Gain FCU to Acquire Small, Troubled LA Credit Union
Pacoima Development FCU was founded in 2005 to help low-income Los Angeles residents.
Gain Federal Credit Union of Burbank, Calif., will acquire a small, troubled credit union in Los Angeles’ Pacoima neighborhood late this month.
Gain FCU ($341 million in assets, 19,511 members) announced Friday that it will be acquiring Pacoima Development Federal Credit Union ($3 million in assets, 1,207 members) on July 29. Gain said NCUA had approved the merger, following board votes approving the plan in June.
When Pacoima Development FCU was founded in 2005, its membership was limited to the 90,000 residents of the Pacoima neighborhood, which until then did not have access to a credit union. By 2007, it had 453 members and $2.4 million in assets.
JoAnn Johnson, then chair of the NCUA, visited the credit union in May 1987 when it held a grand opening of its new headquarters — a building that once housed a pawnshop. “I’m very pleased that there is a credit union in this community to offer an alternative to predatory lenders and pawnshops,” she said.
Pacoima Development FCU is now a Community Development Financial Institution open to 255,000 residents in the Los Angeles neighborhoods of Pacoima, Sun Valley, Sylmar, and Panorama City, along with the City of San Fernando.
However, NCUA data shows the credit union has lost 7% of its members in the past year, and a third of its loans. It lost $115,452 in 2017, $47,270 in 2018 and $190,205 in the first quarter of this year.
The most recent net loss occurred as it charged off $114,494 in loans, including $107,799 in real estate-secured commercial loans.
Roberto Barragan, Pacoima’s founder, told the Los Angeles Daily News that the loss stemmed from a loan to an apparel company that has filed for bankruptcy.
Barragan told the Los Angeles Business Journal that the credit union began seeking a merger after its sponsorship by the Valley Economic Development Center ended in early 2017. The non-profit center, which helps small businesses and provides micro-loans, filed for bankruptcy protection earlier this month after more than 40 years of operation.
Gain’s ROA was 0.66% for 2018, up 34 basis points from 2017. Its annualized ROA for the first quarter was 0.44%, down 26 bps, according to NCUA data.
Gain’s field of membership now includes past and present City of Burbank employees, several other local employee groups, and their families.