The NCUA rated the District Government Employees FCU, the institution run by NCUA Board nominee Carla Decker, a CAMEL 3 and criticized it for having a “high strategic risk.’’
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Its “current infrastructure is not sustainable’’ and its operating expenses are too high, according to copies of the examination report obtained by Credit Union Times.
The report on the credit union’s examination of last December found shortcomings such as: No foreclosure procedures; inadequate reporting to the credit union’s board on information security, and willingness by management to assume an unacceptable level of interest rate risk.
The credit union’s overall CAMEL rating was a 3. Its other ratings were: 1 for capital, 3 for asset quality, 3 for management, 4 for earnings, and 2 for asset liability management.
Decker did not return two phone calls seeking comment on Monday. Sources said the Senate Banking Committee planned to hold a confirmation hearing on Nov. 17.
Decker’s 10,800-member $45 million CU, which is based in Washington, D.C., reported a profit of $31,167 in the first six months of 2011. That follows losses of $119,797 for 2007, $369,282 for 2008, $483,946 for 2009, and $322,790 for 2010.
Last December, the NCUA and the credit union signed a letter of understanding and agreement setting certain goals for return on average assets for 2011 and mandating certain reductions in operating expenses and other management and financial changes.
The document also required the credit union’s board to send monthly progress reports to the NCUA which include board minutes, monthly financial statements, a summary of delinquent loans by category, and the methodology sheet for calculating allowance for loan and lease losses.
The credit union exceeded the targeted return on average assets for the first three quarters of 2011.
The NCUA and credit union also signed a document of resolution requiring the implementation of an expense reduction plan and monitor the progress of the plan.
Decker was nominated to the NCUA Board by President Obama last month to succeed Gigi Hyland.