Thursday, November 2, 2017

Bad Loans Push Conserved Riverdale CU Deeper into Insolvency

Massive losses from poor performing loans have pushed conserved Riverdale Credit Union (Selma, AL) deeper into insolvent as of September 2017. performing loans.

The credit union posted a year-to-date loss of $14.3 million, driven by provision for loan and lease losses of $15.6 million through the first 3 quarters of 2017.

As a result of the loss, the credit union's net worth has dropped from almost $8.9 million to a negative $6.1 million.

The credit union's net worth ratio fell from 12.21 percent as of the end of 2016 to minus 11.05 percent as of September 2017.

Delinquent loans rose from $1.6 million at the end of 2016 to $7.1 million at the end of the third quarter 2017. The delinquency rate as of September 2017 was 14.33 percent.

As of September 2017, net charge-offs were $12.8 million. The net charge-off rate was 30.61 percent as of the most recent call report.

Total assets of the credit union have dropped by almost 25 percent from the start of this year to $54.9 million as of the most recent call report. However, the credit union's assets are now less than its total deposits and shares of $57 million.

Surprisingly, the credit union is reporting almost $1.4 million in uninsured deposits and shares.


  1. What will happen to the outstanding loans when the credit union closes?

    1. Under a purchase and assumption agreement, the acquiring credit union will usually acquire some or all of the loans.

      If NCUA closes the credit union and there is not a credit union to acquire the failed credit union's assets, the loans would be transferred to the Asset Management $ Assistance Center (AMAC). AMAC will try to sell the loans.



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