The California Department of Financial Institutions said Monday a long ailing Sacramento credit union, the $21 million Sacramento District Postal CU, had experienced "heavy losses in its portfolio" for a sustained period prior to it being merged over the weekend into the $56 million Southern California Postal CU of Long Beach.
Both CUs are privately insured by American Share Insurance of Dublin, Ohio.
Sacramento Distinct "did not have adequate capital to protect it against further losses," said a DFI statement. The agency "had worked with the CU for some time to help restore it to conformity with industry standards of safety and soundness but the CU continued to suffer losses and was unable to develop a plan to restore its depleting net worth."
In the first quarter, its net worth stood at 4.40% with a negative 2.3 ROA. It lost $114,000 in the first quarter with records immediately unavailable for the second quarter.
For its part, Southern California's CEO, Christine Haley, said her CU welcomed the merger and was "promising a smooth transition for members" as it works with ASI.
"We want to make this transition as seamless as possible for the members," said Haley.
"In today's turbulent economy, Southern California Postal Credit Union has a long history as a respected credit union with a reputation for fiscal strength," she noted, adding that her credit union. Founded in 1933, "is strongly capitalized, well above regulatory guidelines for 'well-capitalized' credit unions."
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