Regulatory Forbearance Keeps Utah Failure Afloat
SALT LAKE CITY – NCUA and state regulators continue to shop Beehive CU, even as they conceded the one-time $200 million credit union has failed and will cost the National CU Share Insurance Fund more than $25 million to resolve.
But Beehive, the erstwhile convert to bank, continues to operate on its own and has yet to be taken under regulatory conservatorship, according to Orla Beth Peck, credit union supervisor for the Utah Department of Financial Institutions, who confirmed yesterday the credit union is still open for business. But she said she was unable to discuss the financial condition of individual credit unions regulated be her department.
Officials at Beehive did not return a phone call seeking comment yesterday. NCUA, which disclosed the failed status of Beehive and the projected losses, declined to comment.
Beehive had applied to the FDIC to convert to a mutual savings bank in 2007 but abandoned its effort as losses began to mount, giving the banking regulators pause. The credit union reported a $1.5 million loss for 2008, a $10.1 million loss for 2009 and a $5.8 million loss for the first nine months of 2010, erasing all of its net worth and pushing down assets to just $145 million.
The failure is the latest among large credit unions in Utah, which has become the fifth “sand state,” along with California, Arizona, Nevada and Florida. Recent failures include Southwest Community FCU and HeritageWest FCU, and most of its largest credit unions have moved in and out of the red over the past two years.