SAN FRANCISCO – In one of the biggest fire sales ever in the credit union industry, Patelco CU yesterday took control of two medium-size credit unions that have fallen victim to the area’s real estate crash: Cal State 9 CU and Sterlent CU.
In agreeing to purchase the remnants of the two failed credit unions, $4 billion Patelco added eight new branches in its existing field of membership and 38,000 member accounts. Many of the members of Sterlent, which was chartered to serve local telephone company workers, have long been eligible to join Patelco–chartered to serve the Pacific Telephone Co.
“We thought it was a great opportunity,” Andrew Hunter, president of Patelco, said yesterday, noting that both credit unions are located in Patelco’s service area. “We think this is a good opportunity for their employees and their members; and it’s a good opportunity for our members who will have eight additional branches in our territory.”
Patelco will try to provide jobs for employees at the two failed credit unions. “There will not be mass lay offs,” Hunter told The Credit Union Journal.
As part of a regulatory purchase and assumption, NCUA assumed the distressed assets of the two credit union failures, mostly underwater home equity loans. A portfolio of some $250 million worth of HELOCs held by Cal State 9 already have been assumed by NCUA and sold off.
The two deals are unusual for Patelco, one of the most aggressive credit unions in terms of growth, which has not done a merger since 2000.
Cal State 9, which held almost $460 billion in assets until two years ago, is one of the biggest credit union failures ever, and was whittled down to just $340 million by the time of the Patelco deal.
A member run on Sterlent’s deposits cut the size of its assets from $125 million to just $95 million at the end.
In an unusual move, Patelco has been managing both troubled credit unions over the last month as it completed the purchase and assumption with NCUA.
In a similar arrangement, Alliant CU of Chicago currently is operating Kaiperm FCU, a financially troubled Oakland, Calif., credit union, it plans to acquire soon.
Hunter, who plans to retire next June, said the integration of the two credit unions will not affect his plans. “It will all be done by then,” he said.
