Expanding its Colorado footprint, the $5.5 billion Security Service Federal Credit Union of San Antonio is planning a takeover of the ailing $120 million Norbel Credit Union of Fort Collins, Colo. in a transaction subject to final NCUA and state regulatory approval.
The transaction, to be completed by July 31, marks Security Service's second NCUA purchase and assumption deal in 10 months after it successfully merged the also struggling $78 million West Texas CU of El Paso, Texas.
Norbel's deteriorating condition marked by large loan losses came to light last spring, culminating in a June 18 management agreement with Security and the Norbel boards, according to a source familiar with the situation. The pact then won clearance from the NCUA and the Colorado Division of Finance, the source said.
In a statement, NCUA confirmed Security Service would be operating Norbel under a management agreement, with the transaction to be completed pending regulatory approval. "In the meantime, Norbel continues to be open for business and serving its membership normally," said NCUA.
NCUA financial performance reports showed Norbel's loan delinquencies at 7.25% as of March and an ROA of negative 31.56%. Norbel lost $9 million in the first quarter after losing $1.1 million in 2009.
In addition to Fort Collins, Norbel, with 17,000 members, has four other branches in Loveland, Longmont, Greeley and Broomfield.
John Worthington, senior vice president of Security, said the Norbel merger, once consummated, would fit into the Texas CU's growth plans to reach beyond the Denver market where it has had a presence for years. Three years ago, Security successfully bid on the failed New Horizons CU of Denver, which suffered loan losses in the subprime mortgage debacle.
--jrubenstein@cutimes.com
