PenFed explores conversion to savings bank

[Purron]

Interesting article about PenFed from Credit Union Journal (www.cujournal.com):

Pentagon FCU Explores Conversion To Savings Bank
Credit Union Journal | Wednesday, February 25, 2009 ALEXANDRIA, Va. – Frustrated over the huge cost of the corporate credit union bailout, the board of Pentagon FCU has authorized management of the nation’s third largest credit union to explore conversion to a mutual savings bank.
No decisions have been made yet but the board agreed over the weekend to have management look into the savings bank charter, according to several sources.
Pentagon officials declined to confirm the reports. "I have no comment," Frank Pollack, president of the $13 billion credit union, told The Credit Union Journal yesterday.
In an interview soon after NCUA announced plans to have natural person credit unions fund the $5 billion corporate bailout Pollack called the estimated $80 million charge to his credit union "confiscatory" and said he will avidly explore every option to limit the cost to his members.
The $80 million charge would wipe out almost two-thirds of the credit union's $125 million of net income for 2008. The credit union giant had a banner year in 2008, with 16% growth in assets and a 1% return-on-average assets, or ROA.

 

[FUEGO]

My local credit union, also a natural person credit union, is like penfed in that they never took crazy risks, they mostly hold their own mortgage notes, so they never went crazy issuing dodgy loans and securitizing them. I think they are in a similar situation as penfed in that they are being asked to cough up tens of millions to bail out other credit unions that weren't responsible. It will interesting to see the outcome of all this.