The NCUA said Wednesday it has terminated its Letter of Understanding and Agreement with the $2.2 million Lynn Municipal Employees Credit Union of Lynn, Mass., and its state regulator, the Massachusetts Division of Banks.
In October 2012, the LUA was issued and stated the credit union was in “troubled condition” and listed specific practices that it was required to correct.
The termination of the LUA letter means NCUA has determined LMECU “has met all of the requirements in the original order,” said an NCUA spokesperson.
Specifically, that means the credit union has complied with practices from previous enforcement actions and is operating with adequate supervision and direction by the credit union’s board of directors.
In addition to establishing appropriate internal controls, LMECU also is maintaining accurate books and records and is no longer engaged in unsafe and unsound underwriting standards and practices, the agency said.
The LUA also required LMECU to ensure credit reports reviewed during underwriting contain credit scores, document why members with adverse credit are granted loans, and ensure debt-to-income ratios are calculated correctly and include all debts from the member’s credit report and loan application.
Of the credit union’s 221 loans that amount to $1,043,816, just over 190 are unsecured lines of credit totaling $862,820. The remaining loans are financing new or used cars, according to the credit union’s June 30 Call Report.
The Call Report also shows LMECU is well capitalized with a net worth ratio of 22.87%.
Nevertheless, the credit union’s loan income has slid from $57,232 in June 2012 to $55,566 in June 2013, according to NCUA financial performance reports. Its net income also has declined from $24,681 in June 2012 to $14,814 by the end of the second quarter 2013.
The credit union operates one branch located in Lynn City Hall and serves 400 members.