California Credit Unions Plan to Merge by October

The $635 million Financial Center Credit Union in Stockton plans to merge with the $2.4 billion Valley Strong Credit Union in Bakersfield by October, the California financial cooperatives announced on Friday.

If the consolidation is approved by Financial Center members and regulators, the combined credit union would manage assets of more than $3 billion and serve nearly 195,000 members from 27 branches throughout the San Joaquin Valley from Lodi to Tehachapi.

Nick Ambrosini, who currently serves as Valley Strong’s CFO, will become the president/CEO of the combined organization. He is succeeding current Valley Strong President/CEO Steve Renock, who is set to retire on July 1.

Michael Duffy, who has served as president/CEO of Financial Center since 1993, will be named chief advocacy officer of the combined credit unions, if approved by regulators and members.

By merging with Valley Strong, the nearly 30,000 Financial Center members would benefit from a significant expansion of products and services including mortgages, solar and energy efficiency loans, business banking, expanded digital and online banking services, and a seven-day-a-week contact center.

These are products Financial Center said it lacks and would take many years and significant resources to develop. What’s more, Valley Strong’s expertise in branch strategy is a significant asset, Financial Center said, to deepen existing member relationships.

Most recently, Valley Strong opened branches in Visalia and Tulare, and is planning additional locations in Dinuba, Porterville and Hanford, according to Financial Center.

“In a financial services sector that is constantly evolving, this merger is a true embodiment of the credit union industry’s cooperative mindset,” Duffy said. “2020 made it clear that right now is the perfect time to leverage a spirit of collaboration.”

As expected, the health and economic coronavirus crisis created a challenging year for many credit unions, including Financial Center.

Throughout 2020’s four quarters, the credit union posted drops in total loans from $155 million in the first quarter to $125 million at the end of the year. And in three out of last year’s four quarters, Financial Center recorded losses.

After a year-to-date gain of $740,052 in last year’s first quarter, the credit union recorded a year-to-date $1.4 million loss in the second quarter, a $990,195 year-to-date loss in the third quarter and a $526,430 year-to-date loss in the fourth quarter, according to NCUA financial performance reports.

Though Financial Center saw total loans drop again to $117 million at the end of 2021’s first quarter, it posted a gain of $690,741, according to NCUA financial performance reports.

Financial Center’s net worth was 16.12% at the end of the first quarter, slightly down from its net worth of 16.76% at the end of 2020, which is above the peer average of about 10%, according to NCUA financial performance reports.

“Financial Center was founded when 11 people (in 1954) with a shared vision and similar values banded together to provide better financial access for members,” Duffy said. “Our partnership with Valley Strong is an extension of that history. One that will allow us to grow together. The best part? We found a partner that truly shares our values.”

If the merger receives approvals, the name of the combined credit unions will operate under the Valley Strong Credit Union brand.

“Our partnership is rooted in the commitment and passion we have for serving our members. Financial Center’s passion for the industry and for the long-term growth and viability of community credit unions matches Valley Strong’s,” Ambrosini said. “We’re partnering for the right reasons, and when organizations do that, it’s a win-win.”