ALEXANDRIA, Va.-NCUA agreed last week to allow Citizens Equity First CU, Illinois' second biggest credit union, to acquire Valley CU, the one-time $305 million credit union taken over by the federal regulator two months ago.
The deal will give the $3.6 billion CEFCU a footprint in the once-lucrative market around Silicon Valley, with three branches and about 30,000 member accounts.
Valley, which now has around $200 million in assets, reported $6.9 million in losses for 2007 and followed that up with $8.9 million in losses for the first three quarters of the year, before the NCUA takeover.
CEFCU had kicked the tires of other California failures in recent months but refrained from completing a deal because of large losses at those institutions.
The Valley CU deal follows other recent acquisitions of failed California credit unions, including Cal State 9 CU, Sterlent CU and Kaiperm FCU. Last week E1 Financial CU, a troubled, privately insured California credit union, agreed to be acquired.
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 deal, as NCUA will assume tens of millions of dollars of bad loans made by the San Jose credit union, as it did with Cal State 9, Sterlent and Kaiperm.
Those failures 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.
