By Ray Birch
SAN DIEGO — The fight over the stalled merger between San Diego County Credit Union and California Coast CU escalated Monday after SDCCU’s outside counsel accused Cal Coast of being in “a state of denial”—a week after NCUA formally declined to move the deal forward in its current form.
Michael Carlinsky of Quinn Emanuel Urquhart & Sullivan LLP, which represents SDCCU, said the regulator’s Jan. 27 letter essentially validated concerns that led SDCCU to attempt to walk away from the transaction.
“It is unfortunate that Cal Coast is unwilling to acknowledge its well-documented and repeated compliance failures as a clear deal-breaker for any prospective merger,” Carlinsky said. “SDCCU places the highest priority on consumer protection and its members’ interests, and will not compromise its ethics or compliance by merging with Cal Coast. Indeed, just days ago, the National Credit Union Administration cited many of the issues discovered during SDCCU’s post-signing diligence when it advised that, as of now, it is not prepared to approve the merger.”
Carlinsky went further.
“Despite these facts, Cal Coast remains in a state of denial and continues to waste its members’ resources on what appears to be CEO Todd Lane’s self-serving litigation campaign to expand the size of his dictatorship,” he said. “SDCCU must and will continue to protect all of its stakeholders by fighting Cal Coast’s meritless actions through the appropriate legal channels.”
Cal Coast rejected that portrayal.
In an email to CUToday.info, Cal Coast Senior Director of Community and Public Relations Robert Scheid emphasized the NCUA letter does not kill the deal—and that SDCCU is mischaracterizing the agency’s stance.
“Cal Coast has always been in full compliance with all laws, rules, and regulations,” Scheid said. “We are routinely examined by state and federal regulators and audited continuously. Cal Coast remains well capitalized and financially strong.”
Scheid added that the regulator’s action was procedural, not punitive.
“SDCCU’s characterization of the NCUA letter is inaccurate. It does not deny the merger,” he said. “The letter defers a decision on the merger until the NCUA gets additional information and clarification. That step is not uncommon in complex transactions of this size and scope.”
He also addressed SDCCU’s "rhetoric."
“While SDCCU continues to poison the well with inflammatory and personal attacks, Cal Coast remains focused on what matters most: serving our members, supporting our employees, and strengthening the communities we serve,” Scheid said. “These issues are being addressed through the proper channels, where facts, not rhetoric, will determine the outcome.”
What NCUA Actually Said
In her Jan. 27 letter to SDCCU CEO Teresa Campbell, NCUA Western Region Director Julie Cayse wrote that NCUA received the initial merger application on May 23, 2025, sought additional information on May 30, received it July 11, and conducted a review beginning Oct. 14.
“Due to the relative asset size of the credit unions involved, and areas of concern identified during the review, I am deferring my decision to approve or deny your merger request at this time,” Cayse stated.
She said examiners had identified “multiple weaknesses in governance practices and strategic planning related to this proposed merger” and invited the parties to submit an updated application with revised financial information and timelines—along with a lengthy list of additional materials.
In broad terms, NCUA is requiring the credit unions to submit a far more detailed, coordinated plan showing they are ready to operate as a single institution from “legal day one.” The agency wants clearer governance and leadership arrangements, a defined long-term strategy for the merged credit union, and a more complete financial picture—including realistic estimates of merger costs.
Among other stipulations, NCUA is also requiring the parties to formally engage an independent technology consultant to help plan integration of critical systems such as core processing, digital banking, and payments networks.
How This Fits The Broader Dispute
The two credit unions announced in April 2025 that they would combine under the Cal Coast name to form a roughly $13-billion institution, with Cal Coast CEO Todd Lane leading the merged entity and SDCCU CEO Teresa Campbell planning to retire.
By November, however, SDCCU moved to terminate the agreement after what Campbell described in court filings as systemic compliance problems at Cal Coast discovered during post-signing diligence and an NCUA merger exam. Cal Coast responded by seeking court intervention to keep the deal alive.
Litigation remains active, with a Feb. 20 hearing scheduled on Cal Coast’s request for a preliminary injunction that would reinstate interim operating covenants on SDCCU while the case proceeds.
CUToday.info has reached out to NCUA for comment.