NCUA Took Over Texans CU To Preserve Dwindling Capital
RICHARDSON, Texas – NCUA decided to take over troubled Texans CU April 15 as the credit union giant’s undivided earnings, a key component in net worth, at $48.2 million a year ago, were almost completely depleted.
Financial reports for the one-time $2 billion credit union posted Friday show its undivided earnings had fallen all the way to just $189,868 over the preceding 12 months. Combined with $31.5 million of regular reserves, the other major component of net worth, Texans’ net worth ratio had declined to just 1.95% at the end of the first quarter.
The first quarter report shows the credit union was required to add another $14.4 million to its provision for loan losses, even as loan income declined by 7% and investment income fell by 1% during the quarter. The result was an $11.4 million loss, after almost $125 million in losses for the previous three years.
Texans is one of the nation’s biggest providers of member business loans, and was burned by commercial bankruptcies and defaults of several multi-million dollar MBLs. Some of those MBLs are expected to spread red ink from other credit unions who bought participation pieces from the credit union’s wholly owned MBL CUSO, Credit Union Liquidity Services LLC.
Troubled MBLs made by Texans’ CUSO including a $36 million loan for a real estate development in San Antonio, a $45 million MBL to an ill-fated mall redevelopment outside of Chicago, and a $30 million MBL for a mixed-used development in Rockwall, Texas. All three MBLs are the subject of litigation.
Texans is one of five credit unions being run under conservatorship by NCUA. The others are Arrowhead Central CU, Keys FCU, AEA FCU and Vensure FCU.