The troubled Mission SF Federal Credit Union of San Francisco, one of the oldest inner city credit unions, has lost its battle to stay independent. Following the NCUA’s April 8 seizure, Mission has been merged into the $360 million Self-Help FCU of Durham, N.C.
Terms of the purchase-assumption transaction arranged by the agency were not disclosed, but the $6 million San Francisco credit union, now a division of the North Carolina credit union, ends an unsuccessful public drive begun last fall to raise $200,000 in capital to forestall a merger or liquidation.
Mission’s new parent, Self-Help, has been among the more active community development CUs in the country, taking over ailing or failing low-income CUs in the Bay Area and Central Valley of California. Over the last three years, Self-Help has combined the operations of six CUs from Bakersfield to Modesto, most with a large Latino membership.
Mission SF, chartered 40 years ago, with 2,500 members and located in the Tenderloin district of the city, ran into financial trouble two years ago, the victim of the recession, high unemployment and bad real estate and consumer loans. It lost $370,000 in 2009 and $262,000 last year, placing its net worth at 1%.
Coming under regulatory scrutiny, Mission management, supported by other California CUs eager to preserve the CU from failure, maintained that the CU performed a valuable community service. Mission organized the capital campaign, which initially brought in $5,000 to $10,000 in donations from peers across the state, New York and elsewhere. Mission was able to win several regulatory delays as it continued collecting donations but also came under online criticism from some CU leaders who called the solicitation unseemly and one that injured the industry image.
One of Mission’s leading backers has been the National Federation of Community Development Credit Unions, whose president/CEO, Clifford Rosenthal, argued that H.R. 1151 and its PCA provision contributed to Mission’s demise. He said CDCUs like Mission have long faced tough financial requirements they were unable to meet given their existing structure.
Though the troubled California CU was admittedly barely solvent at the time of the NCUA liquidation, “a decade or so ago, the credit union would have been given additional time to strengthen itself,” he said. But “under prompt corrective action, we have seen the termination of credit unions that we believe could have survived, if given more time,” he added.
Moreover, said Rosenthal, “we believe that in many cases PCA results in greater NCUSIF losses than might otherwise have incurred” contending, “we don’t believe the credit union movement was well served by the introduction of PCA through HR 1151.”
Rosenthal went on to express Mission’s good fortune in having Self-Help FCU available as a merger partner, giving the San Francisco CDCU “the best possible opportunity for the preservation and even expansion” of services to inner city residents.