After years of financial troubles but no serious changes in the way it does business, state officials say they will now step in to manage the Credit Union Group Credit Union, which has an affiliate in Lawrence, the Free State Credit Union at 1001 E. 23rd St. and 901 Iowa.

The Kansas Department of Credit Unions took control of the Credit Union Group’s finances under a conservatorship order issued Tuesday.

Under the order, the state will re-evaluate the Credit Union Group’s lending operations, which federal records show have been the primary cause of financial troubles.

“We feel that there needs to be some improvement there,” department director John Smith said. Because of an ongoing probe into the Credit Union Group’s finances, Smith would not comment further.

But records on file with the National Credit Union Administration show that the Credit Union Group’s problems have been ongoing. For example, its return on assets was in negative numbers every quarter in 2005, far below the national peer average for credit unions of the same size.

Most of the trouble stems from the amount of loans underwritten compared with the ability to collect on those loans, records show.

The Credit Union Group had almost $9 million in loans outstanding as of 2005, including $465,000 to senior officials and executive staff.

Currently, more than $160,000 in loans are at least one month delinquent, records show. The delinquent loan ratio has exceeded the peer average four of the past five quarters dating back to 2004.

But the records show that the Credit Union Group has other issues as well. The membership is low compared with the potential members in the area, and the company’s net worth growth has been in negative numbers throughout last year.

The Credit Union Group – which also includes Kansas City Metropolitan Credit Union, Colgate-Palmolive Employees Credit Union and Employees Credit Union of Puritan Bennett – underwent a management change this week when former chief executive officer Mark Kasson went on leave. Though interim CEO Christine Dawe would not detail the reasons behind the change, she did say they were finance-related.

“The action is the action,” Dawe said.

But Dawe said that the Credit Union Group views the state’s takeover as a positive step, saying that long-term financial stability is the most important thing.

The state’s goal is to institute the necessary management changes to restore the Credit Union Group’s profitability, and expects to eventually return control to the credit union’s members.

The Credit Union Group is co-operated by its members and is a nonprofit corporation.

The Credit Union Group currently serves more than 5,000 Lawrence and Kansas City area residents and, without commenting on the investigation, Smith said that customers shouldn’t notice any change in their day-to-day business.

All accounts at the institutions are federally insured for up to $100,000, and a statement by the state Department of Credit Unions said that the Credit Union Group continues to be a viable financial institution.