The National Credit Union Administration (NCUA) liquidated Tracy Federal Credit Union (Tracy FCU) of Tracy, California. Valley First Credit Union purchased and assumed Tracy FCU’s assets, loans and shares.
On March 19th, NCUA placed Tracy FCU into conservatorship. Tracy FCU’s declining financial condition led to its closure and subsequent purchase and assumption. At closure, Tracy FCU had $25.4 million in assets and served 5,973 members.
This is the sixth credit union to be liquidated in 2010 and the third in California.
Fact: This did not cost the NCUSIF a loss, when was the last time the FDIC liquidated a bank with a loss?
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MB:
ReplyDeleteUnless you have insider information, NCUA never discloses in the press release the loss to the NCUSIF associated with a CU failure.
The credit union had about 10% net worth at year end but negative earnings and increasing delinquencies. NCUA is getting more aggressive in dealing with "problems" before they become liabilities to the system. Also, it is listed as a purchase and assumption which means that the acquiring credit union assumes all obligations of the merged credit union.
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Correction; The merged credit union had 5% net worth at year end and the merging credit union has about 10%. Other comments remain operative.
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MB and Anonymous:
ReplyDeleteAt the end of March, the Financial Performance Report for Tracy FCU showed that it had a net worth ratio of 0.01 percent.
You are correct and if you look a little closer, you will find that Tracy's allowance for loan losses was increased by about $1 million and a lot of loans were charged off. I suspect this was a pre-merger step by NCUA and Valley First to get the balance sheet as clean as possible before Tracy was merged. Fact; Valley has over 10% net worth and should not have a problem absorbing Tracy.
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