The Michigan Department of Insurance and Financial Services onFriday liquidated the $24 million Craftsman Credit Union of Detroitafter determining the state-chartered credit union was insolventand had no prospect for restoring viable operations. The stateregulator appointed the NCUA as liquidating agent.

The $367 million, 49,277-member Security Credit Union of Flint,Mich., immediately assumed Craftsman's members and deposits, aswell as some loans.

Loan losses had plagued Craftsman, which served employees ofDetroit's General Motors plants and select groups near thecredit union, since 2008 when the credit union ended the year with10.54% delinquencies and 4.48% charge offs.

Craftsman had 22.69% net worth at that time, but loan lossessteadily eroded capital. Losses accelerated in 2011, with chargeoffs rising above 10%, leaving Craftsman with 11.05% net worth bythe end of the year. Another tough second quarter in 2012 furtherreduced net worth to below 9%, but the credit union seemed to holdsteady the second half of 2012 and the first quarter of 2013,matching above peer charge offs with a healthy net margin.

However, in the second quarter of 2013, net worth plunged to1.46% from 8.43% the previous quarter after Craftsman reported amore than $2 million net loss. Operating expenses rose from$223,079 in March to $948,203 in June. Loan loss provisions alsosaw a steep increase, from $31,662 in the first quarter to $1.43million in June.

The bulk of the credit union's loan portfolio was concentratedin real estate loans; of Craftsman's $8.56 million total loans,$5.8 million were real estate. According to the credit union's June30 call report, it had earmarked nearly $3 million of its totalloan portfolio for loss allowances.

However, just $391,664 in fixed rate mortgages and $126,554 inadjustable rate mortgages were reported delinquent, accounting fornearly all delinquencies. Craftsman also reported $646,695 inrestructured mortgages as of June 30. Year to date, Craftsman hadcharged off just $214,584 in bad loans.

Also in the June 30 Call Report was that Craftsman paid out$375,405 in employee compensation and benefits during the firsthalf of the year, another $180,000 for outside services and$528,999 for miscellaneous operating expenses. According to thecredit union's website, it was only open four days a week.

Craftsman Credit Union is the 12th federally insured creditunion liquidated in 2013.