Alaska USA Using Mergers, P&As To Expand On West Coast
ANCHORAGE, Alaska-In contrast to the hunkered down position of many CUs over the past two years, Alaska USA FCU has been aggressively expanding its operations into a third state: California.
After establishing itself in its home market and Washington state, in 2009 Alaska USA took over two failed CUs in the Golden State: High Desert FCU in Apple Valley on July 1, and The Members Own CU in nearby Victorville on Oct. 1. Earlier this year it announced it would purchase five branches in the same area from Arrowhead Central FCU, a deal that has not yet been finalized. Most recently one of its CUSOs, Alaska USA Insurance Brokers, acquired Rainier Pacific Insurance Services-allowing it to sell personal lines of insurance in the state of Washington.
But according to Dan McCue, SVP of corporate administration for the $4.1-billion, 390,000-member CU, Alaska USA's expansion should come as no surprise."We have always had a long-standing strategy to grow our business model," he said. "California was an extension to us. We have been pursuing growth in both Alaska and Washington for some time now, and the California opportunities came along that allowed us to grow into a market that has a lot of growth potential-known locally as the High Desert. It is not something we just started to do, it is something we have continued to do. Opportunities for growth in the credit union world usually are through mergers, and the opportunities came in 2009 to perform purchase-and-assumption agreements with NCUA for the two CUs in California."
As for the insurance company purchase: McCue said Alaska USA had been looking for the right deal in the insurance space for some time. "We have operated branches in Washington since 1983. The economic downturn has provided opportunities to meet our growth strategy."
Alaska USA had the third-best performing year in its history last year, despite a number of challenges. McCue attributed this performance in large part to "a pretty diverse portfolio" of CUSOs that helped the bottom line of the credit union-and helped it overcome the NCUSIF expense and the WesCorp capital it was forced to write off.
But even as it grows, Alaska USA does not move quickly, he noted.
"It has been 27 years since we moved into Washington, and we were in the right financial position to make the move to buy the insurance provider. As with all credit unions, we look for ways to control and manage expenses, because we are all about the transfer back to members. So anything we can do as far as increasing revenues or cutting expenses, that's how we operate."
Expense management has been key and was something the CU had already been focusing on. "As it turned out, we held our expenses in line with 2008, despite the fact we were in the process of working out those two purchase and assumptions."