Norlarco CU Deposit Base Erodes

FORT COLLINS, Colo. – Norlarco CU, one of three credit unions taken over by NCUA because of speculative Florida real estate loans, this week said its deposits declined by 11% during August, a whopping $32 million, after news of the government takeover was disclosed to the public. The troubled credit union, which was secretly taken over by state regulators last May, said in notices posted at its branches it had deposits of $269.2 million as of Aug. 31, down from $301.1 million on July 31. News of the regulatory takeover was made public in late July. In a letter sent to members this week, NCUA sought to pacify jittery members, saying it is working with anyone with accounts that may exceed federal deposit coverage to restructure the accounts. The letter, signed by Melinda Love, director of NCUA’s Region Five, and Robert Hamer, president of Norlarco, said the credit union will continue to provide services to its members while the regulators work to resolve the loans made to two Florida real estate developments. The credit union has more than $238 million worth of residential construction loans to those projects, many of them in delinquency or default. “The conservatorship,” said the letter, “ensures we have dedicated resources to address issues concerning the delinquent loans with the construction loan portfolio. Our goal is to take the necessary actions to accomplish this goal.”