KEY WEST, Fla. – In an unusual regulatory response, NCUA said Friday it was asked by the board of Keys FCU to take the ailing $180 million credit union under federal conservatorship.
"As a result of the voluntary conservatorship, NCUA removed the board of directors and replaced other officials," NCUA’s Southeast Region Three Director Alonzo Swann, said in a letter to Keys FCU members. "This action results in NCUA taking control of Keys FCU operations in order to protect the interest of the members, and Keys FCU assets."
The voluntary conservatorship is unusual because NCUA usually takes over an institution that is troubled over the objection of its board and management and typically dismisses all directors and senior management.
NCUA conceded that Keys FCU has been in a "deteriorating financial state," but said members can be confident their accounts are insured by the National CU Share Insurance Fund.
The government takeover came as the Florida Keys’ biggest credit union has been beset by troubles in its real estate loan portfolio, seen its assets decline from almost $215 million two years ago and is being sued for more than $1 million in back pay and penalties by its former CEO.
The credit union has reported growing losses over the last two years, with a loss of $1.8 million for 2008, and of $2.4 million for the first half of 2009 (including $1.2 million for the corporate credit union bailout).
