SAN DIEGO— The chief executive of California Coast Credit Union has accused San Diego County Credit Union of suffering from a “management-manufactured liquidity crisis” and paying its top executives tens of millions of dollars, as part of a court filing seeking to block SDCCU from terminating a proposed merger between the two institutions.
In a sworn declaration filed Jan. 27 in San Diego Superior Court, Todd Lane, president and CEO of California Coast Credit Union, outlined what he described as stark differences between the financial health and governance practices of the two credit unions
As the CU Daily reported here earlier, in a newly filed document, San Diego County Credit Union said it ended its proposed merger with California Coast Credit Union after NCUA raised concerns about the combination and after determining that compliance risks and cultural deficiencies at Cal Coast posed unacceptable threats to members, according to an 18-page sworn declaration filed Feb. 5 in San Diego Superior Court.
Additional information on NCUA’s position appears below.
As the CU Daily has also been reporting, the two CUs had initially announced plans to combine and create a $13.6-billion institution. But the situation soured and the $3.3-billion California Coast Credit Union sued the $9.2-billion San Diego County Credit Union in California Superior Court, alleging SDCCU improperly terminated an agreement to merge the two San Diego-based cooperatives.
Both credit unions are profitable and highly capitalized. California Coast CU closed 2025 with $26.1 million in net income, with net worth of 13.72%. San Diego County CU had $81.2 million in net income and had net worth of 20.10% as of the same date.
New Declaration Ahead of Hearing
The newest declaration in the case was submitted in support of Cal Coast’s motion for a preliminary injunction, with a hearing scheduled for Feb. 20 before Judge Carolyn M. Caietti.
CCCU CEO Todd Lane said Cal Coast “has a longstanding record of strong regulatory compliance” and most recently passed its regulatory examination in June 2025. He said SDCCU representatives had acknowledged Cal Coast’s strong finances during merger discussions and that Cal Coast’s financial condition has improved since the supplemental merger agreement was signed
‘Severe Liquidity Crisis Alleged’
By contrast, Lane alleged that SDCCU began experiencing a severe liquidity crisis in 2022 after investing heavily in long-term mortgage-backed securities and mortgage loans at low interest rates using pandemic-era deposit inflows. He said those deposits were widely understood to be temporary and likely to be withdrawn in the short term, according to the court filing.
Lane cited a December 2024 SDCCU capital plan, obtained during merger due diligence, that he said reflected SDCCU’s awareness that it had failed to “proactively identify” issues that led to the crisis. He further stated that SDCCU was forced to borrow significant amounts from a federal government program to bolster liquidity.
According to Lane, the fallout from the liquidity issues placed SDCCU’s net interest margin in the bottom 5% of credit unions nationwide, based on publicly available NCUA data.
In her declaration, SDCCU CEO Teresa Campbell refuted that allegation, stating, “Mr. Lane’s suggestions that SDCCU sought a merger due to a liquidity crisis is false. To be clear: SDCCU is not facing a liquidity crisis and was not at that time. SDCCU remains well-capitalized, well-managed, and financially sound. Indeed, the greatest threat to SDCCU’s financial health would be merging with Cal Coast given Cal Coast’s systemic compliance failures, deficient policies across multiple regulatory areas, and a deeply troubling culture of non-compliance under Mr. Lane’s self-proclaimed dictatorial leadership.”
Focus On Exec Compensation
The declaration also focuses heavily on executive compensation at SDCCU. Lane alleged publicly available IRS filings show Campbell earned more than $18.8 million in 2024 and more than $55 million between 2020 and 2024.
In addition, he alleged SDCCU Executive Vice President Nathan Schmidt earned nearly $1.6 million in 2024.
By comparison, Lane said his own compensation in 2024 was $1.2 million.
Allegation Related to Call Reports
In addition, Lane addressed allegations concerning Cal Coast’s reporting of a technology loan program. He said Cal Coast amended three quarterly NCUA Call Reports after SDCCU raised concerns about how certain technology loans had been categorized. However, Lane stated the credit union did not believe the original reports were inaccurate or that the loans were material enough to require amendment.
Internal emails referenced in the filing indicate the total balance of the technology loan program was under $100,000, and that under normal circumstances Cal Coast would not have amended prior filings due to the loans’ immateriality
‘Buyer’s Remorse’
In a separate filing, California Coast Credit Union is asking a San Diego Superior Court judge to block San Diego County Credit Union from terminating their proposed merger, arguing that SDCCU is suffering from “buyer’s remorse” and has no legal basis to walk away from the deal.
In a motion for preliminary injunction filed Jan. 27 in San Diego County Superior Court, Cal Coast asked the court to preserve the status quo while the lawsuit proceeds, contending SDCCU breached the parties’ Supplemental Merger Agreement and improperly issued a termination notice.
