Corporate America CU Buys Constitution CUSO
Corporate America Credit Union has purchased and assumed Smart Source Solutions, the CUSO owned by Constitution Corporate FCU, which the NCUA plans to liquidate by the end of November.
The NCUA said the CUSO will be transferred to Birmingham, Ala.,-based Corporate America by the end of November.
The NCUA said Corporate America was chosen following a "bidding process that included credit union and non-credit union entities."
It is one of the first purchase and assumptions done under the agency's new procedures, which includes a registry for credit unions to sign up for if they want to be considered as potential merger partners.
NAFCU and CUNA had both encouraged the agency to set up the registry. In a letter to the agency in March, NAFCU President/CEO Fred Becker wrote that some credit unions had complained about the lack of transparency in the merger process.
The NCUA's registry is modeled in part on a similar registry from the FDIC, FDICconnect. That is a secure site that lets banks get information about acquiring problem banks and then register if they want to be considered as a partner.
There is increased interest in purchases and assumptions because of the increased number of problem credit unions.
There have been 27 failures of federally insured credit unions through October, including 17 involuntary liquidations. There have been nine purchase and assumptions and 10 assisted mergers. There were 28 failures in 2009.
Constitution, headquartered in Wallingford, Conn., was one of three corporates that the NCUA placed into conservatorship in September. On Nov. 19, the agency announced it planned to liquidate Constitution and transfer the operations to the Members United Bridge Corporate Federal Credit Union in Warrenville, Ill. The liquidation will cause 30 jobs to be eliminated in Connecticut, though Members United plans to keep three staff members in Connecticut, according to the NCUA.
The agency said that liquidation of Constitution is "the next step in gaining control of the mortgage-backed securities on Constitution's balance sheet to facilitate the securitization of those assets."
The NCUA has sold more than $12 billion worth of notes from the five conserved corporates so far.
Constitution Corporate FCU had $1.3 billion in assets as of June 30 and was the smallest of the three corporates conserved in September. It had a $24.5 million capital deficit.
On September 24, the NCUA conserved Constitution, Members United Corporate FCU and Southwest Corporate FCU. In March 2009, it conserved U.S. Central Coporate Federal Credit Union and Western Corporate Federal Credit Union. It created bridge corporates for all of them except Constitution Corporate FCU.