The NCUA-rejected sale of the $600 million United Services of America FCU's South Korean and Japanese branches was worth as much as $30 million, California Credit Union League Interim CEO Dave Chatfield said.
USA Fed CEO Mary Cunningham told the San Diego Business Journal she had attracted three interested bidders for the branches "that would have saved the institution." However, NCUA rejected the capital restoration plan as too risky, and forced the credit union to merge instead.
Chatfield agreed with Cunningham's statement, saying the situation "has some resemblance" to Arrowhead Credit Union, which was seized by NCUA June 25 after the regulator rejected its plan to sell branches and loans to Alaska USA FCU.
"It's not just at Arrowhead and USA Fed, there are probably other cases around the country where a credit union had assets that were of value so that when capital ran low, they could sell them and replenish capital to some degree," he said. "It was certainly a viable strategy for USA Fed."
NCUA Spokesman John McKechnie said, "NCUA supports USA Federal Credit Union's decision to seek a merger."
Navy FCU announced today it will merge USA Fed, which fell to 2.76% net worth as of June 30. An influx of $30 million, minus the institution's $11.6 million net loss so far this year, could have potentially returned capital to September 2009 levels, when it reported 5.52% net worth.
