Navy Fed to Merge Ailing United Services of America
The $41 billion Navy Federal Credit Union announced Sept. 13 it will merge the $605 million United Services of America FCU of San Diego, which fell to 2.76% net worth as of June 30. Both boards have approved the merger, Navy Fed said in a release.
Both credit unions praised the deal and their new partners. USA Federal CEO Mary Cunningham told Credit Union Times she has worked with Navy Fed for years and has a good relationship with the world's largest credit union, which currently has 13 branches in San Diego County.
"This is ending not like we hoped at all," she said. "It is no ending at all. It is sad."
Cunningham told The San Diego Business Journal in a Sept. 13 article she had attracted three interested bidders for the CU's Japanese and South Korean branches "that would have saved the institution." However, the NCUA rejected the capital restoration plan as too risky and forced the credit union to merge instead, she said.
USA Fed's last profitable year was 2006, when the then-$700 million credit union earned a $2.2 million net profit. Performance turned south in 2007, when the cooperative reported a $5.76 million net loss, driven primarily by loan loss provisions that increased to nearly $8 million from $3 million 12 months earlier.
The following year resulted in an $11 million net loss. Fourth-quarter 2008 was particularly painful, when delinquencies suddenly increased to 2.26% from 1.54% the previous quarter. USA Fed also charged off $1 million worth of Western Corporate FCU paid-in capital and accounted for an NCUSIF stabilization assessment. As a result, net worth plunged to 6.61% as of Dec. 31, 2008, down from 8.08% during third quarter.