Chartway takes over Utah-based credit union

VIRGINIA BEACH

Chartway Federal Credit Union said Monday that it took control of a failed credit union in the Salt Lake City region and is pursuing opportunities to acquire others.

"I get two or three calls a week from credit unions that say, 'We're looking for a merger partner,' " said Ronald L. Burniske, president and CEO of Virginia Beach-based Chartway.

That's because the agency regulating federally chartered credit unions and insuring most credit-union deposits has told those that are struggling to "find a partner or we're going to liquidate you," Burniske said.

Chartway, the largest credit union based in South Hampton Roads, took over HeritageWest Federal Credit Union after the National Credit Union Administration

liquidated the institution in Tooele, Utah, at the end of the year. The regulator said it closed the credit union because of its deteriorating financial condition.

HeritageWest reported a net loss of $15.3 million for the first half of 2009 and that it had $30.2 million of delinquent loans at the end of June. Federal regulators noted last year that the credit union was "significantly undercapitalized." When it was shut, HeritageWest had $311 million of assets and 40,000 members. It was the 15th federally insured credit union liquidated in 2009.

Chartway found HeritageWest attractive because it had a community charter to serve Salt Lake County and the potential for significant membership growth, Burniske said. In addition, it evolved from a credit union affiliated with a military base and had a culture much like Chartway's, he said.

Chartway, once known as Naval Air Norfolk Federal Credit Union, evolved from an organization that served employees and service personnel at the air station.

Burniske blamed HeritageWest's difficulties on a loss of focus on consumer lending and its move into lending to commercial builders. Chartway, he said, examined the credit union's financial condition in November and began to manage the credit union in December. He declined to say what financial incentives credit-union regulators provided to Chartway for the transaction.

HeritageWest will keep its name and operate as a division of Chartway. The combination boosted Chartway's assets to more than $1.5 billion and its membership to almost 200,000.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com