The $3.1 billion Kinecta Federal Credit Union and the $1.1 billion NuVision CU have called off what would have been the nation's second-largest merger of credit unions.
In a statement Thursday, the two blamed the lengthy, future time frame and its disruption of the business cycle as the reason for calling off the merger first announced two years ago and once described as a model for future consolidation of large CUs particularly on the West Coast.
The statement said Roger Ballard will continue as joint CEO of both California credit unions while Kinecta conducts a CEO search and puts a transition plan in place.
“As two independently strong, well-capitalized credit unions, both boards agreed at the outset that they would move forward with the merger only if it offered substantial benefits with minimal disruption to members and each organization's business strategies and operations,” the statement said.
“As both credit unions have continued to assess the length of time required for merger review, approval and integration, they now estimate an additional two-year timeframe given the economic environment. Both credit unions have come to the conclusion that continuing the merger process for this amount of time would be disruptive to their business and members,” it said.
The statement cited the demands on resources and staff in merging two large, diverse institutions.
Last month Kinecta said it was postponing the date for starting final regulatory and membership approval until mid-2013 after it posted a $30.6 million loss for 2011. Kinecta, located in Manhattan Beach, was hit particularly hard by California's mortgage meltdown in 2007-2009.
The statement Thursday quoted Darryl Johnson, Kinecta chairman, as stating, “We still believe there are great synergies between our credit unions, and look forward to exploring strategic opportunities that benefit our members. We have tremendous respect for the NuVision organization, and know they have a great future ahead.
“The Kinecta board has begun a search for a new CEO, and we are confident we will have a smooth and seamless transition. We also want to express our appreciation to Roger, who has done an outstanding job as Kinecta's CEO and played a key role in working with our leadership team to build capabilities that will drive our business for a successful 2012.”
The original announcement of the merger was made in June 2010 and followed on the heels of another mega merger now complete of the $4.9 billion First Tech FCU and Addison Avenue, now operating as First Tech FCU out of Portland, Ore.
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