Spokane credit union closed by regulators
The Union Credit Union of Spokane was closed Friday by state regulators, citing severe loan losses.
Seattle Times staff reporter
State regulators shut down a Spokane credit union Friday — the first in 15 years — after its finances fell victim to high unemployment among members, who were mainly workers in the recession-battered construction industry.
The state Department of Financial Institutions (DFI) announced late Friday it had closed The Union Credit Union, citing severe loan losses that exceeded reserves.
The one-branch credit union, with about 3,000 members, was organized by members of a bricklayers union local in 1968. It was unusual in that its membership was so concentrated in one sector, said Linda Jekel, director of DFI's division of credit unions.
No depositors in The Union lost money, officials said, because their accounts are federally insured by the National Credit Union Share Insurance Fund up to at least $250,000.
Because regulators couldn't find any credit unions willing to merge with the failing Spokane institution, the federal National Credit Union Administration (NCUA) made deals with two credit unions to absorb parts of it:
• Numerica Credit Union of Spokane Valley, the state's fourth largest, will assume its $11.9 million in deposits and its members. Numerica, which has branches in Spokane, has $1 billion in assets and about 84,000 members.
• Alaska USA Federal Credit Union of Anchorage will assume some assets and liabilities. Alaska USA has $4.1 billion in assets and about 399,000 members.
The Union was the 17th federally insured credit union liquidated this year, according to NCUA.
Of the 116 credit unions in the state, Jekel said only two were below capital requirements as of June 30: The Union and Seattle-based Transportation Northwest, which was merged earlier this month into Alaska USA.
Credit unions hold 19.3 percent of deposits in the state, Jekel said. They largely make money from home mortgages, car loans, lines of credit and credit cards.
Most credit unions are well diversified in their membership and have more than adequate capital levels, she said.
The state ordered The Union's board in May 2009 to come up with a turnaround plan or merge with another credit union.
Jekel said she contacted 18 credit unions in the state to arrange a merger with the state-chartered Union, but found no takers. Neither could the NCUA.
"Credit unions are trying to protect what net worth they have," Jekel said. "If they take in a financially troubled credit union, they take in all of those losses."
Jekel said The Union was the first credit union to fail in the state since 1995. That year Emerald City Credit Union was closed due to internal fraud, and Tacoma-based United Alliance Credit Union was closed just two years after opening.
Sanjay Bhatt: 206-464-3103 or firstname.lastname@example.org