NCUA Takes Over Bethex FCU
The NCUA announced Friday that it has conserved the $12.9 million, 5,600-member Bethex Federal Credit Union.
In a prepared statement, the NCUA announced it had taken over the Bronx, N.Y.-based cooperative “to enable the credit union to continue regular operations with experienced management in place and correct previous operational weaknesses.”
Chartered in 1970 by its president/CEO, Joy Cousminer, Bethex FCU had been a leading community development credit union for years as an active member and leader of the National Federation of Community Development Credit Unions.
Bethex FCU was the first credit union to enter into a partnership with a local check cashing firm, which allowed members to deposit money from check cashers directly into their Bethex FCU accounts.
This relationship drew negative attention when a leaked report from the U.S. Treasury Department’s Financial Crimes Enforcement Network named Bethex FCU, among other credit unions, as being at risk for money laundering.
Previously, the cooperative served as a beacon of financial stability in the wake of both the Sept. 11, 2001 terrorist attacks on the World Trade Center and Hurricane Sandy in 2012.
During Hurricane Sandy, Cousminer reported the credit union remained open despite her not having power or hot water in her Manhattan home, and despite the credit union's 23 staff members not having access to public transportation to get to work.
Bethex FCU arranged carpools and offered to pay staff cab fares for those who needed to make it into work during the natural disaster.
“No conservatorship has made me sadder than this one,” Clifford Rosenthal, former CEO of the National Federation of Community Development Credit Unions, said in response to Friday’s news. “I’ve known and worked with Joy Cousminer for more than 30 years. Long past the age when other credit union veterans are on the golf course, Joy has given every ounce of her energy not only to making Bethex run, but also, to providing volunteer assistance – probably, tens of thousands of hours – to other low-income credit unions in New York and elsewhere.”
He added, “There has never been an innovative idea that Joy didn’t embrace. Sometimes, her innovations outstripped the capacity of her credit union. This is a challenging era, with regulations and compliance burdens far beyond what we all saw in previous decades. It proved a very difficult challenge for Bethex to meet.”
As of the end of June 2015, Bethex FCU’ net worth ratio had fallen to 5.75%, leaving the cooperative with roughly $750,000 in capital, while its ratio of provision for loan losses to average assets hit 10.65%, dwarfing the peer average of 0.19%.
In addition, the credit union’s return on average assets had fallen to -10.86% compared to its peers’ 0.24%, its ratio of delinquent loans to total loans had risen to 15.35% compared to a peer average of 1.22%, and its ratio of net charge-offs to average loans had climbed to 18.96% compared to 0.42% for its peers.