UnionFed Sells Almost All of Its Assets : Banking: Glendale Federal to buy 13 branches in $6.6-million deal, expanding its California base.
Long-suffering UnionFed Financial Corp., almost dismantling itself as a thrift, said Monday that it has agreed to sell 13 of its 14 savings and loan branches and $820 million in deposits to Glendale Federal Bank for $6.6 million in cash.
The purchase dramatically expands Glendale Federal’s presence in California, said Jeff Misakian, a spokesman for the thrift, one of the nation’s largest with $15.7 billion in assets and 135 branches.
“We’ve said we want to build our retail network of branches in California and we’re following up on that,” Misakian said. “Union Federal is in a number of locations we aren’t in currently.”
UnionFed, the Brea-based parent of Union Federal Bank--chronically short of capital, its final reserve against losses--could receive additional payments from GlenFed based on the performance of a portfolio of about $200 million in loans over the next three years. GlenFed is acquiring the loans as part of the deal.
Union Federal was once a strong regional thrift with more than $2.5 billion in loans and other assets and was heavily involved in funding real estate construction and its own real estate deals.
But the recession, along with changes in federal law that severely curtailed thrift investments, devastated both its real estate holdings and its large developer customers. It lost $178.8 million over the past six years and had shrunk to $912 million in assets by the end of December.
“This is pretty much the end of Union Federal,” said Campbell K. Chaney, an industry analyst with investment banker Rodman & Renshaw in San Francisco. “I don’t see how their shareholders will ever recoup. Glendale is the clear winner in this transaction.”
The deal is part of UnionFed’s plan to sell substantially all of its assets and liabilities to boost its capital in the face of a June 30 deadline set by federal regulators. Union Federal Bank is “significantly undercapitalized,” according to federal guidelines, with its capital amounting to only 2% of assets. Regulators could seize the bank if the sale doesn’t go through by the end of June.
Under the deal, Union Federal will retain only its Downtown Los Angeles office and deposits there, along with about $35 million in assets.
GlenFed, which closed a deal earlier this month for another Orange County thrift, Independence One Bank of California in Mission Viejo, will continue to operate 10 of the 13 Union Federal branches, closing offices in Anaheim, Sherman Oaks and Encino and transferring those operations to nearby Glendale Federal branches.
The Glendale thrift will keep the branches in Anaheim Hills, Seal Beach, Fountain Valley, Mission Viejo, Huntington Beach, Van Nuys, Long Beach, Gardenia, Silver Lake and Newbury Park.
