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Utah Central Credit Union, which has struggled with poor-performing real estate loans since the downturn in the real estate market in 2007, was seized Friday by state regulators.
Immediately after the seizure, Utah Department of Financial Institutions Commissioner Ed Leary named the National Credit Union Administration as liquidator. That federal agency in turn struck a deal with Chartway Federal Credit Union to take over.
Chartway, which is based in Virginia Beach, Va. and has assets of $1.8 billion, now operates three Utah credit unions. It took over the troubled HeritageWest Credit Union in Tooele in January 2010 and Southwest Community Credit Union in St. George six months later.
"Utah Central, along with Beehive Credit Union, were the two [cooperatives] that were having the most difficultly due to the decline in the real estate industry," said Michael Jones, the chief examiner at the Utah Department of Financial Institutions.
Beehive Credit Union was taken over by Security Service Federal Credit Union of San Antonio in mid-December 2010.
Utah Central had $158 million in assets and served about 23,390 members at the time it was seized. Its members will be counted among the 230,000 members of Chartway, and they should have full access to their accounts and not experience any interruption in service, Jones said.
Members' deposits are insured up to $250,000 by the NCUA.
The Utah credit union's problems have been well known, with at least one nationally recognized rating agency, Bankrate.com, assigning it its lowest mark in recent quarters.
Utah Central lost $3 million in 2008, $3.3 million in 2009 and $547,000 last year.
Those losses led Leary at the state's Financial Institutions Department to take possession of Utah Central, declaring the step was necessary "in order to protect members and the public, finding, among other things, that the credit union had a negative net worth and was not in a safe or sound condition to transact business."
Utah Central, whose representatives could not be reached for comment Friday, was created in 1940 as "a credit union for credit unions" by the directors of the Utah Credit Union League.
"Back in the old days, credit union employees were not allowed to be members of their own credit unions," said Scott Simpson, the CEO of Utah's Credit Unions, an association of the state's cooperatives that was formally known as the Utah League of Credit Unions. "And that resulted in Utah Central being established."
In recent years, Utah Central drew its membership base from the residents of Salt Lake County, where it had five offices, and Carbon County, where it operated a single branch.
"Utah Central worked pretty hard to improve [its] balance sheet over the past couple of years but just couldn't seem to turn the trajectory around," Simpson said.
Tribune reporter Paul Beebe contributed to this story
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5 Utah credit unions have been closed in past 15 months
Utah Central Credit Union, Salt Lake City, bought by Chartway Federal Credit Union, Virginia Beach, Va., Friday.
Family First Credit Union, Orem, bought by Security Service Federal Credit Union, San Antonio, Texas, February 2011.
Beehive Credit Union, Salt Lake City, bought by Security Service, December 2010.
SouthWest Community Credit Union, St. George, bought by Chartway, July 2010.
HeritageWest Credit Union, Tooele, bought by Chartway, January 2010