Texas Credit Union Released From 22-Month Conservatorship

The NCUA and the Texas Credit Union Department announced Friday that the $96.4 million Edinburg Teachers Credit Union has been released from its 22-month conservatorship.

The new president/CEO is Mary L. Carpenter, who replaced Marsha Hahn.

The state regulator in March 2021 named the NCUA as the conservator to protect the public’s interest.

By the end of June 2021, three months after the credit union had been conserved, it posted a net income loss of $284,111. By the end of the third quarter, ETCU’s net income loss was $814,519, and by the end of 2021, its net income loss totaled $2,570,138, according to NCUA financial performance reports.

In 2022, ETCU returned to profitability, recording a net income of $77,772 in March, which grew to a net income of $222,468 at the end of the second quarter and jumped to a net income of $316,981 in the third quarter, according to NCUA financial performance reports.

An NCUA investigation into ETCU’s past operations alleged that its former President/CEO Jeffrey B. Moats made regular cash gifts to board members and made at least one personal loan to the former board secretary.

The monetary value of those cash gifts and other gifts were not specified in court documents filed in a Texas federal court.

However, the former board secretary, Brian J. Warren, acknowledged to CU Times that he received a loan from Moats for $10,000 at an interest rate of 11.9%, which he paid back.

In June 2021, Moats sued the NCUA and ETCU, which he led as CEO for more than 25 years, claiming his employment contract was breached without notice or cause; he sought more than $1 million in monetary relief. Moats also claimed the NCUA did not return his personal belongings, which included artwork on display at the credit union office worth an estimated $275,000, according to court documents. Moats dropped the lawsuit in December 2021.

The credit union’s 2019 IRS 990 return revealed Moats was paid a total compensation of $1,611,821, which was four times the median base salary and bonus pay for CEOs across all asset sizes in 2019, according to a CUES Executive Compensation Survey. In that year, ETCU posted a net income of $775,084.

What’s more, a CU Times review of ETCU’s 990 returns from 2008 to 2019 showed that Moats received $8,799,709 in total compensation. From 2008 to 2019, the credit union recorded a cumulative net gain of $8,946,403, according to NCUA financial performance reports.

Even though ETCU returned to profitability in 2022, it has suffered a significant drop in members since it was conserved in March 2021.

The credit union’s membership plunged from 12,543 in March 2021 to 7,417 at the end of 2021, according to NCUA Call Reports.

By March 2022, ETCU’s membership fell to 7,363 and declined again to 7,104, though membership increased slightly to 7,113 at the end of the third quarter, according to NCUA Call Reports.

What’s more, the credit union’s loans and assets also have declined. In March 2021, ETCU posted loans of $14.3 million and assets of $111 million, which declined to $12 million in loans and $103 million in assets by the end of 2021, according to NCUA financial performance reports.

At the end of the first quarter of last year, the decline continued to $11.4 million in loans and $101 million in assets. However, loans increased to $11.8 million and $12.9 million in the second and third quarters, respectively, while assets declined to $97.6 million and $96.4 million in the same quarters, according to NCUA financial performance reports.

NCUA Chair Todd Harper said he is optimistic about ETCU’s future.

“Edinburg Teachers’ leadership and staff diligently worked to revitalize operations, update and reopen the credit union facility so members can conduct business in person, modernize the website, enhance lending services and maintain a robust capital position,” Harper said in a prepared statement. “Their efforts, along with the hard work of NCUA employees and the Texas Credit Union Department, have led to a credit union that is now on a sound footing and will continue to provide essential financial services to its members. The newly seated board of directors are professionals from the community and eager to serve the membership. In short, Edinburg Teachers Credit Union is now set up for long-term success.”

The new board members are Ofeila Abrego II, Rodrigo Cainglet, Julie A. Garza, Mariaa E. Ovalle and Robert N. Tamez, according the ETCU’s profile report filed with the NCUA.

ETCU serves employees and their families from many of the school districts in the Rio Grande Valley, the University of Texas Rio Grande Valley, several select employer groups and persons located within 10 miles of the credit union’s office.

The credit union’s 13 full-time employees and two part-time employees run one branch.