Kinecta, NuVision Propose New Union Of Own In $4.6B Merger
MANHATTAN BEACH, Calif.-Kinecta Federal Credit Union and NuVision FCU last week announced plans to merge and create a $4.6 billion credit union serving 300,000 members throughout Los Angeles and Orange counties. It would retain the Kinecta FCU name.
Kinecta and NuVision issued a joint statement that they are "independently strong, successful" credit unions with shared Southern California roots in the aerospace industry and complementary branch networks, product/service offerings and membership bases. Both credit unions reported losses in 2009, but narrowed those losses in Q1 2010. NuVision lost $6.2 million in 2009, but posted a $22,000 loss in Q1; Kinecta lost $71.3 million last year, which it reduced to $2.7 million in Q1
Roger Ballard, current CEO of NuVision and who will serve as CEO of Kinecta after the due-diligence and approval process, told Credit Union Journal the shared heritage was a big factor in the attraction.
"For us, we both are in California and we both have our roots in aerospace," said Ballard. "Beyond Boeing, our ATM and branch networks are complementary with a little bit of overlap. Together we will have 31 branch locations that are publicly accessible and 40 total counting employer-based, on-site locations. And we will have 112 ATMs."
Ballard said the convenience factor is another key, along with the fact "we understand each other's members."
"Together we have products and services that are complementary, especially Kinecta's CUSOs," he said. "We think we will be able to remain competitive and be positioned to be even more effective as a larger organization. The boards of both credit unions did a good job of being open to different approaches to make it happen."
Kinecta also operates 49 branches of Nix Check Cashing, which it acquired in 2007.
Steve Lumm, interim CEO of Kinecta since January, agreed with Ballard that "value for members is a key driver."
"It ties back to the LA/Orange County geographic footprint," Lumm said. "It really makes sense to pursue this merger. From the board perspective, the aerospace heritage is important. We have two boards that share cultural and work experience backgrounds, which facilitates coming together."
Other Billion-Dollar Mergers In Works
The Kinecta/NuVision merger is just one of several involving billion-dollar CUs that is currently in the works. In March, Palo Alto, Calif.-based Addison Avenue FCU and First Tech CU, Beaverton, Ore., announced plans to merge into a CU with assets of $4.6 billion, 38 branches and 320,000 members nationwide. Lumm, who was CEO of Addison Avenue FCU for 12 years prior to taking over at Kinecta, noted, "I was at the 40th anniversary of Addison Avenue two weeks ago and was talking with people there about the merger with First Tech. Certainly from the perspective of having a concentration on the West Coast and technology SEGs in common, those two credit unions are a good combination."
Ballard said regardless of size, there will be other healthy credit unions that will be open to mergers to create member value.
"If they are open to possibilities and flexible, we may see these more frequently going forward. Only time will tell," he said.
The expected completion date for the proposed merger is first quarter 2011. Both credit unions were chartered in Southern California to serve aerospace employees: $1.2 billion NuVision was founded in 1935 as Douglas Aircraft Company FCU; $3.5 billion Kinecta in 1940 as Hughes Aircraft Employees FCU.