The regulatory clock ran out on $5 million El Paso’s Federal Credit Union of El Paso, Texas last week when the NCUA liquidated the credit union and discontinued operations.
According to a release, the NCUA made the move Friday after determining the 1,035-member credit union was insolvent and had no prospect for restoring viable operations.
A look at EPFCU’s financial reports reveal inconsistent numbers provided to the agency by former Manager Lou Hernandez. As of June 30, the insolvent credit union had 11.38% net worth, up from 9.92% as of March 31.
Delinquencies rose from 2.57% as of Dec. 31, 2011 to 9.29% as of June 30, but charge offs decreased, reported as 0.86% as of June 30. The credit union didn’t have any real estate loans on its books; however, unsecured loans spiked from $120,739 as of Dec. 31 to $330,445 as of June 30, with most of the portfolio reported in the “other” category on the credit union’s June 5300 Call Report, earning 18% interest.
As outstanding loans and delinquencies rose, loan loss allowances were non-existent, with Hernandez reporting negative numbers, most recently a -$13,551 as of June 30. And, loan loss provisions were also underfunded, with a -$23 put aside as of March 30, and $2,334 provisioned as of June 30, compared with $7,300 in the provision pot one year earlier when delinquencies were only 1.49% of total loans.
As the size of the high-interest loan portfolio rose, net margin sunk, from 5.82% as of June 30, 2011, to 3.51% as of Dec. 31, and dropping further to 1.34% during 1st quarter 2012. Net margin rose to 2.02% as of June 30, 2012.
EPFCU reported a net loss of -$117,680 for 2011, and a -$62,986 net loss as of June 30, 2012.
The NCUA said in a release that its Asset Management and Assistance Center will transfer certain share accounts to the $471 million El Paso Area Teachers Federal Credit Union, also located in El Paso, Texas. For non-transferred accounts, the agency will issue checks to individuals holding verified accounts in the credit union within one week.
Originally chartered as El Paso Smelter Federal Credit Union in 1952, EPFCU was a full-service financial institution serving employees of American Smelting and Refining Company, select employee groups, and other affinity groups at the time of closure.
The credit union’s listed website address is no longer valid. EPFCU is the ninth federally insured credit union liquidation in 2012.