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Tuesday, July 7, 2020  Spokane, Washington  Est. May 19, 1883
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News >  Business

Credit union dissolution going quietly

Building slump felled The Union

The Union Credit Union had been on a slow descent into insolvency for more than a year when Washington regulators closed the doors at 2004 N. Hamilton St. Friday night.

In April 2009, Union officials had signed a consent order with the Department of Financial Institutions that required submission of a plan to rebuild the credit union’s capital ratio. The Union’s capital ratio had fallen to 3.28 percent; 7 percent is considered well-capitalized.

Although The Union made some progress over the next two quarters, loan delinquencies exploded in the fourth quarter of 2009 as workers in the construction trades were laid off. The credit union, founded by Spokane Bricklayers Local No. 3 in 1968, never recovered.

Friday, the capital ratio was a negative 0.35 percent.

The Union was the first Washington credit union closed in 15 years, but the 17th closed in the United States this year.

Linda Jekel, director of the DFI Division of Credit Unions, said two West Side credit unions were merged into stronger institutions before they had to be taken over. No partner could be found for The Union, she said.

In July, the hunt was turned over to the National Credit Union Administration, which recruited Alaska USA Federal Credit Union to take The Union’s loan portfolio, and absorb 100 percent of whatever balances could not be collected, Jekel said.

Alaska asked Numerica Credit Union to accept The Union’s $11.8 million in deposits and 3,400 members, she said.

Jekel said the transition had been in the works for several weeks, but was kept quiet to prevent a run on Union deposits.

Spokesmen for Alaska USA and Numerica said Monday the weekend transition went well, with only a handful of inquiries from members.

“We’re doing everything we can to make it as much ‘business as usual’ as possible,” said Alaska USA Senior Vice President Dan McCue.

The Anchorage-based credit union has 17 Washington branches but none in Eastern Washington, so it turned to Numerica to maintain member services, he said.

Fixed-rate, closed-end loans will continue with no changes, McCue said, while adjustable loans like lines-of-credit will be reviewed. But Alaska USA has generally held the line on rates for assumed loans, or lowered them slightly, he said.

At Numerica, spokeswoman Jane Ronnfeldt said customers were able to access their accounts at any of the branches shared by local credit unions. Many Union members, she said, were also members of Numerica.

All former Union account holders will be asked if they want to maintain membership, she said.

Jekel said all but one of Washington’s 100-plus credit unions is considered well-capitalized. No other closures are expected this year or next, she said.

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