ALEXANDRIA, Va. – NCUA is reporting that 97% of accounts at $12.7-million New London Security First FCU, which NCUA liquidated in July after it became insolvent, have been paid in full.
While liquidations of credit unions are not uncommon, New London Security’s situation was complicated by the lack of computerized records, the delay in posting updated account balances and activity, the fact a number of accounts were significantly above the $100,000 NCUSIF insurance threshold, and the suicide of a principal with the CU. All of which led to calls from Connecticut’s Attorney General, Richard Blumenthal, for NCUA to disclose more information about the closure. Blumenthal said he wanted NCUA to provide more assurances to depositors that the agency will be investigating the 72-year-old credit union’s failure, aiming at full restitution for those who have lost money.
The $12.7-million credit union was seized by NCUA with more than $700,000 of uninsured deposits. In addition, the credit union had only $234,000 in loans outstanding and more than 98% of its assets in investments – more than $5 million worth of which is unaccounted for on quarterly call reports.
The credit union’s 82-year-old investment advisor, Edwin Rachlef, a broker with A.G. Edwards, jumped from a window on the top floor of an 11-story apartment building for seniors in New London hours after NCUA announced it was seizing the credit union.
The seizure was puzzling because, even though NCUA said the credit union is insolvent, New London Security has more than $2.1 million in capital, a net worth ratio of almost 17%, and reported a small loss of just $5,000 for the first six months of the year.
NCUA now says that within two days of the credit union’s July 28 liquidation, 80% of the account balances were paid by the NCUSIF, and as of Aug. 28, 99.5% of all accounts have received some payment (615 of 618). More than 97% of all accounts have received full payment (602 of 618 accounts). “The remaining accounts are still being reviewed, or have deposits in excess of the $100,000 federal insurance limit for individual accounts,” the agency said. “NCUA is working to maximize recoveries for the benefit of uninsured depositors.”
According to NCUA, New London Security First FCU was one of 104 federally insured credit unions that did not have automated records.
