Small Washington CUs Build Strength With Merger

Community 1st Credit Union in DuPont, Wash., has acquired Generations Credit Union in nearby Olympia, improving its ability to better serve their combined members, president/CEO Bill Paulen said Wednesday.

The credit union now has about $150 million in assets and about 13,000 members served through six branches in the Puget Sound.

Paulen led a turnaround at Generations ($38.2 million in assets, 5,215 members as of Sept. 30). He was CEO at Generations CU from April 2014 to August 2017, when he was hired as CEO of Community 1st ($110.5 million in assets, 8,245 members), which as it faced challenges.

After Paulen came on board, Community 1st took $355,902 in loan loss provisions, contributing to a $484,914 net loss for the second half of 2017. Loan loss provisions for the nine months ending Sept. 30 were $1.2 million, leading to a $926,724 net loss. It remains well capitalized with a net worth ratio of 14.49% as of Sept. 30, down from 15.70% a year earlier.

Paulen, who has experience in banking and as a credit union examiner for Washington state’s regulators, joined Generations as it began writing off loans and taking losses. Generations lost $179,135 in 2014 after taking $186,951 in loan loss provisions. The return on average assets grew steadily from -0.71% in 2014 to 2.61% in 2017.

Paulen said he is hoping the economies of scale created by the merger will put the credit union in a stronger position, providing better service to members.

Nikki Lougheed has been appointed vice president of project management. Among other things, this will allow the combined credit union to build on technology improvements made at Generations, Paulen said.

Rebecca L Riker has been appointed vice president of member experience.

Lougheed and Riker shared the title and duties of CEO of Generations after Paulen left.

Credit unions need to provide a better experience for members than they can get at banks, Paulen said.

“The challenge for all credit unions is how to develop that niche, that unique value proposition,” he said. “If we don’t do that, why would they want to keep their money with us?”

Community 1st and Generations combined as a merger plan was announced between Seattle’s Inspirus Credit Union ($1.3 billion in assets, 79,831 members) and Gesa Credit Union ($2 billion in assets, 162,781 members), based about 200 miles southeast in Richland, Wash. When completed in 2019, the deal will create the state’s second-largest cooperative with $3.3 billion in assets and more than 242,000 members.