OAKLAND, Calif. – Alliant CU, a Chicago-based credit union founded by United Airlines, is poised to complete its acquisition of troubled Kaiperm FCU, giving the $5.7 billion credit union a physical presence in the San Francisco Bay Area where it has more than 25,000 members.
“We’re overseeing the integration of Kaiperm and the partnership is on track,” said Joe McGowean, spokesman for Alliant. “We’re trying to complete the integration by the end of September.”
Kaiperm, one of a half dozen credit unions founded by health services giant Kaiser Permanente, is the latest California credit union to run afoul of the region’s soured economy. The one-time $150 million credit union has seen its asset base dwindle to just $106 million and its net capital to only 2%, while reporting almost $4 million in losses for the first half of the year.
Kaiperm is one of several large California credit unions in the process of being merged out, including Cal State 9 CU and Sterlent CU. Regulators last week took over another troubled institution, Valley CU, and are looking for a merger-mate for the one-time $310 million institution.
In an unusual step, troubled Kaiperm has been managed by a senior executive of Alliant CU, Rudy Pereira, senior vice president of operations and technology, since June, even before a merger agreement had been struck.
Alliant, known until 2005 as United Airlines Employees CU, is one of the healthiest credit unions in the country and one of the few capable of absorbing a $100 million failure with negligible impact on its capital. Alliant, which serves a variety of select groups as well as the community surrounding O’Hare International Airport, grew more than 16%, by more than $700 million in deposits, in the first half of the year and has almost 11% capital – $611 million.
Pereira on Friday said Alliant had been looking at potential mergers to establish a physical presence for its California members for some time and considered a bid for another failed credit union in the area, Cal State 9 CU, before settling on Kaiperm. By merging Kaiperm, Alliant will acquire a branch to serve its Bay Area members and a relationship with a blue chip sponsor, well-known Kaiser Permanente, he said. “They’ve got a strong deposit base and good loyal membership,” Pereira told The Credit Union Journal. He said he believes Kaiperm’s business has been stabilized since the onset of Alliant management in June.
After the merger is complete, most Kaiperm employees are expected to be laid off, according to Pereira. The workers have been offered severance packages.
