DENVER – Officials of Public Service CU will be working over the next few weeks to stem the outflow of deposits from Norlarco CU, the failed $290 million credit union for which it won the bidding last week.
The initial focus of Public Service CU will be to prop up the confidence in Norlarco members, who have withdrawn more than $30 million since a federal conservatorship was announced in August.
“We’ll be working through what we have over the next few days; we want to make sure we do this in a way that doesn’t cause any undue concern for the membership,” Cyndi Koan, chief financial officer for the winning Norlarco bidder told the Credit Union Journal last week.
Public Service CU, which outbid credit union giants Bellco CU and Ent FCU for the remnants of Norlarco, was one of a half-dozen credit unions to explore a merger with the troubled credit union last year, and even signed a letter of intent to acquire Norlarco before it was taken over by regulators last May.
Under a purchase and assumption agreement with NCUA, which has been running Norlarco under conservatorship, Public Service CU will get the credit union’s Fort Collins, Colo., headquarters, six branches and almost 40,000 member accounts, according to Koan. NCUA will assume about $140 million in bad loans, most of them in speculative residential real estate in southwest Florida.
Norlarco is one of three credit union failures tied to the Florida projects – Lehigh Acres and Cape Coral. NCUA has sold off all three failures, leaving the agency with more than $300 million in real estate loans, many of them defaulted on, in those two developments. The federal regulator next must resolve those loans, either by selling them off in the depressed real estate market or servicing the loans.
NCUA sold off the remnants of Huron River Area CU, in Lansing, Mich., to Detroit Edison CU, and the remains of New Horizons Community FCU, in Denver, to Security Service FCU.
The combination with Public Service CU will give Norlarco members access to 19 additional branches in Colorado, plus 2,900 shared branches across the country.
Officials with NCUA and Public Service CU would not disclose the price the $640 million credit union paid for the Norlarco assets.
