SAN DIEGO, Calif. – Two large San Diego credit unions have formally merged, creating one of the largest credit unions in San Diego County and which will likely catapult it into one of the top 25 credit unions in the state. The new institution, First Future Credit Union, is the result of the merger between Santel Federal Credit Union and Kearny Mesa Financial Credit Union, a state chartered community financial institution. At the time of the July 1 merger, Santel boasted assets of $402 million and 45,000 members, while Kearny Mesa had $156 million in assets and 15,000 members. By the end of this year, the new credit union is expected to hit $600 million in assets, according to Marla Shepard, president and chief executive officer of First Future and who formerly was president/CEO of Santel. Jim Goulet, president/CEO of Kearny Mesa Financial CU, was named executive vice president of First Future and president of its CUSO subsidiary corporation. Goulet had originally approached Shepard about the merger last year. "They were interested in technology and in distribution," Shepard recalled. "Those were their major concerns." "Their main concern was that at their size, they would not be able to keep up with the technology demands of their members," she said. Kearny Mesa was also concerned about the ability to open additional branches to serve members. It had six branches at the time. Shepard said the merger idea hit a receptive chord with Santel officials. "We were delighted with the idea of it," she said. "We also felt that technology was going to be expensive and that members were going to be very demanding in that area. So the combination absolutely made sense to us for the same reasons, the technology issues and the branching and distribution that it would give us." In an unusual move, the federally chartered Santel, the larger of the two credit unions, merged into the smaller Kearny Mesa because of its state charter status. Members of Santel voted overwhelmingly to approve the merger; out of some 3,000 votes cast only a few hundred voted against the measure, Shepard reported. Shepard said the idea of becoming a community chartered credit union was not the impetus for the merger. "We were excited about that although that was not a major reason for our interest," she said. "We were happy being a SEG (select employee group) credit union. But we're happy to be community charter as well." The new First Future board is composed of six members from Santel and three from Kearny Mesa. "It really was a merger and no one acquired the other," she noted. Shepard said both credit unions and their members have benefitted from the merger. Santel expanded the number of its branches from 13 to 18 while Kearny Mesa tripled its branches from six to 18. One Kearny Mesa branch was closed because it overlapped another Santel branch located one block away. "Other than that their branches are in a perfect location to compliment ours," Shepard said. "The branches were very complementary." The merger increased the ATM network of both credit unions. Economy of scale also resulted in substantial cost savings. Combined expenses for debit card processing expenses, for example, were slashed by $7,000 a month, Shepard reported. The new credit union will benefit from the technology of its predecessors. Kearny Mesa had focused on areas such as streamlining, automation, optical imaging while Santel had been more involved in networking its branches, creating an intranet and an employee web site. "By combining the two, we'll have both technologies right away available to our members and our employees," Shepard said. Staff size remained the same following the merger. "What we wanted to do for both the members and the employees was to make everything positive," she said. That resulted in employees of First Future getting the best benefits that had been offered by Santel or Kearny Mesa. "What that meant was that our employees (Santel) got some benefits that they didn't have before and so did Kearny," Shepard said. "But we didn't take anything away." The same approach was used on the member side. If Santel charged a fee for a particular service which Kearny Mesa offered for free (or vice versa), the service was offered for free. "So the members benefitted significantly on the fee side," she said. To address the various products offered by the credit unions, First Future created a new Family Rewards program which rewards members based on their relationship with the credit union. Those rewards can range from a discount on car loan rates, an increase in interest rates paid on certificates of deposit or a waiver on some real estate loan fees. The program offers four different levels of rewards. Program benefits are based on a member's activity level. Greatest benefits are offered members with a combined savings or loan balance of $20,000. At the opposite end are rewards offered to members with under $10,000 in savings/loan balances. All family member accounts can be combined to reach a particular level. To celebrate the merger, every member was placed in the highest level of rewards for one quarter. That means a three-quarter point discount on a car loan, a 15 basis point boost on any CD they open during the quarter, free unlimited ATM usage anywhere, and "significant fees waived" on real estate loans, Shepard said. "Basically what we're doing is celebrating the merger with our members by allowing them to participate at the highest level of rewards on the new program," she explained. "We're hoping that during this 90-day period two things will happen: members will recognize the value of being at step 4 (the top reward level) and it gives us plenty of time to cross-sell that program. – [email protected]