Local financial leaders are set to launch a replacement for WesCorp, the San Dimas corporate credit union that was seized by regulators in 2009.
United Resources Federal Credit Union would have total assets between $4 billion and $5 billion, far below the $23 billion WesCorp had at the time of its failure.
Corporate credit unions provide check-clearing, liquidity and investment services to retail credit union members, which place their excess capital with corporates. There are about two dozen of them in the United States.
United Resources is seeking up to $250 million in capital from area credit unions. The institutions have until Aug. 31 to decide whether they will recapitalize the corporate.
It is unclear whether credit unions, which lost billions on bad investments made by WesCorp, will feel comfortable reconstituting the corporate system. Matt Davidson, newly elected United Resources chairman, told the Business Journal that he expects fewer institutions will trust corporate credit unions.
But analysts said many credit unions have come to realize that there are few viable alternatives for corporate services.
“A year ago, I think everyone was down on the corporate system, but I think there has been a positive rebound,” said Charles “Chip” Filson, president of Washington, D.C.-based credit union consulting firm Callahan & Associates Inc.
WesCorp had about 1,100 credit union members from across the Western United States prior to its failure. It has been operated under the conservatorship of federal regulators for the past two years.
The National Credit Union Administration, a regulatory agency for the industry, is pursuing a billion-dollar lawsuit against former WesCorp officers and directors.
The public markets are opening up in a big way for local companies.
Local visual effects company Digital Domain Inc. filed papers last week for a $115 million initial public offering slated for this summer, while news also began to circulate that downtown L.A. investment firm Oaktree Capital Management LP is planning an IPO.
Additionally, local companies stand to benefit from offerings of subsidiary companies. Aleris Corp., an aluminum company owned by Oaktree, has filed a prospectus for a $100 million IPO. Shipping container company Royal Wolf Holdings Ltd., which is owned by Pasadena’s General Finance Corp., plans to go public in Australia with an offering that could raise nearly $100 million.
“This market is on a comeback footing,” said John Fitzgibbon, owner and publisher of research site IPOScoop.com, who noted that the number of IPOs has picked up dramatically over the past two years.
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