First Family FCU Placed into Conservatorship (Updated)

The National Credit Union Administration (NCUA) seized control of operations at Family First Federal Credit Union of Orem, Utah.

The press release stated that the $139.5 million was placed into conservatorship due to declining financial condition. NCUA said that the credit union "was not adequately capitalized" and "has earnings insufficient to enable it to continue under present management."

NCUA's press release understated the magnitude of the problems at Family First FCU.

According to its June Financial Performance Report, Family First reported a loss of almost $12 million in the first half of 2010. Most of the loss was attributable to almost $10.6 million in provisions for loan and lease losses.

As a result of the loss, the credit union's net worth was wiped out. As of June, the credit union reported a net worth ratio of minus 5.55 percent.

Additionally, $9.26 million or 8 percent of the credit union's loans were at least 60 days or more past due.