Telesis Took a Belly Flop
The NCUA announced on April 2 that it has contracted with the $1.3 billion Premier America Credit Union to manage the assets of the $318 million Telesis Community Credit Union during Telesis’s conservatorship. Both credit unions are based in Chatsworth, Calif.
The NCUA was named conservator of Telesis after the California Department of Financial Institutions took over the credit union March 23.
The troubles at Telesis arose as credit unions were making a big push for legislation to expand member business lending. Telesis’ conservatorship also followed the business lending-related conservatorship of the once-$2 billion Texans Credit Union, which is running with a $60 million subordinated note.
The California Department of Financial Institutions liquidated Telesis June 1 and appointed the NCUA liquidating agent. Premier America purchased and assumed Telesis’ members, deposits, core facilities and consumer loans from the regulator. The NCUA retained Telesis’ CUSO shares. Telesis was the fifth federally insured credit union liquidation in 2012.
Telesis its financial condition worsen in the first quarter of this year, posting a $13.6 million loss with net worth plummeting to 1.27%.
For years, Telesis has been on NCUA’s list of troubled credit unions because of large losses incurred on business loans, many participations extended outside of California to commercial real estate developments that have since gone sour.
Telesis lost $7 million in 2011 and at year end its net worth stood at 4.59%.
Delinquent loans stood at 10.9% of total loans in the first quarter, a drop from 12.25% at year end. Net charge-offs as a percentage of loans was at 10.58%. Underscoring its business loan problems, the NCUA said Telesis’ participation loan delinquency ratio stood at 18.9% in the first quarter.
Member business lending CUSO Business Partners LLC, founded by Telesis, entered a new phase with the announcement of new owners in November.
According to the Chatsworth, Calif.-based CUSO, the NCUA recently reached an agreement to sell the controlling interest to a managing principal partner group of three credit unions: $650 million Farmers Insurance Group Federal Credit Union in Los Angeles, $526 million Great Lakes Credit Union in North Chicago, Ill., and the $1.2 billion Public Service Credit Union in Denver.
Business Partners said it is owned by 16 credit unions nationwide.