PLEASANTON, Calif. – SafeAmerica CU said it is converting to private deposit insurance under ASI to skirt the costs of the corporate credit union bailout.
The $325 million credit union paid about $400,000 to NCUA last year for its share of the corporate bailout – about the same it would have paid to ASI for a special assessment – but its executives expect costs assessed by NCUA to finance the corporate bailout to continue to grow in the coming years. "We anticipate that over time their [ASI’s] assessments are going to be less than NCUA’s," Richard Jordan, president of SafeAmerica, told The Credit Union Journal yesterday.
SafeAmerica is the second medium-sized credit union to convert to ASI in recent months to avoid the costs of the corporate bailout, following $500 million Velocity CU in Austin, Texas. Several other credit unions also are considering the move. In October, Community United CU, a $14 million credit union in Strongsville, Ohio, converted to ASI.
Jordan, whose credit union also lost $2 million on the failure of WesCorp FCU, said he is concerned about the growing estimates of losses for NCUA’s corporate bailout, for which NCUA already has told credit unions to prepare for additional assessments. "I think the assessments that ASI charges will be a lot less than what NCUA charges for the [NCUSIF]," he asserted.
The SafeAmerica conversion was approved in a membership vote by 60% of the participating members and has been approved by NCUA.
SafeAmerica has been a longtime partner with ASI, having purchased excess deposit insurance from the Ohio company for as many as 17 years, according to Jordan.
SafeAmerica is well capitalized with almost 9% net worth and had operating net income of about $1.3 million for 2009.
