Wednesday, June 2, 2010

BIGGER IS NOT BETTER: Kinecta and NuVision Head to $5 Billion Mega Merger

The boards of the $3.5 billion Kinecta FCU and $1.2 billion NuVision FCU have announced their intent to merge into an institution that will serve 300,000 members in two Southern California counties. What will this produce?  Easy, a $5 billion institution. I'm certain many old time CU leaders are rolling over in their graves. Do these CUs feel they cannot survive unless they merge? There's a bunch of "quitters" here somewhere and it's a shame to see one (or both) throw in the towel.

The Manhattan Beach-based Kinecta will be the surviving institution. Although the two are just now beginning due diligence and have yet to file formal merger documents with NCUA, Huntington Beach-based NuVision now shares CEO Roger Ballard with Kinecta; he took executive control of both institutions yesterday.

Interim CEO Steve Lumm, who retired as Addison Avenue FCU’s CEO in 2007, said he was under contract with Kinecta’s board as a consultant, and wasn’t interested in the permanent position.

A general strategy discussion between Ballard and Lumm evolved into “what if” brainstorming which revealed two credit unions and boards open to merger discussions. They share aerospace legacies and SEG Boeing, which has large employment facilities in both Los Angeles and Orange Counties.

Does this send a signal that all CUs under $1 billion are be in trouble? Will the day come where trillion dollar credit unions cannot survive and will need to merge? Is bigger really better?

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