The National Credit Union Administration last week finished converting 95 privately insured Tennessee credit unions to federal coverage.
The credit unions, which represent about $1.4 billion of assets, were formerly insured by Mutual Guaranty Corp. The Chattanooga-based insurer, which announced plans to liquidate last year, had been losing institutions for two years after several states in which it had customer. s required federal coverage.
"We were extremely pleased with the way the conversion went," said Tom Mottern, president of Mutual Guaranty. "We had outstanding cooperation with the NCUA."
Mutual Guaranty's current task is defending itself against lawsuits filed by credit unions that left the insurer earlier and are suing to regain their capital contributions.
Mr. Mottern said there were four lawsuits - three from Missouri-based credit unions and one from a Kansas credit union that are demanding the return of about $5 million. The credit unions left Mutual Guaranty after state law mandated they acquire federal insurance.
"We're standing pat until those matters are considered," Mr. Mottern said.
More than 200 credit unions left Mutual Guaranty between 1991 and 1993, abandoning $14 million in capital contributions. Several states required credit unions to obtain federal insurance after a Rhode Island private insurer went belly-up in 1991.
In 1993, the Tennessee regulator threatened to require all credit unions to obtain federal insurance if they didn't do so voluntarily.
There are currently no plans for Mutual Guaranty to enter new lines of business, such as secondly insurance. The credit union's insurance fund stands at about $18-million, Mr. Mottern said.
Four credit unions were merged and one voluntarily liquidated in the course of the conversion, said Billy Thomas, chief credit union regulator for Tennessee. None of the credit unions required a capital infusion, although Mutual Guaranty purchased a loan from one credit union, Mr. Thomas said,