PEORIA, Ill. — Members of San Jose, Calif.-based Valley CreditUnion might have scratched their heads last week when they receiveletters from the NCUA informing them that the agency had selectedthe $3.6 billion Citizens Equity First Credit Union, based here, toacquire Valley's assets.
“The [California] DFI and NCUA have made the decision to combinethe assets of Valley with another credit union, known as a purchaseand assumption. I am pleased to announce that we have acceptedCitizens Equity First Credit Union's bid,” said NCUA RegionalDirector Melinda Love in the Dec. 15 letter to Valley members. Theacquisition will be final on Dec. 31. Valley CU was placed underconservatorship on Sept. 2.
CEFCU President/CEO Mark A. Spenny said even he was surprised tobegin receiving bid applications from the NCUA, especially forcredit unions half way across the country, but he said the newtrend of interstate assisted mergers and purchase and assumptionsfits well into his strategic plan.
“It caught me by surprise, when I received the first one in themail,” he said. “I had to study and think about it for awhile, butthe more I looked at it, I decided it was something worth lookingat, because it would achieve our diversification goals.”
Spenny said he had a long discussion with his senior managementteam prior to placing the bid. He said he received strong,unanimous support for the move, despite the fact that CEFCU doesn'tcurrently have a strong membership base in San Jose. Instead, thepurchase and assumption is designed to provide both cultural andeconomic diversity to the central Illinois institution.
“What we saw in Valley was a community credit union, and we thinkwe know how to operate a successful community credit union,” Spennysaid. “Specifically for Valley, we did a very deep analysis oftheir financials, and what we see there is an organization that raninto problems because of a weak strategic plan and poor executive,and not so much because of poor lending practices.”
“Obviously, the California economy, and particularly real estateloans, are very troublesome right now,” he added. “But we believewe have very strong lending discipline, that, along with ourculture and values, will allow us to be successful there.”
Despite the strategic changes in store, Spenny said he'll keep allcurrent Valley branches open and hopes to mine some of theknowledge, experience and culture that CEFCU's new California-basedemployees can bring to Peoria.
“At this point in time, what's going to be important to us is thatValley operates consistently with CEFCU's values and culture, buthaving said that, there are things they do that we want to capturehere, too,” he said. “For example, San Jose is more ethnicallydiverse, and Valley has some bilingual employees. We're lookingforward to bringing that knowledge base back here to Illinois.There are some very good things that Valley does, and I think theirpeople and values are already pretty consistent with CEFCU.”
Spenny laughed when asked how many employees have put in transferrequests to the Golden State.
“Our people with have deep roots here, and besides, I think it was34 in San Jose last night, so it's not that big of an advantage,”he said, adding, “but, you might want to ask me that again in acouple of months.”
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