Agency liquidates city-based credit union

March 6, 2010

By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com

Federal regulators closed a local credit union and cited its deteriorating financial condition as the reason.

The Lawrence County School Employees Federal Credit Union ceased operations at 1 p.m. yesterday.

The National Credit Union Administration reached an agreement with First Choice Federal Credit Union to purchase the credit union and assume a small percentage of its loans. Members of the defunct credit union can access their accounts beginning Monday at one of two First Choice locations: 2209 W. State St., Union Township, and 1400 Wilmington Road, Neshannock Township.

The NCUA’s action marks the fourth federally insured credit union to be liquidated this year. The National Credit Union Share Insurance Fund insures accounts to $250,000.

“The most important thing is that no member lost any money,” said Marilyn Wehr, First Choice’s chief executive officer. “We want everyone to feel safe and secure.

“It is important for the public to understand that this was an isolated incident limited to the Lawrence County School Employees Federal Credit Union and should not reflect on any other bank or credit union.”

First Choice employees have provided operational assistance to the former credit union since October.

The school employees credit union, chartered in 1937, reported a net loss of $3.4 million in the fourth quarter of 2009. Its cash assets dropped from $2.6 million to $151,000 from September to December. Total assets during the same period fell from $6.4 million to $2.6 million.

The credit union reported approximately 1,900 clients last year. Its membership was made up of the employees and families of the county school districts, the Midwestern Intermediate Unit IV and Westminster College. At closing, the customer base dropped to approximately 1,100.

The NCUA has contacted the U.S. Department of Treasury’s financial crimes unit to review the financial losses.

Wehr said First Choice opted not to hire the former credit union’s lone employee nor keep the North Mill Street site open. The liquidation also dissolved the volunteer board of trustees: President Kenneth Cotton, Joseph Croach, Brian Glass and Donna Pezzuolo.

Cotton said First Choice offered the best option for its members.

“That was the best way we could have gone,” he said. “I am personally relieved that all funds were insured and nobody lost any money.”

First Choice has assets of $22.3 million and serves approximately 4,400 customers. Membership is open to anyone who lives, works, worships or attends a county school.

Wehr said she will meet with school district business managers to outline the services First Choice offers. She also wants to reach out to those who left the credit union prior to its closing.

“I gave my word I would treat everyone as family as I do at First Choice,” she said.

The NCUA will administer a majority of the loans made through the school employees credit union.

“Due to the limited time available for review, First Choice was only able to acquire a small percentage of LCSE member loans,” Wehr said, “but we are committed to reconsidering refinance of any loan we did not acquire.”

For questions regarding school employee accounts, call First Choice at (724) 652-8393.