Although Beehive Credit Union wasn't shut down until Tuesday, its fate was sealed months earlier when federal regulators began hunting for someone to acquire the insolvent financial cooperative.

"Back in probably September" officials with the National Credit Union Administration got in touch with Security Service Federal Credit Union and other potential buyers, John Worthington, a spokesman for San Antonio-based Security Service said Wednesday.

After the close of business Tuesday, the Utah Department of Financial Institutions seized Beehive, which has 18,000 members. It appointed the NCUA as liquidator of the Salt Lake City-based cooperative, which had been brought down by loans that went bad when the real estate market collapsed.

The NCUA, the prime federal regulator of credit unions, immediately consummated a deal it reached with Security Service in October when the latter had agreed to buy Beehive's $145 million in assets and take on its liabilities, which were greater because the credit union had a negative net worth.

Security Service and state and federal regulators won't say what Security Service paid to acquire Beehive's assets, whether any taxpayer money was involved or whether NCUA tapped its insurance fund to protect member deposits, which are insured up to $250,000 each.

But there was much behind-the-scenes action before Tuesday. After the NCUA accepted Security Service's bid made in October, Security Service on Oct. 29 took over management of Beehive while the latter's executives remained nominally in charge.

"That's normal procedure when you are going to go into an acquisition or merger," Worthington said.

"That's the way [NCUA] wanted to handle it. I don't know why," said Michael Jones, chief examiner at the Utah Department of Financial Institutions.

NCUA officials didn't respond to a request for comment.

Jones acknowledged he has little experience with credit unions. Beehive was the first state-chartered credit union to be shut down in at least 20 years, he said. The two other Utah cooperatives seized in the last year — Southwest Community and HeritageWest — had federal charters.

In the weeks after Oct. 29, Security Service officials interviewed all of Beehive's 70 employees. Jobs were offered to 51 people. An additional seven are staying on temporarily. Laid-off employees are being paid until the end of this year.

Beehive CEO Scott Jorgensen lost his job, and the position of CEO has been eliminated, Worthington said.

Stephen Anderson, a Beehive executive, was appointed assistant vice president and district manager of Security Service's Utah operations, Worthington said.

Beehive will operate as a division of Security Service for the time being. Once the credit union is integrated into Security Service, the name will be dropped, Worthington said.

Jones, the chief examiner at the state department of financial institutions, doesn't foresee another credit union failure anytime soon.

"All depository institutions — those that were making construction, development and real estate loans — are working through the same problems that banks are. Overall, credit unions are in good condition," Jones said.

Credit unions face an uphill battle when they run into financial trouble. Unlike banks, which can raise fresh capital by selling stock, cooperative institutions can right themselves only through profitable growth.

"Their net worth comes from members, who put their money on deposit. They have deposits and retained earnings, and that's what builds their net worth," Jones said.

pbeebe@sltrib.com —

About the new owner

Name • Security Service Federal Credit Union

Headquarters • San Antonio

Founded • 1956

Assets • $5.9 billion

Members • 785,000

Size • Security says it's the eighth-largest credit union in the U.S. (by assets)

Operations • 36 offices in Texas; 19 in Colorado

Recent acquisitions of distressed credit unions • Norbel Credit Union, Fort Collins, Colo., July; West Texas Credit Union, El Paso, Texas, 2009; Aurora Catholic Credit Union, Aurora, Colo., 2009