NCUA Liquidates Paducah Teachers FCU After $2.1 Million Loss

The NCUA liquidated the $12 million Paducah Teachers Federal Credit Union in Paducah, Ky., determining it insolvent after it lost more than $2.1 million, plunging its net worth to -5.24% in the second quarter.

The $278 million C-Plant Federal Credit Union, also of Paducah, purchased some assets and assumed most of PTFCU’s share accounts, the NCUA said in a prepared statement released late Friday afternoon.

PTFCU’s was the second federally insured credit union liquidation this year. In March, the $5.1 million Empire Financial Federal Credit Union in New York was liquidated by the federal agency.

The credit union also posted a loss of $633,926 in the first quarter of the year, according to NCUA financial performance reports.

Sometime in the first quarter, Lisa Hay, a national credit union consultant, was appointed PTFCU’s CEO. She previously worked as the COO at the $4.2 billion Municipal Credit Union in New York when it was conserved in 2019. She had been credited with rebuilding and streamlining MCU’s operational and retail operations, which was accomplished, in part, by closing six branches in 2020. MCU was released from conservatorship in February.

Hay replaced Sarah V. Smith, who had been PTFCU’s CEO since at least June of 2012, according to the credit union’s profile reports filed with the NCUA.

Although the credit union recorded a meager loss of nearly $8,000 at the end of 2021, PTFCU posted no losses and mostly produced five-figure and six-figure gains from 2012 to 2020, according to NCUA financial performance reports.

What’s more, in eight of the last 10 years from 2012 to 2021, PTFCU posted double-digit loan growth and single-digit loan growth in 2018 and 2019, NCUA financial performance reports showed.

However, the credit union’s delinquent loans and net charge-offs to average loans ratio rocketed from 6.89% in June 2021 to 21.04% in June 2022, and again soared from 3.60% in March 2021 to 14.80% in March 2022, according to NCUA financial performance reports. The peer average is 1.10%.

The credit union posted loan charge-offs of $1,070,803 and only $5,921 in recoveries, and recorded 92 loans for a total of $1,204,198, which were more than 60 days delinquent, according to the credit union’s Call Report for the second quarter.

Chartered in 1957, PTFCU served 1,187 members who were employees and retirees of the Paducah Board of Education.