LAWRENCE, Mass. – A failed indirect loan program is being blamed for a disastrous 2007 for Lawrence Firefighters FCU, forcing the 50-year-old credit union into the arms of the regulators.
The $49 million credit union lost $1.7 million last year – after losing $730,000 the year before – erasing almost half of the credit union’s equity. Alan Jenne, president of Lawrence Firefighters, said it has been working with NCUA on a net worth restoration plan under the agency’s prompt corrective action.
With the credit union losing another $83,000 for the first quarter this year, the net equity ratio fell even more from year end, to only 4.68%, which is considered undercapitalized by NCUA.
Last year’s massive losses were caused by the credit union’s in-house indirect loan program, according to Jenne. The portfolio has since been sold.
Jenne, who was brought in from nearby Merrimack Valley FCU after the departure of the CEO, said the board has discussed merging with a healthy credit union but there are no negotiations being conducted. “There’s some question about whether we can’t hold out on our own,” he told The Credit Union Journal yesterday.
