and mergers are a way to do that."
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