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Altura and Visterra credit unions are expected to merge this year, a move that will create the largest Inland Empire-based credit union based on assets. While banks still dominate the market, credit unions have grown in popularity since the economy started to improve, and officials with both local entities hope to take advantage of that trend.
Last month, Altura Credit Union and Visterra Credit Union, both Riverside-based, announced that they plan to merge.
The proposed merger, which must be approved by state and federal regulators as well as by the members of both institutions, could be completed by July 1, said Mark Hawkins, chief executive officer of Altura Credit Union.
Whenever it becomes official, the new Altura Credit Union – the name of the merged entity – will be the largest Inland Empire-based credit union based on assets: more than $1 billion worth, compared with Arrowhead Credit Union and its $856 million in total assets, Hawkins said.
Based on membership, the two financial institutions will be about the same: 118,000 members for Altura, 119,000 for San Bernardino-based Arrowhead Credit Union, which started in 1949 as a credit union for San Bernardino County employees.
Both institutions have deep roots in the Inland Empire. Altura was founded in 1957, four years after Visterra started as the March Air Force Base Federal Credit Union.
The merger, which was announced Feb, 19, got started about seven years ago, when Hawkins and Robert Cameron, Visterra’s chief executive officer, began informal discussions.
Two years ago, as the economy began to improve, those talks became more serious and a deal began to emerge. Now that the economy is clearly recovering and people are again taking out loans, both parties agreed that the time was right to consolidate, Hawkins said.
The new Altura Credit Union will have plenty of local competition. Besides Altura and Visterra, there are 23 credit unions based in the Inland Empire, 18 in San Bernardino County and five in Riverside County. Combined, those institutions serve more than 214,000 members, according to the California Credit Union League.
Depending on how quickly the government agencies act – and there’s no reason to expect any opposition – the Altura-Visterra merger could be completed by July 1, Hawkins said.
“Business activity is strong again, and when that door opened we knew it was good time to merge,” said Hawkins, whose credit union serves all of Riverside County and parts of San Bernardino, Orange and San Diego counties. “The credit union industry took a hit during the slowdown, but the marketplace is exploding right now.”
Hawkins was referring to Riverside and San Bernardino counties, but credit unions are doing well across the country, as more people are taking advantage of the broader range of loans and savings accounts that credit unions typically offer at more affordable rates than banks.
The credit union industry’s assets grew nearly six percent between the end of 2013 and the end of 2014, to $1.14 trillion, according to Callahan & Associates, a Washington, D.C. company that provides research, networking, analytics and consulting services to more than 4,000 credit unions.
By the end of last year, total loan balances at credit unions topped $722 billion, a 10.7 percent increase compared with December 2013. That’s the fastest annual loan growth for credit unions since the first quarter of 2006, well before the recession hit.
Credit unions had more than $130 billion in capital at the end of 2014, up 8.3 percent from the previous year, and all major loan categories – real
estate, credit card and automobile – grew at a faster rate than they did in 2013, according to Callahan & Associates.
One reason the credit union industry is improving its asset portfolios is because it’s marketing itself more aggressively than it has in the past, said Dwight Johnston, chief economist with the California Credit Union League.
They also come across as more consumer-friendly and community oriented than banks, something that a lot of consumers might have started to realize during the recession.
“Credit unions are not-for-profit, and they’re more about serving people and the community,” Johnston said. “They also offer most of the services that banks do. I think that appeals to a lot of people.”
While they’re growing their assets, credit unions are also consolidating, often so they can be large enough to compete with banks. During the first six months of 2014, the National Credit Union Administration approved 123 mergers.
That was down slightly from the first half of 2013, when the administration – the federal agency created by Congress to regulate and supervise federal credit unions – gave a green light to 132 mergers.
All but three of those merged credit unions had assets below $50 million, although one of the two largest consolidations happened in Orange County, when South Western Federal Credit Union joined forces with Credit Union of Southern California.
The new company, called Credit Union of Southern California, has more than $840 million in assets and 74,000-plus members, according to the credit union administration.
What impact the Altura-Visterra merger will have on the Inland Empire is difficult to predict now, said Kevin Posey, chief executive officer of the San Bernardino School Employees Federal Credit Union.
“It’s a big merger, no question, and a lot of people are going to be watching what happens once it’s approved,” Posey said. “I think it will be like any other credit union. It will need to be primarily service oriented.”