Center of Dispute
As the CU Daily reported earlier, the dispute centers on a March 27, 2025, Supplemental Merger Agreement that would combine the two San Diego-area credit unions into a roughly $13.5 billion institution. According to the filing, SDCCU initiated merger talks in mid-2024 amid liquidity pressures stemming from pandemic-era deposits that were invested in long-term assets, contributing to a liquidity crunch and net interest margins in the bottom 5% nationally, as alleged above in Lane’s statement.
In its Motion for Preliminary Injunction, Cal Coast argues that after months of due diligence — including reviews by outside consultants that identified no “significant or material adverse findings” — SDCCU signed the merger agreement and moved forward with integration planning.
Under the agreement, SDCCU CEO Teresa Campbell would retire, and Lane would lead the combined institution. A new board would include directors from both organizations.
‘Purported Termination Notice’
In November 2025, however, SDCCU sent what Cal Coast characterizes as a “purported Termination Notice,” alleging compliance failures, improper reporting of certain loans, and resistance to adopting SDCCU policies and technology systems.
Cal Coast contends in its response that those allegations rely heavily on eight legal memoranda prepared by Sheppard Mullin during integration planning. The filing states the memoranda identified potential risk considerations but did not conclude that Cal Coast violated any laws.
Additional Arguments & Allegations
The motion further:
- Argues SDCCU breached the agreement by halting integration work before a required 30-day cure period expired and by demanding changes to post-merger governance, including installing Campbell as CEO and altering board composition.
- Alleges SDCCU paused workstreams, instructed third-party advisers to stop work and withheld shared professional fees, actions it says violate contractual obligations to use best efforts to obtain regulatory approval and consummate the merger.
- Argues that without a court order, it would suffer irreparable harm through the loss of what both parties previously described as a unique merger opportunity, as well as from SDCCU’s continued access to proprietary information obtained during integration planning.
Part of Broader Trend
In her declaration, Campbell suggested none of the allegations made by California Coast Credit Union about why it was seeking to merge are true, saying instead, “This pattern of consolidation to achieve economies of scale in the face of increasing regulatory burdens is common throughout the credit union industry. SDCCU’s decision to pursue a merger was a prudent strategic response to these regulatory realities, not a reaction to any financial distress.”
NCUA Letter
As the CU Daily reported earlier, in her declaration, SDCCU’s Campell cited a Jan. 27 letter from NCUA that she said followed the agency’s October 2025 merger examination and reiterated supervisory expectations related to the proposed transaction.
According to the filing, the NCUA letter emphasized that San Diego County Credit Union, as the larger and surviving institution, bore responsibility for merger readiness, integration planning and risk management, and underscored the need to resolve identified compliance and operational concerns before proceeding. Campbell said the correspondence reinforced earlier regulatory guidance and factored into the board’s assessment that continuing the merger posed unresolved regulatory and member risks.
Timeline: Cal Coast–SDCCU Merger Dispute
Based on court documents, the following is a timeline of litigation between Cal Coast Credit Union and San Diego County Credit Union.
Mid-2024
San Diego County Credit Union CEO Teresa Campbell contacts California Coast Credit Union CEO Todd Lane to discuss a potential merger, citing strategic benefits and scale advantages.
Nov. 25, 2024
The parties sign a Letter of Intent outlining governance terms, including Lane as CEO of the combined institution and a split board structure.
March 27, 2025
The credit unions execute a Supplemental Merger Agreement (SMA), targeting a merger date on or about May 1, 2026.
May 23, 2025
SDCCU submits the initial merger packet to the National Credit Union Administration.
June 25, 2025
Formal integration planning begins, including creation of steering and management committees and workstreams.
June 2025
Cal Coast passes its most recent regulatory examination, according to a sworn declaration by CEO Todd Lane.
July–October 2025
SDCCU retains Sheppard Mullin to prepare legal memoranda analyzing certain Cal Coast practices during integration planning.
Sept. 23, 2025
Senior executives from both institutions meet to address disagreements over policy harmonization and compliance culture.
Late September 2025
According to court filings, SDCCU leadership begins internally discussing possible termination of the merger.
Mid-October 2025
NCUA examination occurs as part of merger review process.
Nov. 14, 2025
SDCCU serves a “Termination Notice,” alleging material breaches of the merger agreement and announcing a halt to integration work.
Nov. 25, 2025
Cal Coast files lawsuit in San Diego Superior Court seeking to enforce the merger agreement.
Jan. 27, 2026
Cal Coast files a Motion for Preliminary Injunction and supporting declarations, including a sworn statement from CEO Todd Lane.
Feb. 20, 2026 (scheduled)
San Diego Superior Court hearing set on Cal Coast’s request for a preliminary injunction
