SAN DIEGO — In a newly filed document, San Diego County Credit Union said it ended its proposed merger with California Coast Credit Union 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.
As the CU Daily has been reporting, the two CUs had initially announced plans to combine and create a $13.6-billion institution, before the situation soured 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.
In a declaration was submitted on Feb. 5 by Teresa Campbell, president and chief executive officer of San Diego County Credit Union, in opposition to California Coast Credit Union’s request for a preliminary injunction that would require San Diego County Credit Union to resume merger-related activities, the SDCCU CEO says NCUA is now discouraging the merger.
Bearing Responsibility
In the declaration, Campell cited a Jan. 27 letter from the National Credit Union Administration 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.
Claims Rejected
In the filing, Campbell rejects claims that San Diego County Credit Union pursued the merger because of liquidity or financial stress, stating the credit union was “well-capitalized, well-managed and financially sound” throughout negotiations. She said the merger was explored for strategic reasons, including long-term scale considerations and regulatory thresholds affecting large credit unions.
Campbell said concerns emerged after the two institutions signed a letter of intent in November 2024 and began integration planning and limited due diligence. She said San Diego County Credit Union retained outside firms to conduct enterprise risk, compliance and credit reviews, but emphasized that the work was necessarily high-level and dependent on information California Coast Credit Union chose to provide.
‘Escalating Compliance Issues’ Alleged
As integration discussions continued, Campbell said San Diego County Credit Union identified what she described as escalating compliance weaknesses, policy gaps and resistance by California Coast Credit Union leadership to remediation efforts. She characterized those issues as evidence of a broader culture of noncompliance that, in her view, outweighed the potential benefits of completing the merger.
A Vote to End Merger
San Diego County Credit Union’s board voted to end the merger on Nov. 10, 2025, Campbell said, denying allegations that the decision was predetermined or that the credit union intentionally undermined the deal. She said staff were not instructed to stop merger-related work until after the termination vote, though she acknowledged that individual communications may have been interpreted differently.
Campbell also addressed member communications, stating she sent a letter in January explaining the decision to abandon the merger because members “deserved transparency” once the transaction was no longer moving forward.
California Coast Credit Union has argued in court filings that San Diego County Credit Union wrongfully abandoned the merger and should be compelled to continue integration efforts while the lawsuit proceeds. A hearing on the preliminary injunction request is scheduled later this month.
The Financials
Both CUs are profitable and very well capitalized. California Coast CU finished 2025 with $26.1 million in net income, with net worth of 13.72%. San Diego County CU finished last year with $81.2 million in net income with net worth of 20.10%.
The combined Cu would have more than 620,000 members.
The Case
The case is California Coast Credit Union v. San Diego County Credit Union, Case No. 25CU063843C, in the Superior Court of California, County of San Diego.
