APPLE VALLEY, Calif. — Alaska USA FCU has assumed the operation of troubled High Desert FCU and is in the process of assessing whether it will be closing branches or laying off personnel.
"We are assessing that as we speak," said Dan McCue, SVP of corporate administration for Alaska USA. "A purchase-and-assumption is a little bit different from a traditional merger process. Some assets are given to you, and you assess how to merge those in. We are trying to assess the experience High Desert's employees have, what talents they have and what they bring to the table."
The end of High Desert FCU was long-anticipated, as the damage from bad construction loans had poisoned its balance sheet since last year. Earlier this month Ken Chapman, High Desert's conservatorship CEO, told Credit Union Journal "High Desert FCU will be no more by the end of June" because the number had gotten too "ugly."
The credit union, whose assets have dwindled to $102 million from $190 million in 2006, said in its March 2009 5300 Report its allowance for loan losses was $10,506,029, and the NCUSIF stabilization expense was more than $1 million, leading to a net loss of $12,953,627. High Desert's net worth ratio was -9.45%.
NCUA had been overseeing the operations of High Desert since placing it in conservatorship on Oct. 16, 2008.
Alaska USA currently serves 350,000 members worldwide, including 5,400 members in California, with 72 service facilities.
McCue said High Desert FCU was an attractive candidate for a P&A for the Anchorage-based credit union because, "For us it aligns with our diversification and growth strategy."
"This is an opportunity to get into a diversified market," he said. "Alaska USA has 17 branches in Seattle, so it is not unusual that we are outside the state. The opportunity came up from NCUA, so we put in a bid."
Alaska USA's original roots are as a military credit union, McCue noted. Although it has expanded past its original field of membership, it has members all over the world. He said it is not unusual for the CU to have "pockets of members" in other states. Some members get shipped out of the Alaska area on a military assignment, or they retire, McCue explained.
For the transition period, possibly up to 120 days, it will be "business as usual for High Desert," he continued. "Products and services are still the same. The members' best interests are first and foremost and we want an orderly transition-that's the message we've been conveying to the members and staff."
