NCUA Explains Conservatorship Stance
NCUA policymakers provided a few more clues into conservatorship procedures in the wake of industry concern over when and how purchase and assumption deals are arranged with bidders for involuntary mergers.
The issue has come into sharper focus in recent days following the conservatorship of the $808 million Arrowhead Central Credit Union of San Bernardino, Calif. and a trio of failures in Utah.
Queried on the NCUA policy by Credit Union Times, John McKechnie, director of public and congressional affairs, stressed that each conservatorship case is different and that "typical considerations in a decision to conserve vs. award a bid include: overall financial condition of the credit union, loan portfolio, and compatibility of field of membership."
Commenting specifically on the failure last Friday of the $139 million Family First FCU of Orem, Utah, McKechnie said the NCUA's regional office had recommended a conservatorship "in order to gain full operational control of Family First, to complete a thorough review of all loan portfolios, to develop a more complete understanding of the Family First franchise value, and to ultimately mitigate the NCUSIF loss."
Conservatorships, said McKechnie, "are undertaken in an effort to preserve member assets and maintain uninterrupted service if possible."
Industry sources, asking for anonymity, said NCUA Chairman Deborah Matz is currently recruiting retired CEOs to fill some of the management slots in seized CUs and some larger and troubled CUs, which could be ready for NCUA takeover and a bidding procedure at a later date.
There are currently six active conservatorships in the NCUA portfolio, said McKechnie.