League of Southeastern Credit Unions President Patrick La Pine and Alabama Credit Union Administrator T. Glenn Latham confirmed that the suit had been filed. La Pine said a court hearing has been scheduled for Aug. 24 but said the league will not participate in the legal challenge.
According to its June 2009 5300 report, the Birmingham-based MSCU had an 8.16% net worth. It reported a $105,115 net profit as of June 30. During the first quarter, MSCU recorded a $1.25 million NCUSIF stabilization expense, which resulted in a $1.19 million net loss. Return on average assets was 0.11% as of June 30, though ROA was negative during both first-quarter 2009 and fourth-quarter 2008.
MSCU is an active lender, reporting 97.8% loans to shares, down from a high of 110% as of Sept. 30, 2008. Real estate loans account for the bulk of the $142 million loan portfolio, with $98.4 million in outstanding real estate as of June 30. Of those, nearly $15 million were reported as business loans, down from $20 million June 2008.
The credit union has bulked up its indirect point of sale portfolio in recent months, with $13.8 million outstanding as of June 30, nearly triple June 2008's outstanding balance of $5.5 million in POS indirect loans.
Latham wouldn't comment why he seized the institution, citing both regulatory confidentiality and the pending legal challenge. However, he did say NCUA Region III Director Alonzo Swann told him MSCU had recently applied to convert from a state to federal charter. Latham said he won't approve the conversion until "we get this credit union straight."
La Pine, the CEO of the newly formed League of Southeastern Credit Unions, fired off an Aug. 4 e-mail to his board questioning Latham's decision to seize the institution.
In the e-mail, La Pine said he spoke with Dalbey and Swann about the conservatorship. He reported to his board that "NCUA officials" told him they don't understand why the ACUA took action against the Birmingham, Ala.-based institution, don't agree with it and wouldn't have done it themselves. "To make a long story short, the motivation of the state regulator...is suspect at best," La Pine said.
La Pine told Credit Union Times he didn't intend to challenge the regulator. Rather, he only meant to address the conservatorship as it related to his board member, particularly news regarding Dalbey's resignation from the board and his replacement.