The Michigan Department of Insurance and Financial Services (DIFS) on Wednesday placed Saginaw, Mich.-based Valley State Credit Union into conservatorship.
DIFS Director Patrick M. McPharlin issued an order to conserve the credit union and appointed DIFS as the conservator, effective immediately. The regulator said the move was necessary to "protect members and to ensure uninterrupted access to funds."
According to Call Report data, the credit union lost more than $48,000 in 2014 and more than $26,000 in 2015, and during the first two quarters of 2016 already has a negative net income of more than $300,000.
"The 3,116 credit union members should be assured that their deposits are protected and they will have continued, uninterrupted access to their funds," McPharlin said in a statement. "All Michigan state-chartered credit unions are insured by the National Credit Union Administration (NCUA) for up to $250,000 per depositor and sometimes more."
As the appointed conservator, DIFS noted it will assume control of Valley State CU to "ensure its financial stability and safe and sound operation." DIFS said it would work with NCUA to address "issues related to the credit union's operations and financial condition" while maintaining member services.
Upon review of the current DIFS examination, Director McPharlin said the regulator determined conservatorship of Valley State Credit Union was necessary to protect the public interest.
"We remain focused on continuing our efforts to provide appropriate regulatory oversight of the insurance and financial services industries, including state-chartered credit unions. We work to ensure that the businesses within these industries are safe, sound, and entitled to the public's confidence," added McPharlin.
