The $12 million Mid East Tennessee Community Credit Union, chartered 11 years ago, was placed into conservatorship, the NCUA said Tuesday.
The federal agency did not state the reasons for placing the 1,855-member credit union into conservatorship, though the Tennessee cooperative has much higher rates of loan delinquencies and net charge-offs compared to its peers, according to the credit union’s financial performance reports.
Mid East Tennessee Community CU was chartered and insured in October 2008 and serves persons who live, work, worship, volunteer or have a relative that lives in or participates in programs to alleviate poverty or distress in Meigs, Rhea, or McMinn counties.
The NCUA said member services will continue uninterrupted at the credit union’s main office in Decatur and its branch in Athens. Members can continue to conduct normal financial transactions, deposit and access funds, make loan payments and use shares.
From 2014 to 2017, the credit union’s delinquent loan rate ranged from 5% to 6% and fell to 4% in 2018, well above its peer average of 1.1%, according to NCUA financial performance reports.
The credit union’s December 2018 Call Report shows 82 loans worth more than $444,000 were in delinquency. It also had 12 indirect loans worth more than $92,000 in delinquency.
In addition, Mid East Tennessee Community CU’s net charge off rates on loans were 2% to 4% higher than the peer average of 0.49%.
Of its total loan charge offs that amounted to $381,321, most of it, $320,932, originated from used car loans, according to the credit union’s December 2018 Call Report.
Mid East Tennessee Community CU posted a net income loss of more than $240,000 in 2014, but recorded low six-figure net income gains from 2015 to 2017 and a $60,810 net income gain by the end of last year.
According to the NCUA financial performance reports, the credit union’s total loan portfolio increased from $4.5 million in 2014 to $10 million in 2018, while in the same years, loan income jumped from $595,764 to $1,035,633.
Mid East Tennessee Community CU’s net worth was 7% at the end of 2018, down from 8.24% in 2015 but up from 4.44% in 2014.