Beehive Credit Union has been first among the Utah industry to try a lot of things, such as federal deposit insurance and opening services up to the general public, and it recently renewed that tradition by agreeing to acquire $15 million in savings and loan assets.
"It's certainly the first time this has happened in Utah and we believe it's the first in the United States," Beehive president Jim Wickens said, noting the National Credit Union Association wasn't aware of any similar transactions between a credit union and savings and loan.The sale between Beehive and Home Savings and Loan is subject to approval from federal and state regulators. Officials expect to receive the regulatory go-ahead by the end of July.
Under terms of the agreement, Wickens said, Beehive has acquired part of the home mortgage servicing portfolio from Home Savings, two branch locations, 75 percent of their employees and some loans. Beehive also hand picked $15 million in deposits.
Asked if Beehive was sold a bill of sour goods by Home Savings, Wickens said the credit union only took on about $800,000 in troubled loans, which he expects to liquidate by year's end.
"What we got was good people, two beautiful locations and a $53 million loan servicing portfolio," he said.
If the sale goes through, Beehive's assets will increase from $30 million to $45 million and it will have five offices in the Salt Lake Valley.
For Home Savings, whose deposits are federally insured up to $100,000, it means increasing its net worth by about $1 million while scaling down from $19 million in assets and three offices to $5 million in assets and a single location at 116 S. Main.
"It's a win-win situation for both institutions," Home Savings president Fred Smolka said.
He explained Home was not on the verge of closing its doors, although it was still reeling from losses it suffered as a lender in the infamous AFCO real estate scam. Smolka said he anticipates a judgment from Home Savings lawsuit against its insurance carrier to pump another $1 million into the 73-year-old savings and loan.
Meantime, Beehive will be one of the first Utah credit unions to head full steam into the mortgage lending business.
Wickens said the motivation to enter into mortgage lending came from requests by Beehive members.
"Rather than reinvent the wheel we wanted to buy something that was in place. We needed people who knew the business and connections with the secondary lending market."
Home Savings had the people and was servicing $53 million in mortgage loans held by secondary market investors - agencies that buy mortgage loans from lending institutions. That portfolio will produce $250,000 in annual income for Beehive in servicing fees, Wickens said.
"This puts Beehive Credit Union light years ahead of the competition by putting us in the the home mortgage business," Wickens said. "We have always before been in the consumer loan business like all other credit unions, but now our members can also obtain home mortgages."
He said Beehive will continue its conservative approach in operating its mortgage loan operation, while improving service for its 10,000 members seeking home loans.
Beehive, whose deposits have been federally insured through the NCUA since the 1960s, began operations in 1954 as a credit union for state employees and opened membership to the general public in 1985.