Family First Credit Union has been acquired by Security Service Federal Credit Union of San Antonio, the same not-for-profit cooperative that took over Utah's financially troubled Beehive Credit Union in mid-December.
The fate of Orem-based Family First, which claimed 19,476 members, was sealed last July when federal credit union regulators determined its financial condition had deteriorated and they needed to step in to assure that member assets were protected.
"We became aware of the opportunity to assume control of Family First's operations last fall, around the time we were beginning to get involved with Beehive," John Worthington, a senior vice president at Security Service, said Wednesday.
Security Service, which counts itself as the eighth-largest credit union in the U.S., with more than 800,000 members and assets of more than $6 billion, will continue to operate the credit union and its five branches under the Family First name for the time being.
However, of the 60 employees working at Family First, only 41 were offered jobs. "We had some duplication in back-office (bookkeeping) positions," said Clarrisa Rodriguez, a Security Service spokeswoman.
Family First was founded in 1947 as the Geneva Recreational Association Federal Credit Union and drew its members from the employees of Geneva Steel.
Like Beehive, Family First was among a handful of Utah credit unions that were heavily involved in the once-sizzling real estate market along the Wasatch Front. When property values started to plunge in fall 2007, their finances suffered.
Family First lost $1.1 million in 2008 and $5.8 million the following year. Through the first nine months of 2010, its losses had grown to $15.7 million. Over that nearly three-year period, Family First also saw the value of its assets plunge, from $168.8 million to $126.7 million.
Two former members of Family First's board of directors, who were dismissed by federal regulators in July, declined to comment on Security Service's acquisition.
The National Credit Union Administration wouldn't say whether any taxpayer money was involved in the acquisition or whether it had to tap into its insurance fund to protect member deposits, which are insured up to $250,000.
"When we place a credit union into conservatorship, as we did with Family First, our goal is to protect member assets, while allowing it to continue to operate under our supervision," said spokesman John McKechnie.
Credit unions face an uphill battle when they run into financial trouble. Unlike banks, which can raise fresh capital by selling stock, credit unions can right themselves only through profitable growth. They have to earn their way out of the problems, which can be particularly difficult during tough economic times.
Worthington said Security Service saw the acquisition of Family First's assets as an opportunity to expand its presence in Utah, which it views as an attractive market. However, he added that the credit union won't be considering any additional acquisitions, at least for awhile.
"Our plate in Utah is full right now," he said.
A look at Security Service FederalCredit Union
Founded • 1956 with $25 in capital and was established to serve the financial needs of members of the U.S. Air Force and their families. It has become the eighth-largest credit union in the U.S. in terms of assets.
Headquarters • San Antonio
Assets • $6 billion
Members • 825,000
Offices • 36 in Texas, 19 in Colorado and 15 in Utah