Life After Conservatorship: Where Are They Now?
February 17, 2016 1:04 PM
Credit unions that undergo conservatorship face a variety of destinies. Consider the fate of credit unions that were conserved five years ago. In 2011, according to NCUA, nine credit unions were placed into conservatorship. Of those nine, eight were eventually liquidated (often due to fraud) and one remains in conservatorship almost five years later. Here is a brief review of what became of them.
The $1.3-million Birmingham Financial Federal Credit Union of Birmingham, Ala., was conserved in late October 2011. In December, it was liquidated and its members, assets, loans and debt were assumed by ?CO Credit Union, also of Birmingham. Today,eCO CU is a $129-million institution. (Postscript: In early 2015, Jonathan Wade Dunning, the former president/CEO of Birmingham Financial was arrested for bank fraud, money laundering, wire fraud and conspiracy. Dunning reportedly manipulated the accounts at Birmingham Financial for his own benefit).
The $333-million Chetco Federal Credit Union of Harbor, Ore., was conserved in late September 2011. Chetco was liquidated in December 2012-its various assets were assumed by two other regional CUs: Coast Central Credit Union of Eureka, Calif., and Rogue Federal Credit Union of Medford, Ore.
The $17.7-million Saguache County Credit Union of Moffat, Colo., was conserved in July 2011. By May of the following year, Saguache County was liquidated. The NCUA transferred control of its members and assets to Aventa Credit Union of Colorado Springs, Colo.
The $7-million Borinquen Federal Credit Union of Philadelphia was conserved in late June 2011. It was liquidated the following month. (Postscript: By January 2013, it emerged that Ignacio Morales, the head of Borinquen Federal Credit Union, which served poor Hispanics in North Philadelphia, had plundered the credit union in order to finance a cocaine dealing ring. He eventually was sentenced to more than seven years in jail.)
In June 2011, the $41-million BCT Federal Credit Union of Binghamton, N.Y., was conserved. By November of the same year, BCT was liquidated and its assets, liabilities, and member shares were assumed by Visions Federal Credit Union of Endicott, N.Y. (Postscript: the following year, it was revealed that BCT FCU was victimized by a mother-and-son team of criminals-Laura Conarton and Scott Lonzinski-who stole more than $14 million from the credit union through an elaborate scheme of fraudulent loans. Both went to prison.)
In early May 2011, the $2.7-million Hmong American Federal Credit Union of St. Paul, Minn., which served the local Hmong immigrant community, was conserved. Only two weeks later, the credit union was liquidated.
Also, in May 2011, the $9-million Valued Members Federal Credit Union of Jackson, Miss., was conserved. By the end of that month, Valued Members was liquidated and its assets, liabilities and members were assumed by Magnolia Federal Credit Union, also of Jackson.
In April 2011, the $4.7-million Vensure Federal Credit Union of Mesa, Ariz., was conserved. Two months later, it was liquidated.
Perhaps the most interesting case from that year concerned the $1.6-billion Texans Credit Union of Richardson, Tex., which was conserved in mid-April 2011. Almost five years later, Texans CU is still under conservatorship, although it delivered strong performance in 2015 - featuring an annual net income of $26.63 million and 48 consecutive months of positive earnings. "Texans' continued success is due to the credit union's refocusing the institutional culture on service to its members," said C. Keith Morton, NCUA Region IV Director and agent for the Conservator. "This organizational shift is increasing operational efficiencies and improving the credit union's infrastructure to better serve its membership."
