Dive Brief:
- The National Credit Union Administration board liquidated Englewood Cliffs, New Jersey-based Unilever Federal Credit Union on Wednesday and declared it insolvent.
- The NCUA also issued two consent orders against credit union employees prohibiting them from participating in the affairs of any federally insured depository institution.
- UFCU reported a loss of $134,891 at the end of 2023, then a loss of $336,490 at the end of last year, Credit Union Times reported.
Dive Insight:
This is the first liquidation by the NCUA in 2025. The decision to liquidate comes roughly two weeks after President Donald Trump fired the NCUA’s two Democratic board members, Todd Harper and Tanya Otsuka, leaving the board with just Republican Chair Kyle Hauptman.
Though the board can carry out its usual supervisory and enforcement duties with one member, it cannot vote to implement policy changes or approve new enforcement actions without a quorum of two members, the trade group America’s Credit Union said after the NCUA board members’ termination.
Both the fired NCUA board members are suing Trump and some other government officials over their “patently unlawful removal[s].”
The credit union’s call report revealed an inefficient cost structure, with $1,052,747 in non-interest expenses and $111,089 in non-interest income, resulting in an operating efficiency ratio of 88%.
UFCU’s five full-time employees’ salary and benefits were $700,000 in total, with $140,000 on average – nearly twice that of the peer average of $73,008. Also, its expense on professional and outside services was around $171,805, Credit Union Times noted.
Curt Long, America’s Credit Unions' chief economist, asserted in an email response that banks have failed more than twice as often as credit unions over the past two decades.
“In the rare event that a credit union does fail, the industry is backstopped by the $22 billion Share Insurance Fund,” Long said. “Credit unions are committed to safety and soundness with strong capital ratios and prudent business models.”
Each UFCU member’s account is insured up to $250,000. The credit union requested its members contact the NCUA if they do not receive a letter within 10 days of liquidation.
The NCUA’s Asset Management and Assistance Center will contact individuals holding verified accounts in the credit union within one week and members can reach out to that unit with questions, the agency said.
The NCUA has asked all creditors with claims to submit their completed forms, along with supporting documents, in writing to the agency by Aug. 28.
Unilever Federal Credit Union, with roughly $46.6 million in assets, served about 1,450 members, who were primarily employees of Unilever’s U.S. operations and its subsidiaries who work in or are paid from Englewood Cliffs, the NCUA said.
The NCUA declined further comment.
