As expected, the NCUA seized a federal credit union Friday and placed into conservatorship the $2 million NCP Community Development Federal Credit Union of Norfolk, Va.
The agency said in a release the decision to conserve a credit union enables the institution to "continue regular operations with expert management in place, correcting previous service and operational weaknesses."
According to Financial Performance Reports posted on the NCUA's website, the 709-member credit union saw its net worth plummet from 13.72% as of year-end 2011 to 7.76% as of June 30, 2012. Then in September, net worth sunk below well capitalized to 4.91%. By year end 2012, only 3.83% net worth remained.
Delinquencies and charge offs reported on NCUA's website weren't spotless, but don't indicate a loan loss problem. Other financials appear within reasonable safety and soundness, except for two: during the first quarter of 2012, operating expenses to assets skyrocketed to 15.71% of average assets, from 3.61% during 4th quarter 2011. Operating expenses compared to gross income rose from 84.63% at year-end 2011 to 382.74% during the first quarter of 2012, where it more or less remained all year.
The financial reports reveal that employee compensation increased from $9,819 in 2011 to $151,225 in 2012. That total employee compensation figure is roughly three times the credit union's loan income.
According to the NCUA, the credit union's manager/CEO was Letitia R. Batey.
New board members were elected on Dec. 20, 2012 according to NCP's website, during its annual membership meeting. NCP serves a low-income community in the Hampton Roads area.
Rather than liquidate, the NCUA said in the release it will work to resolve issues affecting the institution's safety and soundness while continuing normal member services.
Members can continue to conduct normal financial transactions, including deposit and access funds, make loan payments and use shares. Deposits at NCP are covered by the National Credit Union Share Insurance Fund.
NCP Community Development FCU is the first federally insured credit union placed into conservatorship in 2013.
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