FORT COLLINS, Colo. — Aiming to calm jitters among Norlarco Credit Union members, NCUA sent out letters this week detailing reasons for the regulatory conservatorship, assuring depositors that funds are safe and claiming a path is being charted to restore stability to the beleaguered $269 million CU.
The four-page letter and fact sheet comes as the CU reported an 11% erosion in its deposit base during the last month with agency officials maintaining such outflows are not uncommon following a failure of this size, one that has drawn intense media coverage.
In the “letter to members” signed by Melinda Love, NCUA's Region Five Director and Robert Hamer, president/CEO, NCUA blames the CU's current problems on the faulty Florida construction loans made by previous management “which exceeded prudent risk levels.”
The letter also reviews secrecy surrounding the May takeover by the Colorado Commissioner of Financial Institutions and the subsequent NCUA conservatorship as done to avoid spreading unnecessary member fear.
The Colorado agency acted so “as not to alarm members until regulatory steps were implemented to address the situation,” said the letter.
In answer to a posed question about the sale of Norlarco, the letter said NCUA has a “highly successful track record” of maintaining CU service.
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