Lumm and Ballard told Credit Union Times the merger idea was born when the two were discussing credit union strategy, and the conversation progressed into a "what if" conversation that included a merger between the two. The credit unions share aerospace legacies and SEG Boeing, which has large employment facilities in both Los Angeles and Orange counties.

Ballard said he and Lumm discovered they even shared some strategic plans and, eventually, boards that were open to merger discussions. Geography was key, because both credit unions were searching for ways to increase visibility and access for members who lived across county lines. Their branch networks complement each other, with only two locations that overlap territories.

NuVision was originally chartered in Los Angeles County before moving south to Huntington Beach, and Ballard said the credit union still has a number of members in Los Angeles County. Additionally, NuVision had recently merged the $300 million E1 Financial CU, headquartered northeast of downtown Los Angeles.

"We had been looking for opportunities to enhance value for [members in Los Angeles County]," Ballard said.

Kinecta will benefit financially from the partnership, which is expected to boost net worth safely back into well-capitalized status. Net worth dropped from a historically consistent 8% in September 2008 to 6.29% in March 2009 and has only risen 35 basis points since.

Nearly half of Kinecta's 2008 losses can be blamed on a $25 million write-off in corporate credit union capital accounts. Delinquencies and charge-offs have risen from a loan quality ratio of 4.38% as of March 31, 2009, to 6.33% one year later; provisions for loan and lease losses increased 50% during that time.

Despite the challenges, return on average assets has improved from March 2009 to March 2010, even when NCUSIF fluctuations are taken out of the equation. As of March 10, Kinecta was in the red, but only by $2.7 million, an easier hole to climb out of than March 2009′s $51 million net loss. Income has dropped across the board, but cheaper cost of funds has made up the difference.

NuVision gains a set of keys to the industry players' club, leapfrogging from a mere $1 billion status to rubbing shoulders with asset heavyweights Alaska USA FCU and San Diego County CU.

The merger also gives NuVision access to expanded products and services, particularly Kinecta's stronger mortgage and business lending programs and investment and insurance products. NuVision members will also benefit revenue-wise from Kinecta's profitable check cashing and payday loan CUSO, Nix Check Cashing, which Lumm said is finding success with a new prepaid debit card product.

Ballard said he expects to put time into educating voting NuVision members, who celebrate the 75th anniversary of their soon extinct cooperative this year. However, he said he thinks the majority will be supportive and added one member ironically suggested via e-mail a few months ago that NuVision follow Kinecta's lead and purchase a check cashing chain.

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