Texar Federal Credit Union: Where Your Friends Are

Abstract

TEXAR Federal Credit Union (formerly Bowie County Teachers Credit Union, Bowie-Cass Teachers Credit Union, and the Teachers Federal Credit Union) has been, from inception in 1951, a provider of a broad range of financial services to its members, primarily in Texarkana, Texas, and Arkansas and the surrounding areas. The credit union experienced normal growth over the years as it progressed through major name changes, especially to TEXAR in 2001. Another significant milestone was the decision to launch a major building program that concluded with moving into a new, large, and modern building in 2003. As the national economy went into a recession in 2008, the states of Texas and Arkansas experienced economic slowdowns that were not as significant as the changes that were reflected in the economic indicators at the national level or those experienced by other states that were much more severely affected. The Texarkana area economy was moderately affected by slowdowns in lending, especially for housing, automobiles, and other durable products.There was additional impact by an elevation in member loan defaults. Another significant occurrence, not related to the local economy, was the failure of U.S. Central Federal Credit Union and Western Corporate (WesCorp) Federal Credit Union and the financial losses of Southwest Corporate Federal Credit Union.Similar to the Federal Deposit Insurance Corporation that insures losses in the banking industry, the National Credit Union Share Insurance Fund (NCUSIF) insures losses among credit unions. To help cover the losses of U.S. Central and WesCorp, TEXAR was assessed approximately $750,000 and because of the losses at Southwest Corporate, it was assessed approximately $700,000.That is the essence of this case.