DENVER — Credit unions hit by the Norlarco failure are learningsome harsh lessons about staying local and chasing yield, thechairman of the Colorado Credit Union Association William Sterner,warned Tuesday.

“It's a matter of realistically evaluating the risks andunderstanding the business you're in,” declared Sterner in areference to the NCUA conservatorship of the $330 million NorlarcoCredit Union of Fort Collins plus two other CUs, one in Michiganand the other in Denver that came under NCUA purview for risky realestate or subprime ventures.

Sterner, who also is president/CEO of the $720 millionElevations Credit Union of Boulder, said NCUA now has “a verycomplex case on its hands”, which could take until next year tounravel in righting Norlarco and “returning it to its members.”

“It is my understanding there are 25 credit unions and at leasttwo banks that had participation loans” in connection withNorlarco's ill-fated Florida real estate operations, some of whichare being adjudicated in court suits, said Sterner.

A year ago, Elevations had seriously considered a merger ofNorlarco, but plans fell through when some of its portfolioproblems came to light, he said. However, now like other ColoradoCUs, Elevations would consider Norlarco in an NCUA purchase andassumption transaction whenever that takes place.