TRACY, Calif. – In a precursor to a merger, NCUA has brought in managers from nearby Valley First FCU to operate troubled Tracy FCU, which it took under federal conservatorship last Friday.
Hank Barrett, president of Valley First, yesterday said its application to acquire Tracy has been accepted by NCUA and he expects the deal to become public after the 10-day appeal period for the Tracy FCU conservatorship. He told Credit Union Journal he hopes to complete the merger process on paper by April 5.
Tracy FCU, which serves the city of Tracy, reported a loss of almost $900,000 for 2009 and has less than 5% net worth.
Valley First, a $330 million Modesto-based credit union, would have had a profitable 2009 without almost $3.2 million in charges related to the corporate bailout, according to Barrett. As it was, a $1.7 million charge for the corporate bailout and a $1.6 million charge for Valley First’s shares in WesCorp FCU put it into the red to the tune of $1.6 million for the year. The two corporate bailout charges shaved about 200 basis points off Valley First’s capital ratio, which was just over 10% at year end, according to Barrett.
Still, with more than 10% capital, Valley First is in a good position to pick up assets in the region’s troubled economy, which Barrett called the “epicenter of the earthquake.” He noted that last year Valley First acquired two branches from County Bank, a Merced institution that was taken over by the FDIC in February 2009. “We see some opportunities,” he said.
The management agreement is similar to ones entered into by NCUA on Kaiperm FCU with Alliant, and with Eastern Financial Florida CU with Space Coast CU, with the latter credit union in each case eventually acquiring the remnants of the failed credit union.
An NCUA official declined to comment on the future of Tracy FCU.
