The $4 billion Alaska USA Federal Credit Union is making good on its West Coast expansion strategy this month with the merger of a small but failed Seattle CU.
The addition of the long-ailing $27 million Transportation Northwest CU gives the Anchorage CU an additional footprint in Washington state, where it already has 17 branches and is the state's second largest indirect lender.
The state and NCUA-engineered takeover of Transportation Northwest CU also comes amid a controversy over the issue of NCUA financial assistance and the merger bidding process.
The imbroglio, raised by the CEO of the $228 ?million Prevail CU also of Seattle, rests on procedures followed over the summer in connection with a state consent order issued last April that TNCU find a merger partner after incurring two years of large real estate losses and 1% capital.
The winner of that process was Prevail, which had been managing TNCU, until it asked the NCUA for financial assistance to cushion against the losses in the TNCU portfolio. TNCU had lost nearly $3 million over the last two years and had a 14% delinquency rate.
Tom Graves, Prevail's president/CEO, told Credit Union Times he was a bit disappointed in the outcome of the NCUA bidding, which, in effect, bypassed his CU even though Prevail had made preliminary plans to merge TNCU.
Graves said there were 10 or 11 suitors, including Alaska USA, that submitted bids with the NCUA picking the well-capitalized Anchorage CU as the winner.
Graves said he is not bitter at the outcome since he still supports the final result of protecting TNCU members, and yet he said he was puzzled at the NCUA suddenly switching gears. "For me, what occurred is beyond my scope of experience with this sort of thing."
The management and board of Prevail had done their due diligence in assessing TNCU's condition and were proceeding to merge the two CUs with a similar member base of government employees.
Prevail even promised to retain TNCU as a division of Prevail. Alaska USA has said the branding will be changed to reflect the takeover by the Anchorage CU. TNCU has two Seattle area offices and serves 2,600 members.
"I am getting an education on how this process works but not sure our experience is much different as to what happened in Utah," said Graves alluding to out-of-state CUs expanding footprints in that state through voluntary and involuntary mergers.
Graves noted, however, that Alaska USA is very much a dominant player in Washington, having held branches since 1983.
For its part, Alaska said it looks to a smooth transition in the TNCU takeover, which was completed in August but detailed in a press release issued Oct. 8. Alaska USA's priority will be "to maintain high quality service to members of Transportation Northwest Credit Union and assure business as usual while we make the transition," said Bill Eckhardt, president/CEO of Alaska USA.