The $9.3 billion San Diego County Credit Union (SDCCU) and the $3.4 billion Cal Coast Credit Union have reached an agreement that will end a months-long, high-contested dispute over their proposed merger.
"Under terms of a mutual agreement, the merger between Cal Coast Credit Union and SDCCU will not be moving forward," Cal Coast spokesperson Bob Scheid said Friday. SDCCU and its attorneys did not respond to a CU Times email and phone request by Friday's deadline.
A request to dismiss the case was filed late Thursday afternoon and all scheduled hearings were canceled, the San Diego County Superior Court docket showed.
The proposed consolidation between Cal Coast and San Diego County Credit Union (SDCCU) unraveled after Cal Coast filed a lawsuit in state court in November 2025 to block SDCCU from terminating its merger agreement with Cal Coast.
Cal Coast alleged SDCCU manufactured excuses to re-trade the fundamental terms of the merger agreement. SDCCU countered in its court filings that the merger agreement permitted termination after discovering Cal Coast allegedly misrepresented its operations, violated multiple regulations and had widespread non-compliance issues.
However, Cal Coast has disputed or denied these claims, pointing out the alleged regulatory issues did not violate any laws, affect or harm its members, and that the credit union has received the highest ratings from regulators following examinations for more than a decade.
In March, the credit unions presented their arguments during a five-hour court hearing before San Diego County Superior Court Judge Carolyn M. Caietti. Cal Coast asked the court to grant a preliminary injunction that would have forced the merger process to continue pending the final outcome of the lawsuit.
"SDCCU's argument that there is an overall lack of compliance and lack of knowledge of the alleged compliance problems by Cal Coast, which is the primary material breach here, is persuasive," Judge Caietti wrote in her April 30 ruling.
It was during the merger's integration process that SDCCU grew concerned about Cal Coast's alleged lack of controls and non-compliance issues regarding its technology, auto and QCash loans. SDCCU also alleged Cal Coast had deficient policies for unfair, deceptive or abusive acts or practices.
"The overall evaluation of this evidence supports the conclusion that there was widespread institutional compliance issues and that Cal Coast failed to implement systems preventing discriminatory practices," Caietti wrote.
What's more, after the federal agency conducted a merger review in October 2025, NCUA Regional Director Julie Cayse issued a three-page letter that identified multiple weaknesses in governance practices and strategic planning of the proposed consolidation. Because of these concerns outlined in a January letter, Cayse decided to defer her decision on whether to approve the merger.
"It is noteworthy the NCUA letter of January 27, 2026, identifies at least some areas of concern which appear to form the basis by SDCCU to seek termination of the merger," Caietti wrote in her decision.
Peter Strozniak can be reached at peter.strozniak@arc-network.com.
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