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Felix Adamo / The Californian

The Kern Schools Federal Credit Union branch at 2424 Chester Ave.

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Felix Adamo / The Californian

Steve Renock, president and CEO of Kern Schools Federal Credit Union.

The county's largest financial institution is riding to the rescue of a much smaller credit union in Tehachapi that federal data show has fallen on very hard times.

Kern Schools Federal Credit Union announced Monday that it has agreed to merge with Tehachapi Federal Credit Union, whose perilous financial condition likely made it a candidate for being shut down by regulators.

Between March 2012 and December, Tehachapi Federal's capital ratio -- a key indicator of financial strength, calculated by dividing net worth by total assets -- slipped from 3.33 percent to 2.07 percent; it recovered to 2.22 percent in March 2013, federal data show. Anything below 6 percent is deemed to be of concern.

In March, Kern Schools' capital ratio stood at 8.38 percent, data show.

Lorri Ward, president and CEO of 383-member Tehachapi Federal, refused to take questions from a reporter Monday.

Steve Renock, Kern Schools' president and CEO, said his 162,891-member institution decided to join with Tehachapi Federal "because there's a credit union that needs assistance." He added that Tehachapi Federal's members will need mortgage and car loans, which Kern Schools can provide at a profit.

"We think it's a good fit," he said. "They've got good quality members."

Renock noted that small credit unions like Tehachapi Federal have had a tough time in recent years. He would not say whether Tehachapi Federal have been in talks recently with regulators, saying he knows but that it was not his place to disclose such details.

As a matter of policy, state and federal regulators do not comment on enforcement actions. Federal data show that Tehachapi Federal had assets of about $2 million at the end of March, when Kern Schools posted assets of $1.3 billion.

Renock asserted that Tehachapi Federal's finances would not harm Kern Schools. He emphasized that he would not have agreed to merge with a large credit union in the same situation as Tehachapi Federal.

"If we were talking about a like-size credit union with us," he said, "that (2 percent capital ratio) would be a big deal. That would have a taking-away effect, if you will."

But because Kern Schools is so much larger, he said, absorbing a small credit union "won't be a significant issue for us."

In a news release, Ward wrote that Tehachapi Federal's members will benefit by the move, which is subject to regulatory approval.

"Kern Schools offers many advantages previously unavailable to members of Tehachapi Federal Credit Union," she stated, "including an express office with two full service ATMs in Tehachapi, mortgage products and services, mobile banking and online banking with Bill Pay."