Premier America Operating Troubled Credit Union

New management at Telesis Community Credit Union may signal that the Chatsworth institution could merge with another credit union. Premier America Credit Union, also in Chatsworth, took over daily operations of Telesis April 2 under a contract with the National Credit Union Administration. The California Department of Financial Institutions placed Telesis into conservatorship on March 23 following a period of continuous losses due to unpaid commercial real estate loans. Telesis suffered a 45 percent loss in its total assets in a three-year period. Repeated attempts to reach John Merlo, president of Premier America, were not successful. Telesis faces three options as to its future: a return to operating by its membership, a merger with another credit union, or liquidation. James Leggett, a senior economist with the American Bankers Association, said that Premier America would be a natural merger partner for Telesis. Leggett said he knew of one other instance where a credit union, Eastern Financial Florida Credit Union, was placed into conservatorship and then acquired by the institution hired to manage it, Space Coast Credit Union. As the operator of Telesis, Premier America would be able to “look under the hood” and give close scrutiny to any problem assets, underwriting criteria, credit evaluations and any current appraisals on properties that Telesis issued loans for, Leggett said. “The last thing you want to do is buy a lemon,” Leggett said. Premier America, with total assets of $1.3 billion, has seven branches in Southern California and two in Texas. The institution has 64,000 members. By comparison, Telesis has more than 37,600 members, branch locations in Canyon Country, Simi Valley and Westlake Village and employs 175 full-time workers. Telesis had total assets of $318.3 million and a net worth of $17.5 million at the end of 2011. The NCUA contracted with Premier America to manage Telesis based on its strong financials and close proximity to Telesis, said administration spokesman John Zimmerman. “We have confidence they will keep the services going for the members,” Zimmerman said. Telesis is the third credit union this year that the federal agency has been assigned to control. The others are the People for People Community Development Credit Union in Philadelphia and A M Community Credit Union in Wisconsin. Telesis performed well until early 2007 and then membership dropped off and earnings dried up. The following year loan delinquencies and charge-offs started to become a problem. An aggressive lending strategy had the Valley institution as the lead lender for a shopping center in Florida, office buildings in Oregon and Georgia and other commercial developments in Tennessee and California. Some of the properties filed for bankruptcy. At the end of 2011, Telesis had delinquent loans totaling $29.8 million. Business loans to members and non-members that went unpaid for a year or more totaled about $18 million. Business loan charge-offs totaled $5.7 million in 2011.