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TVA credit union loses $600K on investments

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The CEO and board chairman of Tennessee Valley Authority Community Credit Union are refusing to comment about a possible federal investigation into impermissible investments that as of March 31 had lost more than $600,000 over the past 12 months.

In a call report posted Thursday by the National Credit Union Administration, TVACCU investments lost $149,169 in the first quarter of this year. That comes after a December report that the credit union lost $453,795 in the last three quarters of 2014.

That’s a total of $602,964 in losses over a one-year period.

The deficits were reported under “gain on investments” on the call reports, available at the National Credit Union Administration website, ncua.gov. The most recent report on the TVA credit union website is from 2011.

“I can’t comment on any issues involving investments,” TVA Community Credit Union CEO Kimball Burkett said Thursday. “I wish I could.”

Still, the losses keep accumulating, and NCUA examiners have been monitoring TVACCU investments, according to an email dated Sept. 9, 2014. The email, forwarded to Burkett, was from NCUA field examiner Delechia Thompkins to Sammy Clements and Rhonda Cabler, the Muscle Shoals-based credit union’s vice president and chief financial officer.

“I hope all is well.

“I’m checking in to get a quick status on those impermissible investments addressed in the last examination report. I know that some additional monitoring was required. So, would you please forward me a copy of your latest report status?

Reached at her D.C.-area office, Thompkins also declined comment.

“This is the federal government. I cannot comment on that,” she said.

TVA credit union board chairperson Frederick Lewis, reached Thursday at his Florence home, said, “As a board member, I cannot comment on anything that affects a third party.”

Asked when he was made aware of the financial loss, or if the board intended to inform TVA’s 18,000 members,

Lewis said, “This conversation is over for the time being.”

So it remains unclear when the board learned of NCUA’s conclusion that TVA held risky investments, when or whether it told its members, and whether it has sold all “impermissible” assets or still maintains some.

Assets of credit unions are monitored by government regulators because that money is deposited by and belongs to the union’s members.

TVACCU showed assets of $304,140,790 in its report to the NCUA that went online Thursday. The credit union has 18,110 members.

NCUA bylaws are vague and open-ended regarding what investments are permissible or not, according to the NCUA Examiner Guidebook. They are set to minimize risk, which can be tempting to some financial officers at a time when low interest rates have caused the demise of the 5 percent certificate of deposit.

TVACCU investments had performed well before last year. But the recent losses cut deeply into previous earnings, including profits of $347,567 in 2013, $172,536 in 2012 and $436,137 in 2011.

The credit union reported no investments in 2010 and 2009.

The 2014 losses came in a year when the Standard and Poor’s 500 reported gains of 11 percent, 14 percent counting derivatives. It grew 0.95 percent in the first quarter of 2015.

It remains unclear whether the credit union’s investments were cleared by its asset liability committee or board of directors.

A former director, Jackie Bevis, of Tuscumbia, served on the TVA board and the Colbert-Browns Ferry Credit Union board before they were merged.

Bevis said the board was informed of some investments, and the Franklin Templeton firm was used.

“Sometimes, we had to ask deep questions, and we did,” Bevis said. “I don’t remember anything we did that got us in trouble — and I would remember that.”

Bill Campbell can be reached at bill.campbell@TimesDaily.com or 256-740-5746. Follow on Twitter @TD_BillCampbell.

Category: Credit

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