ALEXANDRIA, Va. — Limited reviews by the National Credit Union Administration’s Office of Inspector General found that three credit unions that failed and were merged into other institutions with financial assistance did not warrant more extensive investigations, despite combined losses of about $5.7 million to the National Credit Union Share Insurance Fund.
The reviews, the news of which was first reported by Regulatory Report, examined the failures of North Bay Credit Union in Santa Rosa, Calif.; Team Financial Federal Credit Union in Houston; and Teamsters Local 92 Federal Credit Union in Canton, Ohio. All three institutions were merged into other credit unions in late 2025 or early 2026 with NCUA assistance.
Under federal law, the inspector general must determine whether a more in-depth review is needed following a credit union failure that results in losses to the insurance fund. The office concluded none of the three cases required additional investigation because none met the threshold for a material loss review.
The Findings
Among the findings:
- North Bay Credit Union: The $118.9-million NBCU was merged into Alero Financial Credit Union in February. The inspector general said the $4.24-million loss to the insurance fund stemmed primarily from the credit union’s expansion into higher-risk and more complex business lines, including marijuana-related businesses and fintech companies. The report said inadequate internal controls contributed to operational breakdowns, weak underwriting and risk management, resulting in a high concentration of poor-quality marijuana-related business loans.
- Team Financial Federal Credit Union: The $4.3-million- credit union merged into Cy-Fair Federal Credit Union in December after becoming critically undercapitalized and insolvent. The insurance fund incurred a loss of $699,321. According to the report, weak internal controls, poor recordkeeping and inadequate segregation of duties among a small staff — including two related employees — contributed to the institution’s failure. The OIG review also cited identified “level 2” fraud, operation under a fictitious fidelity bond for eight years and significant losses tied to deficient records.
- Teamsters Local 92 Federal Credit Union: The $1.9-million-asset institution merged into Seven Seventeen Credit Union in December, resulting in a $787,148 loss to the insurance fund. The inspector general attributed the failure to extensive operational, financial and governance weaknesses that left the credit union critically undercapitalized and insolvent. The report cited long-standing recordkeeping deficiencies, weak internal controls, accounting errors that produced unreliable financial reports, an inadequately funded allowance for loan losses and significant weaknesses in the loan portfolio. Although investigators identified indicators of fraud, the report concluded the insolvency resulted from systemic operational failures rather than fraud alone.
The Reports
For the full reports, go here:
- OIG-26-08 – North Bay Credit Union
- OIG-26-07 – Team Financial Federal Credit Union
- OIG-26-06 – Teamsters Local 92 Federal Credit Union
One Response
This is a big issue for the movement. We see the failures of small credit unions based on fraud, negligence, or incompetence, and then we write it off (quite literally) because the asset sizes are non-material. The incidence risk, however, is very high and it’s creating political and reputational risk for the entire industry, which is accentuated by small credit union leaders when they advocate for more lax regulations, while staking claim to being the heart and soul of the movement, as if large CU’s don’t understand what people helping people needs. The NCUA needs to stop playing along. If a CU can’t afford to comply with regs and maintain good governance and management practices, they shouldn’t exist. Continuing to push to have a separate set of rules from large CUs and community banks their size is the number one threat to us losing the tax exemption.