The NCUA recently reported year-to-date net income of $5.87 million and $1.48 billion in assets, up from $1.42 billion at year-end 2011. The agency said Texans' net worth also improved by 35 basis points during the first three months of 2012, ending the first quarter at 1.42%.

Morton said the first quarter this year was the first time Texans had turned a profit since 2007.

To help reach that milestone, more than $20 million in expenses were cut with 17% on a recurring basis. Five of the credit union's 19 branches were closed. Morton's team consulted Texans' select employee groups and did a study to determine how the branches were performing and which ones were not needed.

"We kept in mind service to the membership," Morton said. "We wanted to be able to maintain a high level of service."

To keep that focus going, Texans introduced benchmarks to improve service to members, Morton said. Performance management is tied to how the credit union is performing.

According to NCUA's latest data, Texans serves 130,929 members. Morton said while there was a slight decline in membership–roughly 1%–there was some growth in the first quarter of 2011, before the credit union's conservatorship, and since then.

"We're getting good feedback from the members," Morton said.

In the back office, among other divisions, redundant operations were eliminated. Morton said the emphasis is on improving the bottom line. In streamlining operations and reducing inefficiencies, every area was looked at to determine where cuts could be made to turn around net losses.

"We're hitting targets," Morton said. "We still have a lot of challenges as you would expect with a conservatorship, but we're pleased with where we're at."

Texans is being led by Kay Woods, who is known within the industry for aiding other troubled credit unions in the past. Woods most recently worked with Arrowhead Central Credit Union in San Bernardino, Calif., after it was placed in conservatorship in 2010. Most of Texans' senior team, including the president/CEO and the board of directors with the NCUA takeover.

Morton said Woods, who will remain the interim CEO, has a new and strong leadership team working with her. There may be plans later this year to evaluate a search for a permanent CEO, he added. 

Texans previously offered a credit card but shuttered the program. Morton said plans are in place to bring it back along with a new online banking and bill pay platform later this year. Part of a bigger plan to retool Texans' infrastructure, funds have been budgeted to ensure the technology platform is state of the art, he noted. A more user-friendly website is also in the works.

At the time of Texans' regulatory takeover, there were rumblings that a merger might be a possibility to save the cooperative. Morton said the plan going forward is to restore financial health.

"It's not really in the cards," he said of a Texans merger. "Whenever we place a credit union in conservatorship, the goal is to achieve cost resolution… When possible, NCUA will work with the credit union to restore its net worth and return it to the members."