NCUA Takes Over First Delta Federal, Victim of Nine-Year Embezzlement
In its Oct. 23 announcement, the agency said its goal in taking over the management of the $5.4 million First Delta Federal Credit Union, headquartered in Marks, Miss., was to "continue credit union service to its members and ensure safe and sound credit union operations."
First Delta had a successful history serving the residents of a three-county area in the Mississippi Delta and had grown to more than $7 million in assets as of its 25th anniversary in 2006.
But the CU had also been the victim of nine-year embezzlement by one of its loan officers that ultimately resulted in a loss of roughly $1 million. The credit union additionally suffered, according to former executive Robert Jackson, from the NCUA's reluctance to allow some of its secondary capital deposits to be used in its capital ratio. According to the CU's June call report, the credit union's capital ratio stood at 1.06%.
First Delta began life as Quitman County in 1981, then became Quitman Tri-County after one merger and then First Delta in 2004 after yet
"It was Rev. Carl Brown's idea in 1979 to start a credit union since he had been a part of one in Los Angeles and gave witness to the many benefits of having a credit union in this community," said State Sen. Robert L. Jackson, then CEO of First Delta, at a celebration of its 25th anniversary.
Jackson's sense of pride and resolution came through as the credit union notified its members and supporters about the agency's move.
"We were totally taken aback by NCUA's move to place us into conservatorship at this time because the board thought that we were almost there," Jackson said in a statement. "All that was left was the approval of a net worth restoration plan, and we were set to survive. We weren't given a chance to defend it at all."
Jackson thanked community development credit unions throughout the country, the National Federation of Community Development Credit Unions, Mississippi Association of Credit Unions, Mississippi Association of Cooperatives, the Federation of Southern Cooperatives and the "many other individuals and organizations who joined with us to overcome"
"One of the outcomes of conservatorship is that NCUA could turn the credit union back to the community. We will work to secure this option if at all possible," Jackson concluded.
The NCUA's action drew comment from the National Federation where Jackson is still listed as a
"We strongly encourage NCUA to employ every financial, technical and human resource at its disposal to maintain financial services to the people of the Delta," said National Federation CEO Clifford Rosenthal. "To leave that predominantly African-American community at the mercy of predatory lenders and the banks which have historically neglected it would be tragic, not only for the people of Mississippi but for the entire credit union movement, and the federation is committed to working with NCUA to ensure this does not happen."
Rosenthal said the conservatorship at First Delta had served to highlight the importance of an upcoming meeting between the National Federation's governmental affairs committee and the NCUA's senior staff and board members.
"We share the anger of the rest of the credit union movement about the corporate stabilization package and similar issues," explained Rosenthal discussing the meeting. "But we also have a broader agenda as well that relates to CDCUs and other smaller credit unions," he said, like First Delta.