NCUA Pulls the Plug on $13.8M Lynrocten FCU Amid Criminal Probe
The NCUA on Friday liquidated the $13.8 million Lynrocten FCU of Lynchburg, Va., the day after credit union’s annual meeting Thursday night in its legacy sponsor’s breakroom.
Earlier in the week, local print and broadcast media reported that local police were investigating allegations from members that money was missing from accounts and loans were made from their accounts without their knowledge.
The Lynchburg Police Department posted a Facebook update about the investigation, which it said it began on April 25 after receiving a report from the credit union itself.
“Detectives with the Criminal Investigations Division of the Lynchburg Police Department are working with the Lynrocten Credit Union to identify where criminal activity has occurred,” the posting said, adding that citizens with information on the case were asked to call a Crimestoppers number.
The NCUA said in a release the regulator made the decision to liquidate the 1,068-member credit union and discontinue operations after determining it was insolvent and had no prospect for restoring viable operations.
Lynrocten, a three-person shop headed by Manager Linda S. Newcomb, reported 17.54% net worth in the first quarter of 2012 according to NCUA financial reports posted online. Loan losses weren’t reported as problematic, with only 0.04% delinquencies reported in the first quarter. Charge offs actually returned some income to the balance sheet, at -0.08% in the first quarter.
However, asset liability numbers varied considerably from peer averages. The credit union’s loan to share ratio was 121.10% in the first quarter, and has been above 100% since March 2003, the NCUA’s earliest archived financial report period.
Net long term assets to total assets were just 0.79% in the first quarter, and regular shares to total shares and borrowings was just 11.41%, both far lower than the 19.66% and 52.96% reported respectively as peer averages as of Dec. 31. 2012.
There were 92.4 borrowers for every 100 members in the first quarter, far higher than the 42.26% reported by peers. And yet, average loan balance per member was $11,756, not much higher than the $9,243 reported by peers.
Chartered in 1936, Lynrocten FCU served the employees of Rock-Tenn Company, a paperboard, packaging and marketing products manufacturer, and their immediate family members, as well as some additional select employee groups.
According to the credit union’s website, the cooperative’s annual meeting was Thursday night in the plant’s break room, which was located next to the credit union office. It had been conducting a scholarship competition that would have awarded four $500 scholarships in August.
Member deposits were federally insured, and the NCUA said its Asset Management and Assistance Center will contact members holding verified share accounts within one week.
The action marked the NCUA’s sixth liquidation of 2013.