ALEXANDRIA, Va. – Spiraling losses throughout the credit union industry in many cases will end up with NCUA, which has taken under conservatorship or has plans to take over several of the biggest credit union losers.
NCUA has already assumed hundreds of millions of dollars in bad loans made by these credit unions, in order to be able to sell off the healthy assets in those institutions. In recent weeks, NCUA has assumed tens of millions worth of bad loans from Norlarco CU and Huron River Area FCU. The agency is also believed to be holding loans made from New Horizons Community CU, Cal State 9 CU and Peoples First Choice FCU, all failed credit unions it has taken under conservatorship.
Any losses realized on those loans will accrue to the National CU Share Insurance Fund, which NCUA manages to resolve failed credit unions like these. The loans will either be sold on the market for distressed loans, or serviced by NCUA.
The final tally on Norlarco CU, one of three credit unions caught selling speculative real estate in south Florida, was a $4.8 million loss for the fourth quarter, and a $13.1 million loss for the year. Over the last year, as members learned of the credit union’s condition, shares declined by 28%, from $318.5 million to $230.6 million. Assets declined from $360 million to $290 million.
NCUA announced last week it has agreed to sell the healthy assets of Norlarco, which includes seven branches and 40,000 members accounts, to Public Service CU, of Denver. As part of the deal, NCUA will assume an undisclosed amount, believed to be more than $140 million, of the bad loans.
