May 19, 2022

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CEO of Conserved Empire Financial FCU Calls NCUA’s Actions ‘Totally Unwarranted’

NCUA lobby Lobby of the NCUA.

The NCUA on Monday conserved the $3 million Empire Financial Federal Credit Union, which was managing unsecured loans, primarily Paycheck Protection Program loans, totaling $1,634,968 in 2020 compared to just $54,171 of unsecured loans in 2019.

The independent federal agency said it conserved the Jackson, N.J.-based credit union because of unsafe and unsound practices that were not specified.

Gerald Goldenbroit, who served as the credit union’s president/CEO for nearly nine years and also worked as an NCUA examiner for 18 years, said there were no safety and soundness issues at Empire Financial.

He said when he received a conservatorship notice from the NCUA on Monday, he was “totally dismayed.”

“I believe that the facts will bear me out that the actions that were taken by the NCUA were totally unwarranted,” Goldenbroit said when reached by CU Times on Tuesday. He declined further comment at this time.

The NCUA said in a prepared statement that member services will continue uninterrupted by appointment at the credit union’s new location at 22 Cortlandt St. in Manhattan.

That address is the same office building, in the heart of Wall Street, of another conserved financial cooperative, the $4.1 billion Municipal Credit Union. According to the NCUA, Empire Financial’s new temporary location for member services is closer to the core FOM and the Cortlandt Street office building had available office space.

Empire Financial’s December 2020 Call Report listed 52 unsecured loans/lines of credit, which primarily included SBA PPP loans of more than $1.6 million. The credit union was charging a 10{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} interest rate on those loans.

While Empire Financial’s loan income jumped from $24,164 in 2019 to $43,803 in 2020, its fee income soared from $58,787 to $243,363 in 2020, according to NCUA financial performance reports. The New Jersey credit union also listed $2,212,725 as total borrowings under the PPP lending facility, its December 2020 Call Report showed.

By the end of 2021’s first quarter, Empire Financial listed 41 unsecured loans, including SBA PPP loans, worth $1,243,711. The credit union was charging a 3.50{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} interest rate on those loans, according to its Call Report. Empire Financial’s loan income at the end of this year’s first quarter totaled $29,366, compared to $9,169 at the end of 2020’s first quarter, while its fee income substantially jumped from $322 during the first quarter of 2020 to more than $60,000 during the first quarter of 2021.

Empire Financial also listed $1,208,965 as total borrowings under the PPP lending facility, its Call Report showed.

Empire Financial ended 2020 with a gain of nearly $144,000, compared to a loss of $21,000 at the end of 2019. At the end of this year’s first quarter, the credit union posted a gain of $52,349 compared to a $10,371 loss at the end of 2020’s first quarter, according to NCUA financial performance reports.

In March 2020, the credit union posted a net worth of 2.43{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} while in March 2021 its net worth shot up to 9.72{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb}.

Chartered in 1976, Empire Financial served 343 members.