Harborstone CU, TCCU Merger Will Create Third Largest CU in Washington State

OLYMPIA, Wash. – Two large Washington State credit unions have announced plans to merge, creating one of the Northwest’s largest credit unions with more than $1 billion in assets and 120,000 members. Management and staff at Harborstone Credit Union in Lakewood and Twin County Credit Union (TCCU) in Olympia were told of the planned merger during meetings held this week. Harborstone, with more than $543 million in assets, has approximately 220 employees; Twin County has nearly $500 million in assets and employs a staff of about 210. Pending regulatory approval and a vote planned in August by Harborstone’s members, the merger could be completed by early October, officials said. The new credit union, still to be named, would be the third largest in the state – stretching from the Oregon border almost into Seattle – and is expected to rank among the top 125 largest credit unions nationwide. The merger is the largest ever among credit unions in the Northwest, according to officials at both institutions. The merger has received preliminary approval from the Washington State Department of Financial Institutions. Officials at both credit unions stressed that their institutions were “vibrant and growing” and that the merger was designed to better serve the interests of their members. TCCU has some 70,000 members throughout a five-county area. Harborstone has 50,000 members throughout two counties. “This is one of those rare opportunities in the credit union world where both credit unions are vibrant and growing and have complimentary market areas,” said Marshall Ellison, TCCU president and chief executive officer. “Both Harborstone and TCCU are highly rated based on their strength in capital, assets, management, earnings and liquidity.” “It’s a merger of equals,” added Rick Schmidtke, president and CEO at Harborstone. “We’re both strong companies.” The merger is likely to halt any future turf wars between the two credits unions, both of which have community charters and have been eyeing each other’s areas for future expansion. “As we looked at expansion opportunities, we were looking into their marketplace more and they were looking into ours,” Schmidtke said. “So they’re conquering us and we’re conquering them.” Under the proposed merger, Schmidtke will retain the title of CEO while Ellison will be chief operating officer. Schmidtke and Ellison are no strangers to working together and had talked about “strategic partnering” on and off for the past five years. Both executives have partnered in the past on various programs. They were founders of CU Dealer Direct, a program that provides auto loans at dealerships. Currently, they jointly own Financial Services Management Group CUSO, which provides investment and insurance services, and Member Access Pacific, which provides credit and debit card processing services. “We’ve worked together on and off for 16 years,” Schmidtke said. “Our management philosophy is the same.” Members of both credit unions are expected to benefit from the merger, both men said, with greater convenience, more products and services and a faster roll-out of innovative programs. “This is in the best long-term interests for our credit unions and our members,” Schmidtke said. “We have similar cultures and values. Coming together to create a new credit union will give our members access to even better rates, expanded services and more convenient branch locations than before.” “Our goal is to combine the best practices of both credit unions into a great company,” Ellison added. Members of TCCU, which serves more than 300 select employee groups and business partners, will be able to take immediate advantage of the suite of small business services that Harborstone offers. Those include business banking, business loans, employee benefits and special owner programs. For Harborstone members, one of the immediate merger benefits will be access to more convenient branches, something that Schmidtke says members have frequently requested. Members of both credit unions should also see a plethora of new products after the merger. “Even at $580 million (in assets), it takes six months to roll out a new product,” Schmidtke said. “At a billion-plus, we will be able to have more specialized product development people that can roll products out in 90 days. “We’re just going to be able to do more and be more competitive; pay higher dividends and offer lower loan rates,” he said. Schmidtke said he believed there was only one overlapping branch in the merger which he indicated might be closed. With five other branches either on the drawings boards or in some stage of completion and which will need to be staffed, no layoffs were planned, he noted. “There will be jobs for everyone,” he said but added that some retraining might be required. -