The NCUA said it has entered into a Letter of Understanding and Agreement with the $7.4 million Valley Pride Federal Credit Union of Plains, Pa.
The LUA requires the 1,588-member credit union to take steps to correct unsafe and unsound practices, including:
- Engage a qualified individual to reconcile bank and corporate accounts;
- Engage a CPA to perform an opinion audit;
- Obtain training for the board of directors; and
- Implement internal control procedures through the Supervisory Committee.
According to the credit union’s financial performance reports available publicly on the NCUA’s website, Valley Pride suffers from poor loan quality.
As of March 31, delinquencies had increased to 12.16% of total loans. There were no charge offs reported during the first quarter, but loan losses have historically been a problem: during first quarter 2012, the credit union reported 6.49% net charge offs to average loans.
A lack of loan volume contributes to volatile loan quality measurements. As of March 31, Valley Pride reported a 13.71% loan-to-share ratio. Although the credit union’s 8.08% average loan yield is nearly 100 basis points above peers, the lack of loan volume contributes to a much lower than peer net margin, just 1.46% during the first quarter.
The NCUA said it is working with the credit union to make a sustained, conscientious effort to correct the regulatory deficiencies detailed in the LUA. With 21.59% net worth reported in the first quarter, the credit union is not in danger of becoming undercapitalized in the near future.
Current Manager Ken Burke is the son of William Burke, Valley Pride’s long-time president/CEO who died of cancer in 2006. The elder Burke had an active credit union career, serving on the Mid-Atlantic Corporate FCU board of directors since 1986.
Violations of the LUA could result in NCUA initiating formal administrative actions under the Federal Credit Union Act, including civil financial penalties, cease and desist orders, removal and prohibition orders, or orders to liquidate, conserve or merge the credit union.
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
