SAN FRANCISCO - Having been selected by NCUA to take over troubled Cal State 9 Credit Union, where members have been consistently withdrawing funds, Patelco Credit Union said one of its first tasks will be to restore “confidence.”
NCUA took over as conservator of Concord, Calif.-based Cal State 9 last November due to escalating losses from nonperforming real estate loans, including investments in the same failed Florida real estate venture that also led to conservatorships of Colorado’s Norlarco CU and Michigan’s Huron Area River FCU. Cal State 9 reported $54.5-million in loan and lease losses in its September 2007 quarterly report on file with the state; in the previous quarter, the reported losses amounted to $17 million.
The purchase-and-assumption is anticipated to be completed by June 30, with NCUA continuing to hold the troubled assets. Until then, Patelco will have oversight of Cal State 9 under a management agreement.
Alison Jones, vice president of marketing for $4-billion Patelco, told Credit Union Journal her CU is aware Cal State 9 members have been withdrawing money from the institution for months–since news of its financial woes became public. She said there are no plans to close any Cal State 9 branches, and Patelco expects to be in contact with the CU’s members soon.
“Restoration of confidence [by Cal State 9’s members] comes from the strength and stability of Patelco Credit Union as the acquiring credit union,” she said. “We will be communicating with Cal State 9’s members as logistical details are worked out. We will communicate with them on an individual basis regarding their accounts. But it is business as usual for now for Cal State 9 members at their branches.”
Cal State 9 CU originally was chartered in 1948 to serve University of California employees. It operates five branches in San Francisco, Berkeley, Oakland, Hayward and Pleasant Hill. The credit union is open to people who live and work in five Bay Area counties; active or retired Employees of the State of California or the Regents of the University of California; students of San Francisco State, California State, Cal State Hayward and UC Berkeley; and, members of the San Francisco State University, the California State University, and the Hayward Alumni Associations.
Jones said Patelco pursued the deal to acquire Cal State 9 in part because, “We like their East Bay locations. We have a strong presence in the East Bay and are looking to fill that out. And, they also have locations on or near university campuses. We are making a concerted effort to reach out to the Gen Y market, so the acquisition makes good sense for us. We are looking forward to integrating the institutions and welcoming their members,” she added.
