The $183 million Mutual Savings Credit Union of Birmingham, Ala., placed into a controversial conservatorship by regulators a year ago, is on the mend and is recording a profit for the first quarter, president/CEO Douglas Key said last week.
Last July. the Alabama CU was embroiled in financial turmoil after the state's chief regulator, Glenn T. Latham, seized the CU ousting the board and its president/CEO, Dale Dalbey, charging the CU had mismanaged its loan portfolio and was overextended. Those claims were denied by the parties.
Following appointment of Key as the state's handpicked CEO, Mutual Savings has been turned around, said Key. He said he and remaining managers have cut expenses and been "diligent about maximizing our earnings." Key forecast Mutual Savings' first-quarter profit will reach about $325,000 following a $5 million loss in 2009.
That improvement comes after the CU reduced its payroll by eight employees, now at 80, closed two branches and made a series of operational changes, said Keys, a Birmingham attorney.
"We've also been helped by an improved economy," which in some areas runs counter to national trends, said Keys.
Mutual Savings' July 31 conservatorship by Latham later figured into a court suit filed in a state court by Dalbey and the directors seeking to overturn the takeover on grounds that it was unwarranted and illegal. The suit was settled out of court last January with terms undisclosed.
Key projects the conservatorship should be lifted by "mid-year or early fall" when a new board will be appointed. Until that time, Key said he intends to stay on as CEO for an indefinite period under contract.