No banks failed this Friday. However, two credit unions were liquidated this week. Only one of the failed credit unions was federally insured. The other one was just privately insured by the American Mutual Share Insurance Corporation (ASI). It has been rare for ASI-only credit unions to fail. I have more information on ASI in this blog post.
The federally-insured credit union that failed was Telesis Community Credit Union which was headquartered in Chatsworth, CA. It's the 6th federally-insured credit union to be liquidated in 2012. With over $300 million in assets, it's the largest credit union to be liquidated this year. According to the Credit Union Times, "the credit union had sustained years of losses tied to losses in commercial lending, particularly participation loans."
NCUA placed Telesis Community Credit Union under conservatorship on March 23, 2012. This conservatorship process is unique to credit unions. Going into conservatorship has no effect on deposits. Members continue to have full access to all of their deposits, even those over the NCUA limit. This gives members a chance to adjust their uninsured deposits so that all of their deposits are insured.
It appears Telesis members don't have to worry about losing money on uninsured deposits. The NCUA arranged for Premier America Credit Union to assume all deposits. Premier America provided a Questions and Answers page on its website. One bit of good news mentioned in this Q&A page is that rates and terms of certificates and/or IRA certificates will remain unchanged.
The privately-insured credit union that was liquidated was USA One National Credit Union in Matteson, Illinois. It's the first privately-insured credit union to be liquidated in 2012.
The Illinois regulator, Illinois Division of Financial Institutions, had ordered USA One closed due to inadequate capital, and it appointed ASI as the liquidating agent. The ASI then arranged for Credit Union 1 (another ASI-only credit union) to assume all deposits of USA One.
Below is the summary of this week's credit union failures:
6th Credit Union Liquidation of 2012 - ASI-Insured (May 31)
- Liquidated CU: USA One National Credit Union, Matteson, IL
- Size: 8,000 members and had $38 million in assets
- Acquiring CU: Credit Union 1, Lombard, IL
- Financial Ratings: 1 star at Bankrate.com, ? stars at BauerFinancial, 2 stars & Texas Ratio of 93.05% at DepositAccounts.com (see financial rating note)
7th Credit Union Liquidation of 2012 (June 1)
- Liquidated CU: Telesis Community Credit Union, Chatsworth, CA
- Size: 37,600 members and had $301.3 million in assets
- Acquiring CU: Premier America Credit Union, Chatsworth, CA
- Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 99.85% at DepositAccounts.com (see financial rating note)
Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at DepositAccounts.com & Bankrate.com, Texas Ratios over 100% is considered at risk. Bankrate and BauerFinancial ratings are based on December 2011 data. DepositAccounts.com ratings and Texas Ratios are based on March 2012 data.
- FDIC list of failed banks
- Texas Ratios for banks and credit unions
- Latest FDIC info on deposit insurance
- My bank failure review posts
- Review of the 2011 bank and credit union failures
- Review of the 2010 bank and credit union failures
- 10 Lessons from the 2008 bank failures
Edit 6/2/2012: Updated the DA ratings and Texas ratios of the two failed credit unions based on March 2012 NCUA & ASI data.