NCUA’s Office of Inspector General said Telesis Community CU failed due to heavy concentration in member business loans, failure to properly reserve for loans and, among other things, “strategic misreads” by its board and management.
In its material loss review released Thursday, the OIG also said auditors and examiners cited numerous internal control failures, including an ineffective internal audit function. The report also says the credit union’s operating expenses “were high relative to industry standards and exceeded revenue from 2007 through its demise in 2012.
The report says the CEO’s “persuasive and aggressive management style,” plus her notoriety in the industry led the credit union’s board to follow her recommendations with little discussion. It also faults NCUA for failing to take more timely and aggressive supervisory action to prevent or mitigate losses to the National Credit Union Share Insurance Fund.
Regarding the institution’s MBL activity, this California-chartered credit union had an exception under NCUA rules on member business lending. Its failure in 2012 cost the NCUSIF about $77 million, the report says.continue reading »