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Small Credit Unions to See More Scrutiny, NCUA Region III Director Says

ATLANTA - A series of liquidated credit unions as a result of poor mismanagement and bad loans means small credit unions will see stricter oversight, NCUA Region III Director Alonzo Swann told attendees at the African-American Credit Union Coalition meeting here. A regional director since 1997, Swann oversees FCUs in...

By Staff Writer | Updated on August 24, 2004

ATLANTA – A series of liquidated credit unions as a result of poor mismanagement and bad loans means small credit unions will see stricter oversight, NCUA Region III Director Alonzo Swann told attendees at the African-American Credit Union Coalition meeting here. A regional director since 1997, Swann oversees FCUs in Georgia, Alabama, Florida, Indiana, Kentucky, Mississippi, North Carolina, Puerto Rico, Ohio, South Carolina, Tennessee and the Virgin Islands and started out as an NCUA examiner in Gary, Ind. in 1983. Swann cited the growing number of small credit unions (defined as having less than $10 million) that are being merged for a number of good and bad reasons. “NCUA will do more intense audits of small credit unions,” Swann said, as he gave a number of examples he’s seen of poor mismanagement including a $500,000 credit union in Georgia that the insurer had to pay $4 million to members. In Region III, 10 of the largest CUs account for 30% of all the assets in the region and there were 25 community charters granted in 2003. Swann predicted that most credit unions will be community-chartered by 2014. He also said the industry is losing 3% of credit unions each year but assets are still going up. The trend of slowed membership, while a concern, doesn’t affect the NCUA’s regulatory job. “Does the decline in membership have anything to do with safety and soundness, no,” Swann said. “Our mission is to be sure that they are being served” in a financially prudent manner. The outlook is not as bleak as it looks for smaller credit unions, Swann assured. They just need to be on top of earnings, be careful with third party alliances and take “good” risks such as offering member business loans. Currently a lieutenant colonel in the Air Force Reserves, Swann has served in the U.S. Air Force for 30 years. [email protected]

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