A massive loan charge-off during the first quarter resulted in the NCUA liquidating the $622,857 Electrical Workers #527 FCU of Texas City, Texas.
In a release, the NCUA said it made the decision to liquidate the credit union and discontinue its operations after determining the credit union was insolvent and had no prospect for restoring viable operations.
That’s an understatement, according to the 527-member credit union’s financial performance reports posted on the NCUA’s website. As of March 31, net worth plummeted to -36.07%, down from 7.23% the previous quarter.
The credit union’s loan portfolio shrank from $977,894 as of Dec. 31 to just $546,111 as of March 31, with significant losses recorded in both unsecured loans and consumer loans.
Electrical Workers #527 had reported fairly high delinquencies – 16.26% of total loans as of Sept. 30, 2012 and 11.69% as of Dec. 31. Charge-offs were also high, reported as 7.08% as of 2012 year end. However, that number increased to 185.60% of average loans charged off in the first quarter.
The credit union also saw a 688% increase in its loan loss provisioning during the first quarter, setting aside $294,494 for loan losses compared to just $149,480 at year-end. The end result was a $295,220 net loss for the first quarter.
Electrical Workers #527 served a number of select groups centered primarily on electrical workers in the Texas City area. It is the seventh federally insured credit union to be liquidated in 2013.