Sunday, October 25, 2009

Cumorah Credit Union Seized

Nevada officials on Friday shut down privately insured Cumorah Credit Union, which serves 15,000 members of The Church of Jesus Christ of Latter-day Saints. The assets and deposits were assumed by Credit Union 1, a $574 million institution based in Rantoul, Illinois.

George Burns, commissioner of the Financial Institutions Division. stated that none of Cumorah's members will lose their deposits because of the credit union failure.

Cumorah is the first privately insured Nevada credit union to fail since the financial crisis began. Deposits were insured by American Share Insurance.

"Due to inadequate capital and mounting loan losses, it was necessary to take possession of Cumorah Credit Union," Burns said in a statement.

In an administrative order, Burns said Cumorah was "operating in an unsafe and unsound manner" and was "in imminent danger of insolvency." Burns also cited lack of capital or net worth, poor liquidity, inadequate earnings and "excessive loan risk."

Paul Simons, the CEO of the Credit Union 1, disclosed that Cumorah ran into problems when its commercial real estate loans started to become delinquent.
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