Mid-States and Iowa Corporate Central Closer to Launch
NEW ALBANY, Ind.-One credit union is claiming it has paid a steep price for bankruptcy reform. After experiencing a more than $500,000 loss, Community Service Credit Union has decided to call it quits, according to www.news-tribune.net out of Indiana. The credit union experienced a $285,812 operating loss as of October year-to-date and had to commit $288,803 to cover loan losses due to increased bankruptcy filings. Credit unions and other lenders have been bracing for an onslaught of bankruptcy filings as the Oct. 17 effective date drew nearer and has now passed. Community Service's board and members voted last week to merge with Obelisk Federal Credit Union. Community Service had about 1,550 members and $5.6 million in assets, the report said. In contrast, Obelisk holds $54.8 million in assets and is an offshoot of a Pillsbury employee credit union. CUNA Chief Economist Bill Hampel said he suspects that something more than the new bankruptcy law pushed this credit union into its perilous position of essentially having to merge. The national figures simply do not bear out this particular credit union's experience. Reviewing the institution's call report data available through NCUA's Web site (www.ncua.gov), he pointed out that in the last 18 months, the credit union's assets have declined as the loan loss provisions escalated. Community Service Credit Union CEO Mary Hill did not return a call for comment. NCUA declined to comment on the credit union's situation. Hampel said he could not speculate on what could have caused the credit union's decline based on the numbers.