ALEXANDRIA, Va.–Four small federal credit unions that were the most recent to be liquidated by NCUA were shuttered for reasons that include failure to address BSA deficiencies, loan and share account manipulation, and just plain poor financial condition, according to a new report.
The findings were included in a new report to Congress by the agency’s Office of Inspector General.
Each caused a “non-material” loss to the National Credit Union Share Insurance Fund (NCUSIF) that totaled an estimated $4.1 million, the IG report stated. The report states there were no investigations of credit union failures for material losses to the NCUSIF during the period covered, Oct. 1, 2022-March 31, 2023. The agency defines material loss as those of than $25 million and an amount equal to 10% of the total assets.
Instead, the Inspector General said four limited-scope reviews were conducted of the four failed institutions, which ranged in asset size from approximately $477,000 to $11.9 million and caused non-material losses to the fund.
The Four Credit Unions
The four CUs include:
Credit Union: O.F. Toalston Federal Credit Union, Logan, W.V.
Assets: $477,610.
Date Liquidated: Nov. 15, 2022).
As CUToday.info reported, the agency placed OFTFCU into conservatorship and later into involuntary liquidation due to suspicious activity including loan and share account manipulation, recordkeeping concerns, and allegations of potential fraud. Estimated cost to the NCUSIF is $465,164.
Credit Union: Mingo County Education FCU, Williamson, W.V.
Assets: Approximately $2.7 million
Date Liquidated: Nov. 15, 2022
The NCUA placed MCEFCU into conservatorship and later into involuntary liquidation due to suspicious activity including loan and share manipulation, recordkeeping concerns and allegations of potential fraud. Estimated cost to the NCUSIF is $2,369,773, the report said. Interestingly, Mingo County EFCU was located just 20 miles from O.F. Toalston FCU, which was liquidated the same day.
Credit Union: InterAmerican Federal Credit Union, Brooklyn, N.Y.
Assets: Approximately $727,157
Date Liquidated: March 8, 2023): IAFCU entered an involuntary liquidation because it did not resolve concerns for violations of the cease-and-desist orders addressing concerns with Bank Secrecy Act, recordkeeping, dormant accounts, and supervisory committee weaknesses. Estimated cost to the NCUSIF is $74,451.67.
Woodlawn Federal Credit Union, Pawtucket, R.I.
Assets: $11.9 million
Date Liquidated: March 31, 2023
According to the IG report, WFCU failed because of its poor financial condition with various administrative remedies that were not resolved. WFCU voluntarily merged with Navigant Credit Union. Estimated cost to the NCUSIF is $1,205,718.
For additional information: NCUA OIG Semiannual Report to the Congress
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