ALBANY — Two large Capital Region credit unions have decided to merge.
SEFCU and CAP COM announced their plan Thursday, about six months after beginning discussions. Following due diligence by the two partners, if state and federal regulatory approval is granted and members vote in favor, the merger would likely be completed in 2022.
The organizations said no layoffs will result from the merger. They also said the location of the more than 60 branches operated by the two credit unions would be reviewed, suggesting that some existing branches could be closed or relocated and some new branches could be added.
CAP COM and SEFCU said it will be a merger of equals, not a case of one absorbing the other. They said it will create the largest financial institution in the Capital Region as measured by local deposits.
The two boards of directors began discussions in January and voted unanimously Wednesday to approve the plan. The two credit unions notified their employees Thursday morning.
CAP COM President and CEO Chris McKenna said mergers have been a long-running trend within the credit union industry — CAP COM itself has absorbed several smaller credit unions in recent years. The cost of compliance with regulations and technology upgrades can be a problem for smaller organizations, he said.
“The good news here is that this merger came as an opportunity, not because either one had to” merge because of problems, McKenna said.
CAP COM sustained expenses through 2020 as it deferred payments due and worked out interest-only plans with commercial borrowers that had lost their income. But it also emerged with a lot of liquidity on its balance sheets due to all the federal stimulus money entering the financial system, McKenna said. So CAPCOM isn’t stepping into a merger as a matter of survival but as a means of growth, he said, and of better serving members, employees and the community.
SEFCU President and CEO Michael Castellana said his credit union also has absorbed other smaller credit unions, but nothing on CAP COM’s scale.
“Inorganic growth has been in both of our strategic plans for a number of years,” he said.
Along with brick-and-mortar banks and credit unions, competition is coming from technology giants such as Apple, Facebook and Google, Castellana said. (SEFCU has a partnership with Google, in fact.)
Larger organizations are better able to respond to this, he said. “We have to be in a position to provide equal or superior value to our members.”
As part of the process of a merger of equals, the two credit unions will choose a new name.
Their names are a nod to their heritage at this point but not reflective of current operations.
Like many credit unions, they have expanded their membership criteria far beyond the original parameters.
State Employees Federal Credit Union, for example, is no longer just for state employees but for anyone who lives, works, workships, volunteers or attends school in SEFCU’s service areas, or is connected with the roughly 2,000 employer groups affiliated with SEFCU, or is related to someone who meets any of these criteria.
CAP COM FCU, previously Capital Communications FCU, started out 68 years ago as a specialized little institution called New York Telephone Employees FCU. Like SEFCU, its membership ranks have grown far beyond telephone workers.
The merged entity would be one of the top five credit unions by size in the state and one of the top 30 in the nation.
SEFCU was founded in 1934 and is now one of the 50 largest credit unions in the nation. It has more than $5 billion in assets, more than 350,000 members, and more than 50 branches spread across the Albany, Binghamton, Buffalo and Syracuse areas.
CAP COM was founded in 1953 and now has more than $2 billion in assets, more than 140,000 members and 12 branches in the Capital Region.