Utah officials seize Beehive Credit Union
The Utah Department of Financial Services today seized Beehive Credit Union and appointed the National Credit Union Administration to arrange the sale of the insolvent institution.
The NCUA immediately entered into an agreement with Security Service Federal Credit Union of San Antonio to purchase the assets and take over the liabilities of Salt Lake City-based Beehive.
Beehive will open Wednesday as a division of Security Service operating under its own name, said Michael Jones, chief examiner for the Department of Financial Services.
Beehive had about $145 million in assets and served 18,000 members at the time it was seized.
The credit union was established in 1954. It has six offices in Salt Lake County, one office in Utah County and an office in Washington County.
Financial Services Department Commissioner Ed Leary took possession of Beehive “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,” according to a statement.
The worst recession since the 1930s has ruined several Utah-based financial institutions in the past couple of years. Most failed because of real estate loans that soured when the housing market collapsed.
Regulators closed Tooele-based HeritageWest Federal Credit Union in June and sold its assets, loans and deposits to Chartway Federal Credit Union.
The next credit union to succumb to the real estate collapse was Southwest Federal Community Federal Credit Union. Regulators seized the St. George-based financial cooperative in June. Again, Richmond, Va.-based Chartway was the buyer.
Four Utah banks — MagnetBank, AmericaWest, Barnes and Centennial — have folded since January 2009. All were big lenders of real estate land and development loans.
A fifth bank, Draper-based credit card lender Advanta, failed in March when its default rate reached 20 percent.
Earlier this month, AmericanWest (not related to AmericaWest) and its Utah-based Far West subsidiary were sold to a California investment company. Real estate loans made by Far West in Utah were responsible for much of the financial woes of Spokane, Wash.-based AmericanWest that triggered the sale.
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© 2010 The Salt Lake Tribune
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