NCUA Letter Says Contested California Merger Cannot Move Forward 

"On January 27, 2026, SDCCU received a letter from Julie Cayse, the NCUA's Regional Director for the Western Region," Campbell stated. "The letter confirmed that this merger cannot proceed as originally conceived." 

Cal Coast has strongly denied the "culture of non-compliance" characterization, citing its longstanding record of strong regulatory compliance and a successful regulatory examination in June.   

Since Cal Coast filed its initial complaint in November, litigation between the two credit unions has intensified. As of Friday, 186 court filings appeared on the docket in San Diego County Superior Court. Both sides have also deposed key executives involved in the merger process. 

Last month, SDCCU filed a court document disclosing that Cal Coast Chief Audit and Risk Officer Kellen Gill was arrested in August 2023 and convicted of driving under the influence with a blood alcohol content nearly twice the legal limit, which he allegedly did not disclose to anyone at Cal Coast. This occurred one month after Gill began his job. 

"Both the conviction itself and Gill's (redacted) bear directly on core issues in this case: whether Cal Coast suffers from systemic compliance failures attributable to deficiencies in its leadership, culture and accountability, and whether Gill's testimony defending Cal Coast's compliance policies and practices deserves to be credited," SDCCU argued. 

Cal Coast countered that Gill's personal misdemeanor DUI from 2023 has no bearing on its motion for a preliminary injunction. California law does not classify a misdemeanor DUI as a crime of moral turpitude, and Gill was not legally obligated to inform Cal Coast of his conviction. 

In its proposed preliminary injunction, Cal Coast alleged SDCCU sought the merger due to a liquidity crisis.  

"In the wake of the pandemic, SDCCU received short-term deposits from PPP loans and other government COVID relief programs. By the time members withdrew those deposits, SDCCU had already invested them in long-term assets - triggering a liquidity crunch that forced SDCCU to borrow and pushed its net interest margin to the bottom 5% of credit unions," according to Cal Coast. "Facing these pressures alongside an industry increasingly demanding scale, SDCCU recognized that a strategic merger was essential." 

In his sworn statement, Cal Coast Todd Lane also alleged SDCCU's executives received compensation well outside norms for nonprofit credit unions. 

"For instance, according to publicly available data based on IRS filings, SDCCU's Teresa Campbell earned more than $18.8 million in 2024, and Executive Vice President Nathan Schmidt earned nearly $1.6 million," Lane stated. "And from 2020 to 2024 Campbell earned over $55 million." 

From 2021 to 2024, Lane earned more than $6.7 million in total compensation, according to IRS records. Cal Coast's 2020 IRS 990 return was not listed on the IRS website. 

Campbell disputed Lane's liquidity claims. 

"SDCCU remains well capitalized, well-managed and financially sound," she said in her sworn statement. "Indeed, the great threat to SDCCU's financial health would be merging with Cal Coast given Cal Coast's systemic compliance failures, deficient policies across multiple regulatory areas, and a deeply troubling culture of non-compliance under Mr. Lane's self-proclaimed dictatorial leadership." 

When merger integration teams from both credit unions began work in July 2025 across lending, operations, IT and risk management, SDCCU executives reported uncovering "a worrisome lack of control and outright noncompliance" at Cal Coast. 

According to SDCCU, Cal Coast allegedly omitted material information from regulatory filings, issued financial products in violation of regulators, engaged in unfair lending practices, failed to disclose compliance irregularities, and materially misrepresented multiple aspects of its operations. SDCCU argued these issues constituted material breaches of the agreement, justifying termination. 

Cal Coast responded that SDCCU's consultant identified no material adverse findings during due diligence and that the noncompliance claims are based on memos created by a law firm SDCCU hired to prepare for the integration process. 

"But the memos recommend ways to mitigate risk; they do not reach a conclusion of noncompliance," Cal Coast said. "Indeed, SDCCU's own witnesses could not identify any such conclusion. The memos do not show a legal violation." 

In October 2025, during a merger examination by the NCUA, SDCCU voiced its compliance concerns. Cal Coast claimed SDCCU "poisoned the well" with regulators without informing Cal Coast, but SDCCU maintained it had a legal obligation to be transparent with the federal agency. 

A redacted portion of Campbell's sworn statement quoted an unnamed third party who allegedly told her, "You cannot allow this merger to happen. You absolutely cannot allow this to happen. All of the good work, all of the effort, everything this organization has done to become a fully compliant Tier 1 credit union, if this merger goes through, it will unravel within two years." 

The NCUA declined to comment when reached on Friday. 

READ MORE: Teresa Campbell's Sworn Statement, Cal Coast's Preliminary Injunction Motion. 

Peter Strozniak can be reached at peter.strozniak@arc-network.com.