BREA, Calif. - Union Financial Corp. completed the previously announced sale of the bulk of its assets and deposits to Glendale Federal Bank in a deal that will leave Union with one branch, $32 million of assets, and lingering problems.
The sale of 13 branches and $820 million in deposits, along with all of its performing loans, saved Union Federal from imminent seizure by federal regulators.
In addition, Union Federal sold nonperforming real estate assets with a book value of $136 million to institutional investors for $101 million.
Now, Union Federal is operating out of a single downtown Los Angeles office, which has $30 million of deposits. Its net worth is $1.9 million, bringing it into the "adequately capitalized" category for regulatory purposes.
But the company's only remaining assets consist of some cash and $27 million in nonperforming real estate assets including two commercial properties in Key West, Fla. Its only hope for income depends on a favorable resolution to its remaining assets and the likelihood that Glendale, under a formula that allows Union Financial to participate in the improvement of its former assets, is able to make a profit on the assets it just acquired.