A trio of small Wisconsin credit unions are apparently in merger mode this month with two of them under the gun of the NCUA and all linked to last February's collapse of Central States Mortgage Co., the Wauwatosa, Wis. CUSO now in liquidation.
All three, the $31 million Lifetime CU and the $53 million Allco, both of West Allis, and the $32 million First Security CU of Elm Grove, were reportedly forced by regulators last year to write down their CSMC investments and losses on the tainted mortgage pools of the CUSO, now in the hands of a Milwaukee bankruptcy court.
For its part, Lifetime, which lost $2 million in the first quarter following the writeoffs is being merged June 30 into the $1.3 billion Landmark CU of New Berlin, Wis.
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William Kuter, Lifetime president/CEO, acknowledged the financial travail of the 25 Wisconsin and Illinois CU participants in CSMC noting that all of them were surprised late last year by the unfortunate turn of events at the CUSO, hit by losses on subprime mortgage pools.
The NCUA, meanwhile, said Friday it has asked both Allco and First Security to "consider the possibilities" of a merger. Both CUs have suffered loan losses in the first quarter and in 2008 and retained low net worth ratios.
The NCUA, which said its policy forbids "comment on the merger process," said only that Allco and First Security "are undercapitalized, per their 5300 reports and are subject to net worth restoration plan requirements."
On its Web site, Kuter noted the "declining financial condition" of his CU in recent months stressing, however, its losses are "not related to our everyday operations." Lifetime could have put together a net worth plan with regulators but optioned instead "to merge with another credit union."
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