In a move reflecting broader consolidation trends for smaller players in financial services, Wescom Central Credit Union is merging with Central Coast Federal Credit Union. Central Coast will be folded into the Wescom name.

The deal, which is scheduled for approval by the second quarter of next year, expands Wescom’s footprint past its current operations in eight Southern California counties into Monterey and King counties, adding nearly 15,000 members to total nearly a quarter million customers overall.

Wescom is significantly larger than Central Coast; it has $6 billion in assets under management compared to its northern partner’s $174 million. 

The joint venture won’t move Wescom’s Business Journal ranking as the No. 3 largest credit union in Los Angeles – Kinecta Federal Credit Union still outpaces at the No. 2 spot with $6.7 billion reported on its balance sheet.

But Keith Pipes, Wescom’s chief operating officer, said credit unions are expanding past their industry or regional-based roots to compete with the larger financial players.

“Consolidation is what’s inevitable within credit unions,” Pipes said. “That’s something we anticipate continuing in the industry.”  

This demonstrates the challenges smaller credit unions face in a rapidly digitizing world. Customers now expect online and mobile banking, services that are streamlined on the front end but require sophisticated and expensive software development on the back end. 

Credit unions once thrived on a local ethos through employer-based or location-based requirements. Now, credit unions such as Wescom must fold membership onboarding into loan applications online, attempting to eliminate the tedious qualification hurdles that drive online customers to search for easier options in the next tab on their web browser.

This is the fourth credit union merger to take place in the Southern California region this year alone. Additionally, California Credit Union, a close competitor to Wescom in size, expanded its market footprint to San Bernardino and Ventura counties this July.

Central Coast, post-merger, will function as a division under Wescom’s umbrella, with its current chief executive, Leinette Limtiaco, leading the charge. While the merger allows Central Coast to access the larger credit union’s resources, Pipes stressed that the merger would retain Central Coast’s employee base.

“We understand the way they work with their members,” Pipes said. “Our intent is not to impose a different approach, but to respect and build upon it.”

Before Central Coast changes the signage on its four brick-and-mortar locations, both credit unions must gain approval from regulatory bodies and their own membership.

Prerequisites include approval from the California Department of Financial Protection and Innovation, and both credit union boards’ nod on the transaction terms. 

The distinction between the two entities’ regulatory bodies – Wescom’s state recognition versus Central Coast’s federal designation by the National Credit Union Administration – will dissolve, and the credit union will be solely under state oversight.

Once the deal is sealed, the Central Coast branches will convert to Wescom’s, taking the latter’s total branch count to 28.

Wescom, established in 1934 as a part of the Pacific Bell telecom company, evolved into a community-chartered credit union through a busy merger period in the 1990s. Its customer base, while reaching into San Diego, is concentrated in Los Angeles and Orange County.