Troubled District 8 credit union ordered to merge

0 Comments | Gazette, The (Colorado Springs), Nov 9, 2003 | by WAYNE HEILMAN

Air Academy Federal Credit Union will merge Friday with financially troubled District 8 Federal Credit Union by order of federal regulators.

Depositors will not suffer any losses as a result of the forced merger because all accounts are federally insured up to $100,000, said Glenn Strebe, president of Air Academy credit union.

District 8 credit union was started in 1959 to serve teachers in Fountain-Fort Carson School District 8. It had 961 members and $3.4 million in assets Sept. 30. The credit union had just $76,000 in reserves, far less than federal regulators require.

The failure is the first by a local financial institution since the Federal Deposit Insurance Corp. shut down First Bank of Colorado Springs in October 1989. First Bank is not related to FirstBank Holding Co., which operates two banks with nine branches in the Springs.

The last local credit union failure was in 1989, when the National Credit Union Administration merged the failed Hope-Coronado Federal Credit Union with Ent Federal Credit Union.

The credit union's financial problems stem from "irregularities in its lending practices" found during an examination by the NCUA this year. District 8 credit union filed a $568,000 claim on its fidelity bond insurance as a result of losses from the irregularities.

NCUA officials began seeking merger partners for the credit union in July, Air Academy's Strebe said.

"What we can offer in terms of products, services and convenience will be great for the members" of District 8 credit union, Strebe said. Air Academy plans to continue operating it as its eighth branch, with a staff of two, he said.

Air Academy serves students and faculty at the Air Force Academy and nine school districts in El Paso, Douglas and Elbert counties. Residents of the school districts also are eligible to join the credit union, which had $250.7 million in assets as of June 30.

CONTACT THE WRITER: 636-0234 or wayneh@gazette.com