Citizens Community Credit Union in Devils Lake, N.D., which entered into conservatorship earlier this year, has entered into a merger agreement with First Community CU of Jamestown, N.D.
As CU Journal has reported, Citizens Community was placed into conservatorship by the National Credit Union Administration in June 2017 as a result of “unsafe and unsound practices” at the credit union.
At closing of the merger, the combined entity, which will operate under the name First Community Credit Union, will be based in Jamestown and have assets of approximately $800 million.
"It is rare to find two credit unions whose culture, business approach and member origins align as well as First Community and Citizens," Steve Schmitz, president and CEO of First Community CU, said in a statement. "By increasing our size, we expect to be able to take advantage of efficiencies and offer new products and services for the benefit of our members and employees."
Schmitz will serve as president and chief executive officer of the combined credit unions.
Jay Chapin, interim CEO for Citizens Community CU, said that "after meeting Steve and members of his team at First Community, we soon realized how much our credit unions have in common, and that together we could continue our respective community credit union traditions while capitalizing on the benefits that come with being a larger credit union."
Janna Bergstedt, vice president of marketing at First Community, told Credit Union Journal “It’s our intention to retain all CCCU employees.”
The proposed transaction is expected to close January 1, 2018 with an operational merger to occur “later in 2018.”
Schmitz also said First Community CU had “completed extensive due diligence, and while there were some loan issues, Citizens Community Credit Union was adequately funded to cover reserve requirements.”
John Fairbanks, public relations specialist at NCUA, told Credit Union Journal NCUA had approved the merger as the conservator for Citizens Community CU and that the credit union will exit conservatorship upon closing of the merger.
Fairbanks further said that a conserved credit union merging with another credit union “is not unusual.”
Bergstedt also noted that the Credit Union Board of the North Dakota Department of Financial Institutions, the state regulator, also approved this merger.
First Community posted net income of about $7.2 million and $7.5 million, respectively, the past two calendar years.
Meanwhile, Citizens Community recorded net income of about $460,000 in 2016, however the credit unions also reported total delinquent loans of more than $10 million.
In the prior year, Citizens Community posted a net income of about $1.67 million.