ALEXANDRIA, Va. – The National CU Share Insurance Fund, which has been battered by growing losses among California credit unions, is expected to take another big hit from the newly announced deal to sell the remnants of one-time $305 million Valley CU to Illinois credit union giant Citizens Equity Financial CU.
Under the purchase and assumption deal, the details of which have not been disclosed yet, CEFCU, the $3.6 billion Peoria, Ill., credit union will establish a footprint in California with the purchase of three Valley CU branches and 30,000 member accounts, while NCUA will assume tens of millions of dollars of bad loans made by the San Jose credit union, as it did with three other large California failures.
Those failures: of Cal State 9 CU, Sterlent CU and Kaiperm FCU, have cost the NCUSIF more than $250 million in losses so far, with a final price tag still to be determined. The losses include money guaranteed to the purchasers of those failed institutions, capital infusions and the sale of loans acquired by NCUA as part of the so-called P&A deals.
Losses on those and other large failures the past two years has depleted reserves in the credit union deposit fund, making it possible credit unions will be called on next year to replenish those reserves.
