The initial NCUA-sponsored bidders conference for corporatecredit unions interested in possibly acquiring all or parts of thefailed Western Bridge corporate credit union was a month ago andnow questions are circulating among credit unions about probablenext steps.

Answers are beginning to emerge in the form of alternativescenarios for the conserved corporate and its some 875 members.Nothing is coming out of the NCUA–other than to acknowledge thatfour entities have expressed interested in bidding. The NCUAdeclined to reveal their identities, but industry sources toldCredit Union Times they are Alloya, Catalyst, SunCorp andCenCorp.

“We are encouraged that we will find an acquirer given we havefour corporates looking, but we cannot make any guesses as to whatthe bids may look like,” said NCUA spokesperson David Small. He added that the regulator is aiming for a November decision butwill not guarantee that timeline.

The four corporates named by sources each declined to comment inresponse to a request for clarification of their interest inWestern Bridge.

Just what might they be seeking to buy? One reality is that ahigh NCUA priority, dating back to a September statement by ScottHunt, head of the agency’s corporates office, is a strongpreference for an outright sale of Western Bridge as a whole.

“NCUA prefers to sell Western Bridge as an operating wholebecause it is the least systemically disruptive in the short term,”explained credit union consultant Marvin Umholtz.

“I believe a white knight will in fact emerge and take it all.That will end NCUA’s issues,” said a senior executive with acorporate credit union who requested anonymity.

A reality, added another credit union insider, is that thecredit union system is not designed to handle the abrupt need formany hundreds of credit unions to exit Western Bridge and enter anew processing system at a different corporate, the Fed, orelsewhere.

More worrisome, said that insider, is that many hundreds ofthese credit unions are smaller institutions with thin staffing,and they will need considerable handholding as they transition.

However, a stumbling block to seeing this scenario come to be is“it probably will have some shape or form of a capital raise,” Huntsaid at the October annual meeting of the California and NevadaCredit Union Leagues.

An executive at a large corporate corroborated that. Heexplained that existing members of the corporates said to beinterested in acquiring Western Bridge had put in capital, and theywould expect the same from new members that came in via anacquisition. “No matter who were to acquire Western Bridge as awhole, there almost certainly would be a capital requirement.”

The willingness of the current 800 WesternBridge users, and also their ability to, capitalize is a largeuntested question. What is known is that just around 300 of themhad committed to capitalize the ill-fated United Resources, the planned new corporate that failed to rise out of Western Bridgein the summer.

That means about 500 declined to put up capital and theirwillingness to capitalize another corporate is unknown.

This leads to the second scenario: long-term NCUA operation of ashrunken Western Bridge. Scott Hunt floated this idea as apossibility at the California and Nevada Credit Union Leaguesmeeting.

As reported in the leagues’ newsletter: “Hunt also said it’spossible none of the four anticipated bids are accepted. In thatcase, Western Bridge might still operate under NCUA conservatorshipbut would heavily downsize its staff and operations.”

The problem with this, said credit union insiders, is that adiminished Western Bridge would quickly begin to lose customers andalso employees. Little by little, the institution woulderode, and this would solve no problems, for the NCUA or WesternBridge’s credit union users.

A third scenario, mentioned by some outsiders, sees the NCUAselling off pieces of Western Bridge to a medley of buyers.Enthusiasm for this is slim, however, as it is unclear what piecedout Western Bridge assets would fetch in today’s market or even ifthere would be any buyers.

And it is also unclear how this would help with the problem ofproviding many hundreds of small and mid-sized credit unions withcontinuing correspondent banking services.

The clock is ticking, and that is not in the NCUA’s favor. “Itis in NCUA’s interest to resolve this quickly,” said a corporatecredit union executive.

Another executive, who also requested anonymity, added that theuncertainty surrounding Western Bridge’s fate is prompting some ofthe larger current users to make alternative arrangements ratherthan wait out NCUA’s process.

But when and as those large natural person credit unions departWestern Bridge, the acquisition becomes less and less attractive.“NCUA needs this resolved sooner, not later,” she added.