Student credit union merges with private firm

Tuesday, April 30, 1996

First Financial has pledged to maintain student involvementBy
Lia Ramsey

Daily Bruin Contributor

Westwood Student Federal Credit Union completed a merger today
with a private credit union, eking its way out of a debt that could
have completely shut down the student-run operation.

The merger with First Financial Federal Credit Union ends 11
years of student management at the Westwood credit union, which
operates on-campus.

Westwood Student Federal Credit Union representatives refused to
disclose the amount of money the firm was indebted, but explained
that its financial problems were caused by a misappropriation of
guaranteed student loans.

The decision to merge the union was met with little opposition
because of the firm’s dire financial situation, said Mary
Mallavarapu, vice chairman of the student advisory committee for
the student credit union.

"Only 50 percent of our loans can be student loans, but we
exceeded that amount," Mallavarapu said. "We thought it was OK, but
it wasn’t. We didn’t find out until too late."

The student union’s board of directors decided a merger would
save the business from bankruptcy. First Financial offered to pay
off the debt if the student credit union joined their
organization.

"We were trying to get the credit union back to solvency. With
the merger, First Financial takes in the loss and we are no longer
in debt," said Ken Pao, a student representative from Westwood
Student Federal.

The student credit union has been historically operated solely
by UCLA students. Now, due to the merger, students will no longer
occupy all of the higher management positions.

"Basically, Westwood Student Federal Credit Union was run by
students ­ there was a high turnover rate and it was hard to
find consistency," Pao said. "The management will now be with First
Financial … Now we can keep up a stable management."

However, the loss of student management has not been of huge
concern to the student union, in part because First Financial plans
on leaving the union’s Westwood branch mainly in the hands of
students.

"The manager will be an employee of First Financial and most
likely not a student," Mallavarapu said. "But, there’s still a lot
of student involvement. That’s one of the goals First Financial had
when they joined us."

Also, students will still be represented in the credit union
through the recent formation of a student advisory committee.

"The student advisory committee was formed because we need to
address issues that will be very different from other customers of
First Financial. We needed a student perspective," Mallavarapu
said.

"The student advisory committee basically advises the board of
First Financial and keeps an eye on operations here," she
added.

Besides debt and management problems, employee competition was
another factor that lead to the merger. University Credit Union,
another local firm that also caters to students, recently opened
main employment positions to students.

"We weren’t competing with (University Credit Union) but they
are opening their field to students also. So, they are now
competitors," Pao said.

But because of the merger, Westwood Student Federal does not
consider University Credit Union as a threat.

"Before, the union was a $3 million student credit union. Now
that we’re as large as First Financial, we can provide better
service," Pao said.

First Financial Federal Credit Union was recently ranked the
17th largest credit union in Southern California, and is a $300
million membership-based financial organization. The progressive
credit union currently has more than 57,000 members.

"We’re looking to expand our membership and get the younger
members ­ the young, of course, are the future," said Joelette
Quinn , vice president of First Financial. "I think, more or less,
it’s beneficial that we can combine our businesses."

Though the Westwood Student Federal has merged with First
Financial, the unions’ agreement entails that the student credit
union will keep its current name.

Additionally, none of the current services of the student credit
union will be eliminated, though officials promise new student
services will be offered.

"We are going to be offering a bunch of different products
­ we’re expanding the product line to our students in
checking, savings, and loans," Munoz said.

One benefit of the merger is that students are no longer limited
to getting service at the on-campus office, but can go to any
credit union to be helped, Munoz added.

The new Westwood Student Federal Credit Union is also now
offering Visa cards and is working on a special UCLA ATM card,
tentatively designed with a picture of the Bruin bear mascot.

First Financial representatives emphasized that the merger did
not mean students would not participate in the union’s
operations.

"The students made the final decision to choose us," Quinn said.
"Even though we’ve completed the merger, they’re still in charge of
running things at the union."