PALO ALTO, Calif.-In the biggest credit union merger ever, Addison Avenue FCU and First Tech CU in Beaverton, Ore., announced last week plans to combine to create a credit union with almost $5 billion in assets.
The agreement is the first formal step in the merger process. State and national regulators and First Tech CU members must approve the merger.
Both Addison Avenue and First Tech are well-capitalized and share FOMs serving the high-tech sector, including Hewlett Packard, Microsoft, Agilent, Intel, CH2M HILL, in addition to Oregon-based Nike.
Tom Sargent, First Tech Credit Union president and CEO, is scheduled to retire in spring 2010. "As Tom's retirement approached, our board sought a replacement who would lead First Tech with the same integrity, passion, and commitment to innovation that Tom has demonstrated at First Tech for 25 years," said Carolyn Strong, chairman of the board for First Tech. "During our search, we also explored other strategic alternatives and a partnership with Addison Avenue presented a great opportunity."
The deal exceeds last year's combination of Space Coast CU and Eastern Financial Florida CU, creating a $3.2 billion credit union. The combined Addison Avenue/First Tech would have assets of $4.6 billion, 38 branches and 320,000 members nationwide. If approved, the new CU would use Addison Avenue's current federal charter but operate as First Tech FCU, with corporate offices in Palo Alto, Calif. and in nearby Rocklin, Calif., and in Beaverton, Ore. Products available through the CUSO, such as investments, will be offered under the Addison Avenue nameplate.
Sargent told CU Journal his pending retirement and the announcement of the merger are a coincidence. As for the potential logistical concerns of combining two large credit unions in adjoining states, Sargent said both are well prepared. "We have members in all 50 states and many foreign countries. We have branches in multiple states, as does Addison Avenue," he said. "It is not as shocking to these two credit unions as it would be to others. The rules are different in every state, but as a federal charter the new credit union will comply with all federal field of membership rules. We were a federal charter until 1998, so that is in our background."
Benson Porter, current president and CEO of Addison Avenue CU, said he will be the president and CEO of the new credit union. According to Porter, the main logistical hurdle will be the coordination that will need to occur between the Oregon state regulator and NCUA, because Oregon and California recently became different NCUA regions. "One of the most notable changes is we'll be operating under the First Tech name throughout the combined operation," Porter said. "The investment and insurance services operations will operate under the Addison Avenue banner. We have more than $2 billion in assets under management in our investment and insurance operations so we will continue to leverage that brand. First Tech has investment and insurance operations but does not have as high a penetration rate."
Porter acknowledged a great deal of integration planning will need to take place before the merger goes through, but he said the two CUs do not anticipate reducing the size of the staff.
Sargent said First Tech has e-mailed information regarding the proposed merger to all members for whom it has e-mail addresses-about 70% of its membership. It also put a notice on its website.
The next steps? "We will file the appropriate documents with state and federal regulators in early April," Sargent explained. "If regulators approve, then the member vote would take place immediately and would be open for 30 days. We don't know how long it will take for regulatory review and approval, but we hope the entire process will be completed by the end of summer."
Both Sargent and Porter said the two CUs are closely aligned in many ways. Porter said the two have been cooperating for some time, making a merger a natural fit.
Said Sargent: "We are very excited. We think it is a great opportunity for the members of both credit unions and all the employees. We are two healthy partners and they both were founded in the high tech industry so the culture, legacy and heritage are very similar. Addison Avenue was founded as a Hewlett-Packard credit union in 1956; we were founded in 1952 to serve Techtronics. We are genuinely enthused to move forward."
Agreed Porter: "There is uncanny commonality between the two credit unions. There are very similar sizes, strategies and business purposes. We have worked together a lot over the years because we have common platforms. With both of us having high-tech membership, we have leveraged online channels more than many credit unions. We basically serve the same sector and have the same operating platform, so we have shared a lot of information on how we handle things. It has been a casual partnership for years.
Addison Avenue FCU currently serves more than 155,000 members nationwide with a field of membership that includes employees and family members of sponsor companies such as Hewlett-Packard, Cisco and Agilent Technologies.
First Tech CU is a $2.2 billion institution with 165,000 members. It serves employees in the high tech, telecom, education, and government sectors through a 17-branch network in Oregon and Washington.
