DENVER — Credit unions hit by the Norlarco failure are learning some harsh lessons about staying local and chasing yield, the chairman of the Colorado Credit Union Association William Sterner, warned Tuesday.
“It's a matter of realistically evaluating the risks and understanding the business you're in,” declared Sterner in a reference to the NCUA conservatorship of the $330 million Norlarco Credit Union of Fort Collins plus two other CUs, one in Michigan and the other in Denver that came under NCUA purview for risky real estate or subprime ventures.
Sterner, who also is president/CEO of the $720 million Elevations Credit Union of Boulder, said NCUA now has “a very complex case on its hands”, which could take until next year to unravel in righting Norlarco and “returning it to its members.”
“It is my understanding there are 25 credit unions and at least two banks that had participation loans” in connection with Norlarco's ill-fated Florida real estate operations, some of which are being adjudicated in court suits, said Sterner.
A year ago, Elevations had seriously considered a merger of Norlarco, but plans fell through when some of its portfolio problems came to light, he said. However, now like other Colorado CUs, Elevations would consider Norlarco in an NCUA purchase and assumption transaction whenever that takes place.
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