Texans CU Plunges Deep Into Red Ink Amid Huge MBL Charges

Credit Union Journal Daily Briefing | Tuesday, January 31, 2012

RICHARDSON, Texas – Texans CU, a one-time $2-billion credit union being run under conservatorship by NCUA, followed up 2010’s $39.4 million loss with a loss of $88.7 million for 2011, one of the biggest ever for a credit union, NCUA reported yesterday.

The 2011 losses left the former credit union for Texas Instruments insolvent to the tune of negative $46.5 million in net worth. The credit union is only still in business because of a $60 million emergency loan provided by the National CU Share Insurance Fund under 208 assistance.

The main cause of the huge loss was $47.7 million in non-operating charges, as the credit union continues to navigate through various civil lawsuits over its vast member business lending operations.

NCUA took over the 58-year-old credit union last April amid growing losses related to its MBL CUSO, Credit Union Liquidity Services. The MBL losses caused Texans to report red ink of $44.4 million for 2008, $51.6 million for 2009 and $39.4 million for 2010. Last year’s $88.7 million has erased all remaining capital and makes a total of $224 million in losses for the past four years.

Troubled MBLs made by Texans’ CUSO including a $36-million loan financing a troubled real estate development in San Antonio, a $45-million MBL to an ill-fated mall redevelopment outside of Chicago, and a $30-million MBL financing a troubled mixed-used development in Rockwall, Texas. The credit union also lost a multi-million dollar lawsuit over its firing of the head of its insurance CUSO, Texans Insurance.