Wichita ? A credit union that provided low-interest loans and financial counseling to help people pay off high-interest payday loans has been declared insolvent and taken over by federal and state regulators.

Regulators said Friday that the $2.3 million Communities United Credit Union had “no prospects of restoring viable operations” and would be dissolved.

The Kansas Department of Credit Unions is overseeing the move, which will see the 1,900 members’ accounts moved to other credit unions in the area.

“Our goal is to find another credit union that will serve these members,” said John Smith, administrator of the state credit union department.

Members’ accounts are insured up to $100,000 by the National Credit Union Share Insurance fund. It is administered by the National Credit Union Administration, which will operate Communities United until it is dissolved.

That could take up to three months, Smith said.

The news caught credit union member Mitzi Rivers by surprise.

Rivers used a loan from Communities United to retire payday loans that were costing her $600 a month in fees.

“I am tremendously grateful that they were there to come to my rescue,” Rivers said Friday. “Now, I’m just in shock. It’s like family.”

The credit union had a net worth ratio – the difference between assets and liabilities – of minus-2.06 percent, Smith said. The average net worth ratio of Kansas-chartered credit unions in 2006 was 12.52 percent.

“They haven’t had a positive bottom line in the past three years,” he said.

The credit union has struggled with solvency issues several times in its 11-year history, several times needing hastily organized fundraising campaigns to keep going.

When several car loan borrowers recently went into default, volunteer directors tried two weeks ago to organize another campaign to raise $500,000.

Director Ed Poindexter said the campaign might have succeeded with more time, but added that trying to raise the money so quickly “was almost impossible and kind of overwhelming.”

The credit union has 15 days to appeal, but directors said it’s unlikely that would be successful.

“Without the working capital there’s no way we can win,” said Milford Adams, who has served on the board from the start. “That’s the bottom line. We just don’t have the financial stability to carry on.”