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Two Conserved CUs Have Wiped Out Their Net Worth "Credit News 24"

Riverdale Credit Union (Selma, AL) and Shreveport Federal Credit Union (Shreveport, LA), which were placed into conservatorship during the second quarter, are critically undercapitalized and have wiped out their net worth.

Shreveport Federal Credit Union

Shreveport Federal Credit Union with almost $86.7 million in assets saw its net worth fall from slightly more than $15.4 million at the end of 2016 to nearly -1.5 million as of June 2018. As a result, the credit union's net worth ratio fell from 14.65 percent at the end of 2016 to -1.68 percent as of June 30, 2018.

The decline in net worth was due to large losses incurred by the credit union. The credit union reported a loss of negative $17.1 million through the first two quarters of 2018. Most of the loss was due to $14.9 million in other non-operating expenses.

The credit union is also reporting other comprehensive income of almost minus 2.2 million. The credit union has negative equity capital just shy of minus $3.7 million.

Riverdale Credit Union

Riverdale Credit Union with $63.1 million in assets reported a loss of almost $10.5 million through the first six months of 2018.

The loss was due to a dramatic increase its provisions for loan and lease losses during the first six months of 2018. Provisions for loan and lease losses were almost $11.5 million as of June 2018. In comparison, provisions for loan and lease losses were $761.6 thousand a year earlier.

The loss wiped out the credit union's net worth, which fell from almost $8.9 million at the end of 2016 to minus $1.6 million at the end of the second quarter of 2018. The credit union's net worth ratio tumbled from 12.21 percent at the end of 2016 to negative 2.56 percent as of June 2018.

In addition, the credit union recorded a sharp increase in delinquent and charged off loans. The credit union reported having $7.7 million in delinquent loans at the end of the second quarter of 2018. As a result, 13.80 percent of its loans were 60 days or more past due.

Net charge-offs were almost $6.9 million for the first two quarters of 2018. The credit union reported a net charge-off rate of 23.45 percent for the first two quarters of 2018.

According to the Administrative Order, the NCUA Board determined that conservatorship was necessary because the credit union concealed books, papers, records, and assets of Riverdale Credit Union, and evidence exists of illegal and unsafe practices and NCUA staff cannot determine the full ramification of this activity.


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