EDWARDSVILLE, Ill.—The operations of MADCO Credit Union here have been suspended by the state regulator surrounding concerns over financial stability.
The Illinois Director of the Division of Financial Institutions issued an order suspending the $1.7 -million CU’s operations for 60 days and appointed 1st Mid-American Credit Union in Bethalto, Ill., as manager-trustee, reported Keith Leggett, the former senior vice president and senior economist at the ABA, on his Credit Union Watch blog. The order was signed on May 23.
“The Illinois regulator determined that MADCO Credit Union was in danger of insolvency as the true financial condition of the credit union could not be ascertained during an examination. According to the order, the credit union was delinquent in paying Illinois withholding taxes and federal payroll taxes,” reported Leggett. “Also, the credit union is required to hold its annual meeting in the first three months of the year, but as of the signing of the order, the credit union had not held its 2017 annual meeting.”
The credit union was not in compliance with state law on the number of directors, as it only had four board members. In addition, the credit union lacked a quorum, as its bylaws required nine board members. The credit union board declared a dividend although the board lacked a legal quorum to do so, Leggett explained.
In addition, the order states that the credit union had loans that were either non-performing or showed no signs of being collected.
“The order further noted that the loans to directors, officers, loan committee members, and supervisory committee members were not in compliance with Section 52 of the Illinois Credit Union Act. Moreover, the order cited the credit union for its weak internal controls,” Leggett noted.