Hacienda Merger Underscores Funding Rift, Says Lanter

PORTLAND, Ore. – The forced merger of the Latino-based Hacienda Community Credit Union into Point West CU here (CU Times April 13) underscores the need for start-up CUs to ensure funding is firmly in place before opening their doors, according to the state’s top CU regulator, Floyd Lanter. Acknowledging the state’s ultimatum to the fledgling $2.5 million Hacienda, Lanter, administrator of the Oregon Division of Finance and Corporate Securities said there was regulatory pressure on the credit union to get more capital or find a merger partner. But the decision to pick the $90 million Point West among three bidders was made by directors, he said, after the board which included top CU executives representing Portland area CUs that were supporting Hacienda, as well as the Credit Union Association of Oregon, were given the bad news capital-short Hacienda had to be self-sustaining. Since its opening two and a half years ago, Hacienda had relied on the goodwill of other large CUs, principally Portland Teachers CU, for data processing, accounting and operational expertise on its loan portfolio and in other areas. Hacienda, the first new CU to open in Oregon in 20 years to serve a north side Latin neighborhood, had been designated low-income by NCUA and recognized as a Community Development Financial Institution eligible for federal grants. Regulators “wanted Hacienda to be weaned away from us and it wasn’t happening” at a pace dictated by examiners, said Frank Astalosh, who served as chairman of Hacienda but is also senior vice president and chief information officer of Portland Teachers CU. Also on the Hacienda Board was Robert Barzler, CEO of Point West, who said the absorption of Hacienda into PWCU as a separate division would serve long-term desires of the Portland CU to expand its reach into the Hispanic community. PWCU is well prepared for the merger even as it “moves us toward our objective more rapidly than anticipated,” said Barzler, who was also joined on the Hacienda board by Alison Carr, director of training and education at the Credit Union Association of Oregon. Carr said CUAO had “brought a number of resources on board to help Hacienda” prior to its opening in October 2002 with four or five members of the League staff providing assistance in such areas as compliance and training. Astalosh said Portland Teachers was not one of the bidders on Hacienda since it is a SEG-based CU. Lanter, the regulator, said Oregon’s ban on secondary capital and Hacienda’s “inability to compete” on its own were reasons for the Portland CU to find a partner, adding the situation “was a tough one.” But the struggle for survival by small CUs is not unique to Oregon, said Lanter, citing disclosure earlier in the week at a meeting in Denver “of 300 mergers last year and of these 99.5% were small.” Lanter was an attendee at a conference of the National Association of State Credit Union Supervisors. The Oregon regulator also forecast possibly more troubles down the road for small CU mergers because of FASB accounting rules on asset pooling which are to take effect in 2006 with that issue “being resolved now” in a bill pushed in Congress by Sen. Max Baucus (D. Mont). [email protected]