Credit union regulators weigh next step for failed Valued Members

May 5, 2011

Banking & Finance

By Ted Carter
National Credit Union Administration regulators who took over troubled Valued Members Federal Credit Union’s Jackson, Canton and Lena locations Wednesday say they hope the $9 million institution can be returned to the control of its members.
The alternative is to arrange a transfer of the assets of the 2,030-member credit union to another credit union willing to take on responsibilities for the assets, said Ken Chapman, an Ohio credit union finance specialist appointed CEO of the credit union by the NCUA.
“We want to determine can it be an on-going situation and turned around,” Chapman said.
Regulators say Valued Members reported a loss of $668,993 this year and $784,564 in 2010.
NCUA action will not affect most customers of the federally chartered credit union. Deposits are insured up to $250,000, and operations will continue without interruption, according to the NCUA.
Chapman said his immediate task is to become familiar with Valued Members’ operation and to determine the viability of outstanding loans, most of which are collateralized consumer loans. No more than two or three are home mortgages, he said.
He said problems have occurred in the lending area but he has yet to determine the extent of them.
What must be determined, he said, is whether these loans are collectible.
At first glance, said Chapman, “The numbers don’t look good.”
The NCUA dismissed the credit union’s management and dissolved its board of directors upon initiating the takeover.
“The first thing we’re going to determine is can it be turned around and turned back over to its membership,” Chapman said.
Valued Members Federal Credit Union was originally chartered in 1957 and serves Leake County, the under-served community of Madison County, and a number of employee groups in and around Jackson, the NCUA says.
Valued Members Federal Credit Union is the fourth federally insured credit union placed into conservatorship during 2011.

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