If Approved, Merger Will Create $1B Wash. CU
Two credit unions from the "South Sound" region south of Seattle said they will merge to form the third-largest CU in Washington state.
According to Harborstone Credit Union and Twin County CU, if the deal is approved by state and federal regulators, it will be the largest credit union merger in the Pacific Northwest. Members of Harborstone CU will be required to vote on the proposed merger, as Twin County's charter will survive.
The new credit union-which does not yet have a name-will have combined assets of approximately $1.07 billion, 120,000 members and 443 employees. Membership will be open to all residents and businesses in the Evergreen State.
Rick Schmidtke, president and CEO of Harborstone, will be the CEO of the new institution. Marshall Ellison, president and CEO of Twin County, will be president and chief operating officer.
Schmidtke told The Credit Union Journal merger talks between the two CUs began last fall. Harborstone and Twin County had been partners in two companies for five years-Members Access Pacific, which offers Visa debit card services to other CUs, and Financial Services Management Group, which offers investment services, insurance and small business services.
"We are excited about the merger," said Schmidtke. "There will be a lot of work going forward, but it will be great for our members and great for the state of Washington. We will continue to develop services for other credit unions."
Both CEOs cited geographical factors as a reason to merge. Harborstone is based in Lakewood, while Twin County is in Olympia.
"We are contiguous with them, but there is no overlap," Schmidtke said. "Our expansion plans were to the south, and theirs were to the north."
Ellison agreed. "Tacoma County is the next county up. We had one small branch there, and we wanted to increase our presence. Harborstone is one of the strongest organizations in Tacoma County," he said.
Ellison said both boards of directors approved an intent to merge letter in late January. By May, the two CUs expect to have a merger plan submitted to state and federal regulators. He said regulators should take about 30 to 60 days to review the plan.
Schmidtke said Harborstone and Twin County have had a "good dialogie" with Linda Jekel, the director of credit unions for the state's Department of Financial Institutions.
Schmidtke and Ellison predicted the merger will help both credit unions be more competitive, and said it will be done without a loss of jobs.
"There will be improved efficiencies, though those are not the only reasons," said Schmidtke. "All of the backoffice operations tend to lend themselves to efficiencies in a merger. Certainly in marketing, technology, support services such as accounting, finances and loan servicing."
"But we have no plans for layoffs," he continued. "We are two large credit unions, $580 million and $510 million in assets. It will take us two years to put the pieces together and run on all eight cylinders. During that time, people will retire and there will be normal attrition. Over the next three years, we will be opening five new branches. Some employees will be retrained, and some might opt out of that, but we are very comfortable with our plan."
Added Ellison, "We will be expecting to complete the merger over a significant amount of time. Not all of our jobs will remain, but we will offer retraining."
Ellison said the new, larger institution will bring several advantages, including the ability to attract more qualified management and employees, and the ability to negotiate better contracts with vendors. "We will be a stronger competitor in our state. It is a very desirable marriage with a lot of positives," he said.