Clearstar Financial Credit Union, a Reno-based financial institution with 16,000 members, today became the first state chartered credit union to be seized and closed by regulators.
United Federal Credit Union of St. Joseph, Mich., will take over all of Clearstar’s deposits, George Burns, commissioner of the Nevada Financial Institutions Division, said in a statement.
Member accounts are protected up to $250,000 by the National Credit Union Administration’s Share Insurance Fund and are backed by the "full faith and credit of the U.S. government."
United Federal Credit Union, a $941 million institution, will provide uninterrupted credit union service. Clearstar served school district employees and had $141 million in deposits.
Burns said he closed the credit union because Clearstar’s capital was inadequate and its loan losses were increasing. The division said this is the first time that a state chartered credit union in Nevada has been closed although credit unions have been forced into mergers in the past.
Nevada has 11 state chartered credit unions. Clearstar was one of three state chartered credit unions with federal deposit insurance through the NCUA. The other state chartered credit unions in Nevada rely on private deposit insurance.
Community One Federal Credit Union, which the NCUA seized in August, was federally chartered and federally insured. America First Credit Union of Utah assumed Community One’s assets, liabilities and operations.
The NCUA in 2000 seized Virgin Valley Credit Union in Mesquite and American First took over Virgin Valley as well.
Regulators have shut down five Nevada-based banks since July 2008. So far, federal and state banking regulators have closed 95 banks around the country this year because the recession has been forcing higher levels of loan defaults on commercial and other loans.
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