RICHARDSON, Texas – NCUA reached into its stable of available credit union managers Friday and hired Kay Woods, a workout specialist, to manage the conservatorship of Texans CU, one of the biggest credit union takeovers ever.
Woods is fresh off a seven-month stint as conservator of Arrowhead Central, a one-time $1.1 billion San Bernardino, Calif., credit union taken over by NCUA last June. Before that she helped work out several troubled credit unions, including Georgia Heritage FCU, WestStar FCU and Memphis Area Teachers CU.
NCUA took over Texans amid growing losses on the one-time $2 billion credit union’s member business loan portfolio. The MBL losses were the major factors in the credit union’s $120 million of losses over the last three years, including $39.4 million for 2010. During that time the credit union’s assets declined to $1.6 billion and its net worth ratio slid to just 2.76% at year-end 2010.
First quarter financials are not yet available.
In taking over Texans, NCUA removed the CEO and board of directors. Michael Sauer, a longtime director of the credit union, had been serving as interim CEO since the departure of David Addison in January 2009, as losses were mounting.
The NCUA takeover of Texans comes at a bad time politically for credit unions, which will be left defending credit unions’ ability to manage MBL portfolios just as Congress is once again starting to debate raising the MBL cap. Most of Texans’ MBL problems were cause by its wholly owned CUSO, Credit Union Liquidity Services LLC, which has been struggling with numerous multi-million dollar loans made to finance troubled projects, including a shopping mall renovation in a Chicago suburb, a large-scale real estate development in San Antonio, a mixed-use real estate and commercial development in the Dallas suburb of Rockwall, and several others.
The credit union also was ordered to pay a multi-million dollar breach of contract settlement to the former head of its insurance CUSO, after it fired him.
Texans was chartered as the credit union for Texas Instruments in 1957. Since then it has branched out to serve more than 500 select groups, as well as the Texas counties of Collin, Dallas, Rockwall, Travis, and Williamson and Denton.
Texans is the second-largest natural person credit union ever taken over by NCUA, following Eastern Financial Florida CU, a one-time $2.4 billion credit union conserved in May 2009, then acquired by Space Coast CU just weeks later.
