LITTLE ROCK, Ark. — The takeover by NCUA of a small, Black-led credit union here that has led to litigation was the source of a long analysis piece by a local publication.
As the CU Daily reported here, just three years after it was chartered and with a 2% net worth ratio, NCUA placed the $3-million People Trust Community Federal Credit Union into conservatorship, citing unsafe and unsound practices.
Through Sept. 30, 2025, the $3.27-million People Trust FCU reported a $356,506 loss. The credit union is currently being overseen by Arkansas FCU. As the CU Daily reported here, the former CEO of PTCFCU, Arlo Washington, has asked a federal judge to overturn NCUA’s decision, but the courts have upheld the move.
In its reporting, which appeared under the headline “Why Are Federal Regulators Trying To Take Away This Credit Union?”, NextCity.org said the move “raised broader concerns about oversight of community development financial institutions.”
Washington’s challenge in federal court argued the regulator acted before the credit union could implement corrective measures, including a revised business plan and new lending policies submitted in late 2025.
The NCUA told NexCity.org the credit union was deemed insolvent in December and said its revised plan failed to account for the full scope of expenses. The agency declined to comment further on the case, citing ongoing litigation, according to the publication.
Member impact and disruptions
NextCity.org reported that while the credit union remains open under conservatorship, members have reported significant disruptions. Some said they have been limited to withdrawing $500 per week, complicating their ability to pay rent, suppliers and employees.
NCUA told the publication it did not impose a blanket $500 limit but acknowledged that temporary cash withdrawal restrictions were put in place in the early days of conservatorship, with exceptions handled individually.
The uncertainty has had tangible effects on small businesses. One member, Brandon Bell, owner of a Little Rock clothing boutique, credited the credit union with helping him stay afloat through a difficult period and said he remains committed to the institution, NextCity.org reported. Another member reported shutting down her business after being unable to meet payroll and rent obligations due to restricted access to funds, the report added.
The credit union’s affiliated nonprofit loan fund has also experienced delays in distributing funds tied to a Small Business Administration-backed microloan program and a state-supported housing initiative, potentially affecting vulnerable households, according to NextCity.org.
Operational challenges and financial strain
NexCity.org further stated People Trust Community’s difficulties stem in part from problems with its core processing systems, and that the credit union was affected by a ransomware attack on one provider and later faced challenges transitioning to another system, which Washington said contributed to recordkeeping errors flagged by regulators.
NCUA told NextCity.org the institution’s recordkeeping issues went beyond technology challenges. During conservatorship, the agency said it has been working to address inaccuracies and compliance issues, including lending documentation.
NextCity.org noted that financial pressures mounted in 2025. The credit union reported rising loan delinquencies, higher-than-expected vendor costs and a sharp deterioration in its net worth ratio — a key regulatory measure of financial health. That ratio fell from just above 7% in mid-2025 to 2% by September and turned negative by the end of October.
Washington told NextCity.org the credit union’s sponsor organization, a nonprofit community development financial institution, was prepared to inject additional capital and support a turnaround. He also said new lending policies and software tools had been put in place to address regulators’ concerns prior to the takeover.
Broader Concerns
Community development advocates told NexCity.org the case reflects what they said is a broader pattern of regulatory actions affecting smaller, low-income designated credit unions, particularly those serving minority communities. Some pointed to similarities with the 2010 liquidation of a Black-led credit union that also faced disputes with regulators over management and accounting practices, NextCity.org said.
Critics argue such institutions often face unique operational challenges and may require more time and support to stabilize, rather than rapid intervention, the report stated.
NextCity.org further said the case also comes amid questions about governance at the NCUA. The agency’s three-member board currently has only one sitting member following the removal of two Democratic members, a move that is being challenged in court. Some industry observers have questioned the legality of major regulatory decisions made under that structure, according to NexCity.org.
What Comes Next
Despite the uncertainty, some members told NextCity.org they are willing to wait. One member, who had been saving to start her own trucking business, said she had no plans to close her account despite the disruption.
Washington told the publication said that regardless of the outcome, he will continue operating the affiliated nonprofit loan fund, which has long provided small-dollar loans and financial support to underserved communities.
