Mergers: Action in Wisconsin and Nevada
The travails of small credit unions trying to adjust to new product technology, management succession or the real estate hangover were evident again last week with a spate of mergers in both Nevada and Wisconsin.
In recession-hit Nevada, already reeling from the shrinkage of its biggest Las Vegas players, the $667 million Silver State Schools and the $684 million One Nevada, the long-ailing $69 million SONEPCO CU, also of Las Vegas, has agreed to a takeover by the $502 million SCE FCU of Irwindale, Calif., effective at year end.
And the $20 million SWG FCU, Las Vegas, which in July detailed a proposal to merge with the $76 million Sierra Pacific FCU of Reno, Nev., said the NCUA has now approved that transaction, also taking effect by Jan. 1. Under that deal, Sierra Pacific can expand for the first time into Arizona since SWG, which services Southwest Gas Co. employees, retains a Phoenix branch. Sierra Pacific has 5,200 members, while SWG has 2,600.
In both of the Nevada consolidations, the NCUA had encouraged the two CUs to find partners based on low capital levels and dim prospects for growth.
SONEPCO had 5.5% net worth and lost $1.2 million in the first three months of the year.
In Wisconsin, the news was all about the $1.7 billion Landmark CU of New Berlin on a path to completing four mergers.
They include the newest, the $13 million Peoples CU of Cudahy, which had the distinction of being one of Wisconsin’s oldest charters, from 1933, as well as retaining a veteran CEO, Paul Burkhardt. He has been with the CU for 38 years.
“I’ve had a love affair with this place and it is hard to give it up,” said the 66-year-old Burkhardt, noting that he realizes he is at retirement age. Burkhardt, like other CEOs of small CUs, said the compliance burden had become overwhelming in recent years.
“It’s really pandemic,” he said, maintaining that it envelops many facets of the operation. “It is never ending, and I simply can’t understand how a business that is basically so simple become so complicated.”
His CU with 2,000 members has long been a healthy one with net worth at 12.57%.
Landmark said the three other southeast Wisconsin CUs being merged are all healthy but faced difficulty in finding experienced management or saw the handwriting n the wall in keeping up with technology.
Its three mergers are the $22.5 million American CU of Milwaukee, the $22 million Co-Operative CU of Racine and the $26.2 million Horizon CU, also of Racine. Landmark said it expects to integrate all of the computer systems during the first and second quarters of 2012.
As for SCE in California, it said in a statement that SONEPCO FCU “approached us almost two years ago regarding a potential merger” considering “there’s great synergy in our base membership demographics–serving Edison in Southern California and NV Energy in Southern Nevada.”