The National Credit Union Administration said Thursday that it has taken control of Indianapolis’ Newspaper Federal Credit Union because of unspecified “unsafe and unsound practices.”
The credit union, 126 S. Meridian St., remains open and continues to serve its 1,155 members as usual, the NCUA said.
“The NCUA placed Indianapolis’ Newspaper Federal Credit Union into conservatorship because of unsafe and unsound practices at the credit union,” the NCUA said in a statement. “While continuing normal member services, the NCUA will work to resolve issues affecting the credit union’s operations.”
Member deposits at the credit union are protected through the NCUA’s National Credit Union Share Insurance Fund, which insures individual accounts up to $250,000.
Neither the credit union nor the NCUA would comment on the specifics of the situation. The credit union referred queries to the NCUA, and the NCUA declined to comment about why it placed the credit union into conservatorship.
“The NCUA is working closely with the credit union to resolve issues affecting their operations; however, given the supervisory nature of the action, we are not able to comment beyond what is presented in the news release,” NCUA spokesman Joe Adamoli said in an email.
In a question-and-answer section on the NCUA’s website, the agency said it has not set a time frame for resolving the issues at the credit union: “The NCUA has made no decisions about the long-term future of the credit union; however, continued service to members is a priority.”
Recent financial reports paint a picture of financial distress at the credit union.
The credit union’s most recently filed quarterly report, which covers the third quarter, reveals that the credit union is classified as critically undercapitalized, with total assets of $6.6 million but total liabilities of $6.7 million, leaving it with a net worth of zero. During the same period a year earlier, the credit union was classified as well-capitalized, with a net worth of $718,186 and total assets of $7.6 million.
The credit union posted a third-quarter net loss of $852,232, compared with a loss of $12,457 during the same period in 2019.
Loan losses have also ballooned. As of Sept. 30 the credit union reported 19 delinquent loans totaling $526,022. Of that amount, $424,488 was for used-vehicle loans. A year earlier, the credit union reported only four delinquent loans totaling $20,740.
The credit union has also recently replaced its management.
In a letter sent to members in October, the credit union said it had hired long-time credit union executive Ruth Jenkins to take over operations as branch manager of the organization’s sole branch location. Jenkins previously served as the president and CEO at Heritage Federal Credit Union in Newburgh. She held that position for 11 years before retiring in 2018.
Indianapolis’ Newspaper Credit Union was founded in 1962 by employees of The Indianapolis Star and the now-defunct Indianapolis News. It ranks as the 21st largest credit union Indianapolis, based on 2019 assets.